When an insurer wrongfully denies insurance coverage to its policyholder on a liability claim, the policyholder is free to settle the claim against it and press its right to insurance. That the insurer’s policy contains a provision requiring the insurer’s consent to any settlement poses no impediment. Given that the insurer has breached its contract, it cannot demand compliance with that provision. But what happens when the insurer offers to defend the underlying claim, reserving its rights to later deny coverage depending on how matters develop?
Click to read full article: When Insurer’s Consent to Settle Isn’t Required