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 Colorado, insurance is regulated by state statutes and overseen by the Colorado Division of Insurance. The duty to defend obligates the insurer to provide an attorney to defend the insured against covered claims or lawsuits. The duty to indemnify means the insurer must pay for any covered financial losses. Insurance policies in Colorado can cover various risks, including health insurance for medical expenses and commercial general liability (CGL) for business-related claims and losses. Policyholders must carefully review their insurance contracts to understand the scope of coverage, exclusions, and limits. Insurers are required to act in good faith and deal fairly with insured parties, and failure to do so can result in legal action against the insurer for bad faith.