Insurance policies include a provision that the insurance carrier has a duty to defend you against certain kinds of legal action. Suppose someone files a lawsuit against you for an action that falls within the scope of your insurance coverage. In that case, your insurance carrier must provide legal counsel to defend you.
For instance, maybe you were at fault in a car crash. The other driver’s insurer makes a claim against your insurance company for the driver’s property damage and medical treatment. Your insurance company doesn’t want to settle because it’s contesting their requested amount of compensation. Both insurance companies attempt negotiations but still don’t agree, so the other driver files a lawsuit against you.
In this scenario, your insurance company must provide your legal defense. Your policy covers this, and you’ve been paying for it. If the insurance company won’t defend you, it might be acting in bad faith.
It’s essential to note that there are some actions that your policy won’t cover. In some states and circumstances, your insurer doesn’t have to protect you if you deliberately positioned yourself to cause a crash. For example, if you were behind the wheel while under the influence (DUI) of alcohol or drugs.
