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 Montana (MT), insurance is regulated by both state statutes and federal law. The Montana Code Annotated (MCA) contains provisions that govern the business of insurance within the state, including the duties of insurers and the regulation of insurance policies. The Montana Commissioner of Securities and Insurance oversees the insurance industry, ensuring compliance with state laws and protecting consumers. The duty to defend obligates the insurer to provide a defense for the insured against claims covered by the policy, typically including the cost of an attorney and associated legal fees. The duty to indemnify means the insurer must pay for any covered financial losses, up to the limits of the policy. Insurance policies can vary widely, covering different risks such as health, life, property, and liability. In Montana, as in other states, insurance contracts are subject to the principles of contract law, requiring a mutual agreement, consideration, and a legal purpose. Additionally, federal laws, such as the Affordable Care Act for health insurance, may impose additional requirements on insurance policies and practices.