Avoiding Bad Faith Claims from Settlement Negotiations: Coverage Defenses & the Duty to Defend, Settle Claims

Recording of a 90-minute CLE webinar with Q&A

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Conducted on Wednesday, May 20, 2020

Recorded event now available

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Course Materials

This CLE course will discuss the interplay between insurance coverage issues and settlement discussions, including the extent to which an insurance company can consider its coverage defenses in determining whether to settle, and if so, the terms of settlement.

Description

An insurer has a duty to defend and fund reasonable settlements of covered claims against its policyholder, but coverage is not just a question of whether the injury is the kind that the policy contemplates.

Coverage may be affected by the insured's actions that significantly impair settlement, such as a material breach of the contract, the insured's failure to cooperate or its taking actions detrimental to settlement or defense. Coverage may also be vitiated if the insured refuses to settle or commits to settlement terms without advising the insurance company.

Settlement and coverage issues may conflict when the insured has multiple policies, and insurers disagree over coverage, whether all conditions precedent have been met, and the order in which each policy must be accessed. Finally, problems arise when coverage is denied, but challenged, and the insured is left to settle on its own without the insurer’s consent.

Listen as the panel discusses the delicate balance insurers and policyholders must walk when factoring coverage issues into its settlement negotiations.

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Outline

  1. Primary insurer duties when coverage is doubtful
    1. Duty to defend
    2. Duty to settle
    3. Relationship of primary and excess insurers
  2. When lack of coverage defenses may excuse settlement
  3. Importance of reservation of rights letters when coverage issues will be considered toward settlement

Benefits

The panel will review these and other essential issues:

  • Whether the duty to settle requires the insurer to initiate settlement
  • Whether the insurer can ever consider coverage in its settlement negotiations
  • What is the effect of partial coverage?

Faculty

Dunsing, Christopher
Christopher R. Dunsing

Partner
Langhenry Gillen Lundquist & Johnson

Mr. Dunsing is an active coverage and litigation defense counsel practicing at the state and federal trial and...  |  Read More

Harris, Eliot
Eliot M. Harris

Member
Williams Kastner

Mr. Harris' practice focuses on commercial litigation with an emphasis on insurance coverage, including general...  |  Read More

Levin, Bradley
Bradley A. Levin

Shareholder
Levin Sitcoff Waneka

Mr. Levin focuses his practice on tort and commercial litigation, especially insurance bad...  |  Read More

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