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 Wisconsin, the duty to indemnify is a legal obligation of an insurance company to cover the financial costs of a claim against the insured when such a claim is found to be within the scope of the insurance policy's coverage. This duty is typically outlined 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 the insured, which involves providing legal representation or defense costs in a claim or lawsuit. The duty to indemnify is triggered when the insured's liability is established, either through a court judgment or settlement that falls within the policy coverage. Wisconsin courts will review the facts and circumstances of the claim, as well as the language of the insurance policy, to determine whether the insurer is obligated to indemnify the insured. This process often occurs after the defense of the claim has been completed and requires a detailed analysis of the relationship between the claim and the policy provisions.