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 New Jersey, as in other states, insurance is regulated by state law and overseen by the New Jersey Department of Banking and Insurance. The department ensures that insurance policies sold in the state meet legal requirements and that insurers fulfill their obligations to policyholders. The duty to defend obligates the insurer to provide a defense for the insured in legal actions that are covered by the policy, which can include hiring an attorney and covering associated legal costs. The duty to indemnify means the insurer must pay for any covered losses or claims up to the limits specified in the policy. These duties are foundational to liability insurance policies, such as commercial general liability (CGL) insurance, which businesses often purchase to protect against a variety of risks. New Jersey law requires certain types of insurance, such as automobile liability insurance, and regulates the terms and conditions under which insurance is provided. Policyholders in New Jersey have the right to expect their insurers to honor the terms of their insurance contracts, and they can seek legal recourse if they believe an insurer has failed to meet its obligations.