Duty to indemnify refers to an insurance company’s (insurer’s) obligation to indemnify the insured against any loss or damage when the claim(s) asserted against the insured (policyholder) may be covered by a liability insurance policy—which is a policy that may cover claims for personal injury and property damage suffered by third parties.

The duty to indemnify is one of the insurer’s primary duties under most liability insurance policies but is narrower than the duty to defend the insured. The duty to indemnify the insured generally arises at a later date when the liability of the insured is established and a review of the facts developed during the litigation or claims investigation process must be examined to determine if they fall within the insurer’s indemnification obligations under the insurance policy.

In Michigan, the duty to indemnify is a contractual obligation of an insurance company to cover the financial losses of the insured party when a claim falls within the scope of the insurance policy's coverage. This duty is typically found in liability insurance policies, which may include coverage for third-party personal injury and property damage claims. The duty to indemnify is distinct from the insurer's duty to defend, as it only arises after the insured's liability has been established, either through a court judgment or settlement that confirms the claim is within the policy's coverage. Michigan courts will review the facts and circumstances of the claim, in light of the policy language, to determine whether the insurer is obligated to indemnify the insured. This process involves a careful analysis of the insurance policy's terms, conditions, and exclusions, as well as the specific details of the claim.