Introduction:
The main purpose of commercial general liability insurance
policies ("CGL policies") is to provide protection to an
insured party against financial losses which may be incurred if the
insured is sued by a third party. The relationship between an
insurer and an insured party is dependent on the wording of the
relevant insurance contract. Typically though, CGL policies,
similar to other liability insurance policies, require an insurer
to fulfill two distinct, but related duties. The first obligation
is referred to as the "duty to defend". This entails the
insurer paying for, and instructing, legal counsel in the defence
of a claim brought against its insured by a third party. The second
obligation is called the "duty to indemnify". This duty
requires the insurer to pay for any judgment awarded to the third
party against its insured, or any settlement that the parties have
reached in lieu of judgment.1
