Allstate is notorious for shafting people by refusing coverage, but this also isn't really relevant to the current situation. That language is related to indemnification/insurance for libel judgments. What Toye would have wanted in this situation is coverage for the costs of defense, i.e. a duty to defend. While these often come together, they don't always and when they do, different rules apply as to what the company is obligated to do.
Insurance companies generally want their exclusions interpreted broadly, while the insured wants them interpreted narrowly, but as contracts of adhesion (i.e. one party dictates take-it-or-leave-it terms to the other and drafted the contract), they're interpreted, when ambiguous, in favor of the non-drafting party.
So the exact language of any such policy would be what's relevant to whether Toye/Rial would be covered for their defense, indemnified for any judgment, both, or neither.
There's also a difference between an obligation to pay the costs of defense and an obligation actually to provide counsel and do the defense. Usually in the latter case, they're going to want greater control over the defense, but in the former case, they're not obligated to cover every single thing a defendant chooses to do, like engage in frivolous motion practice prior to filing a motion to dismiss.