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 Tennessee, as in other states, insurance is regulated by state law. The Tennessee Department of Commerce & Insurance is responsible for overseeing the insurance industry, ensuring compliance with state statutes, and protecting consumers. Insurance policies in Tennessee are contracts between the insurer and the insured, where the insurer has two primary legal obligations: the duty to defend and the duty to indemnify. The duty to defend obligates the insurer to provide legal defense to the insured against claims or lawsuits that fall within the scope of the policy coverage. The duty to indemnify means the insurer must pay for the losses or damages covered by the policy, up to the policy limits. Insurance coverage can vary widely, from health insurance policies that cover medical expenses to commercial general liability (CGL) policies that protect businesses from various claims and losses. All insurance policies and their provisions must comply with Tennessee state law, and policyholders have legal recourse if they believe their insurer has not fulfilled its obligations under the policy.