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 California, insurance is regulated by both state statutes and federal law. The California Insurance Code provides the legal framework for the operation of insurance services in the state, including the enforcement of the policies and the obligations of the parties involved. The duty to defend obligates the insurer to provide legal defense to the insured against claims or lawsuits that fall within the scope of the insurance policy coverage. The duty to indemnify means the insurer must pay for any covered financial losses or damages that the insured incurs, up to the policy limits. Insurance policies can cover various risks, such as health insurance for medical expenses or commercial general liability (CGL) insurance for business-related claims and losses. The California Department of Insurance oversees the insurance industry, ensuring compliance with the laws and protecting consumer rights. Policyholders in California have the right to expect their insurers to honor the terms of their insurance contracts, and disputes can be resolved through the legal system or through the Department's intervention.