Insurance generally refers to a legally enforceable contract—known as an insurance policy—in which an insurance company (the insurer) agrees to (1) defend the person or entity who purchased the policy (the insured) against future claims or lawsuits; and (2) pay for losses (usually financial) that are covered under the written terms of the insurance policy.

These two primary legal obligations of an insurer under a liability insurance policy are known as the duty to defend and the duty to indemnify.

Insurance may be purchased to cover a wide range of future claims or losses—ranging from health insurance to pay future medical expenses, to commercial general liability (CGL) to cover future claims and losses incurred by a business.

In Arkansas, insurance is regulated by state statutes and overseen by the Arkansas Insurance Department. The duty to defend and the duty to indemnify are fundamental obligations of an insurer under a liability insurance policy. The duty to defend requires the insurer to provide legal defense for the insured against claims or lawsuits that fall within the scope of the insurance coverage. The duty to indemnify means the insurer must pay for any covered losses or damages that the insured is found liable for, up to the policy limits. Insurance policies in Arkansas can cover various risks, including health insurance for medical expenses and commercial general liability (CGL) insurance for business-related claims and losses. Policyholders in Arkansas are protected by state laws that require insurance policies to be clear and enforceable, and insurers must act in good faith and deal fairly with insured parties. Failure to adhere to these duties can result in legal action against the insurer, including claims of bad faith.