Given the cost of insurance premiums and litigation, you should strive to obtain the full benefit of your insurance coverage. To do so, you should know what is required of your insurance carrier when a claim is made; actively engage with your carrier and work closely with the attorney retained by your insurance carrier to defend you during the litigation of a claim; and be aware of your duties, rights and exposures.
The commercial general liability (CGL) policy available to contractors is a standard policy developed by the insurance industry organization Insurance Services Office, Jersey City, N.J. The insuring agreement in the standard CGL policy says your insurance carrier has the right and duty to defend you against a suit seeking bodily injury or property damage and to pay those sums you become legally obligated to pay as damages because of "bodily injury" or "property damage." Your insurance carrier may, at its discretion, investigate any "occurrence" and settle any resulting claim or suit.
Although policy language may be identical, carriers' obligations and insureds' rights vary substantially from state to state. The legal principles and judicial rulings governing insurance coverage disputes and insurers' obligations are a function of state law and state court decisions interpreting specific provisions in insurance policies. As with other contract types, courts examine insurance policies to determine parties' rights and obligations. If unambiguous, a provision is given effect as written. Because insurance policies are written and prescribed by insurance carriers, ambiguities are construed in the insured's favor.
Duties to defend and indemnify