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 Wisconsin, insurance is regulated by state statutes and overseen by the Wisconsin Office of the Commissioner of Insurance (OCI). The OCI ensures that insurance policies comply with state laws and that the insurers fulfill their obligations. 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 insurance policy. The duty to indemnify means the insurer must pay for the losses or damages covered by the policy. Wisconsin law requires these duties to be clearly outlined in the insurance contract. Insurance types, such as health insurance or commercial general liability (CGL) insurance, are subject to specific regulations that dictate coverage requirements, consumer protections, and the claims process. Insurers must act in good faith and with fair dealing in the execution of their duties, and failure to do so can result in legal action against the insurer for practices such as wrongful denial of a claim or failure to defend the insured.