When companies and individuals purchase insurance they are typically concerned not only with protecting themselves from any liabilities, but in assuring that they are afforded a vigorous defense should a claim be brought against them. This right to be provided a defense is called “advancement” and requires that insurers (or other parties such as employers) fund the defense of the insured through the life of the litigation. That is in contrast to “indemnification,” which only requires payment upon the resolution of the underlying dispute.
Advancement is available under a wider range of circumstances and is considered a far broader right than indemnification, as it often requires that an insurer provide a defense in situations where an unfavorable result at trial would negate a claim for indemnification. Accordingly, the quality of the defense for the underlying claim will influence both the findings on liability for the claim and whether the insured can qualify for indemnification. Therefore, advancement is often the nail that will determine whether the kingdom is lost.
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