What's the difference between an insurer's duty to defend and duty to indemnify in Ontario?

The duty to defend is the insurer's obligation to pay for and conduct your legal defence once a lawsuit against you could potentially fall within your policy's coverage, judged against the allegations in the claim itself. The duty to indemnify is different and comes later: it's the insurer's obligation to actually pay a judgment or settlement, and it only applies if the claim, once proven or settled, turns out to genuinely fall within coverage and no exclusion applies.

Because the duty to defend is triggered by the mere possibility of coverage while the duty to indemnify depends on what's actually proven, an insurer can owe you a full defence throughout a lawsuit and still end up owing nothing on indemnity if the facts that emerge take the claim outside your coverage. Insurers commonly manage this gap by defending "under a reservation of rights" - continuing to fund your defence while formally preserving the right to deny indemnity later once the facts are clearer. Understanding which duty is actually in dispute at any given point matters, since a defence being provided doesn't mean the coverage question has been resolved in your favour.