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 North Carolina, insurance is regulated by both state statutes and federal law. The North Carolina Department of Insurance oversees the enforcement of state insurance laws and regulations, ensuring that insurance policies are in compliance with these rules. The duty to defend and the duty to indemnify are fundamental aspects of liability insurance policies in North Carolina. 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, up to the policy limits. Insurance policies can cover various risks, including health, life, property, and liability. Each type of insurance is subject to specific regulations that dictate the terms of coverage, exclusions, and the claims process. It is important for policyholders to understand their policy terms and for insurers to act in good faith, as North Carolina law provides protections against unfair and deceptive insurance practices.