Texas families and businesses frequently purchase liability insurance. In many cases, they must do so.
Everyone who drives on Texas’s roads has to have automobile liability insurance. Personal liability insurance or commercial liability insurance may be required by law or by an agreement with a lender or a business associate.
Liability insurance does 2 things. First, if a person or business is legally responsible to pay for another’s loss, the liability insurance will pay up to the policy’s limits so long as the claim is covered.
Second, if the policyholder gets sued, the insurer has what is called a duty to defend. The duty to defend means the insurance company has to pay for an attorney and other costs of protecting its policyholder from the lawsuit.
Austin residents who are facing a civil lawsuit should as a rule examine their insurance policies carefully.
The duty to defend in Texas is broad. A lawsuit may be baseless, or even downright frivolous, and an insurance company still has a duty to defend it.
The default is to assume that the duty to defend will apply. This is true even if, ultimately, the plaintiff’s claim is not covered under the policy.
At the same time, there are some situations where an insurance company may correctly deny a duty to defend.
What should I do if my insurance company refuses to defend me?
If someone in the Austin area has their insurance company deny their defense, they should make sure they understand all of their legal rights and alternatives.
They may need to take certain steps to protect their rights.
Furthermore, insurance companies that wrongfully deny a defense when they have a duty to defend are liable to pay damages. Their liability may be more than the limits of the policy.