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Resolving Insurers' and Insureds' Settlement Dilemmas When Policy Limits Are Insufficient: Multiple Insured and Multiple Claims

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, February 21, 2023

Recorded event now available

or call 1-800-926-7926

This CLE course will discuss how an insurer's duty to settle may be impacted by two difficult but recurring situations: (1) when multiple claimants are competing for insufficient policy limits against an insured, and (2) when claimants from a single occurrence will release fewer than all of multiple insureds sharing the same limit of liability. The panel will review strategies for resolving the claims while avoiding bad faith litigation.


Liability insurers, depending on the jurisdiction, may have to accept a policy limit settlement demand when liability is reasonably clear and the amount of the judgment "likely" will exceed the policy limit. Unique problems arise when an insured faces multiple claims from a single occurrence, liability is clear, and the policy limits are insufficient to settle all claims. Options for dealing with the issue exist, but all potentially expose the insurer to bad faith claims. The panel will explore different approaches, the jurisdictions that follow them, and solutions that offer insurers the best protection from extracontractual claims.

Equally vexing is the situation in which more than one insured, such as both the owner of a vehicle and its driver, are covered under one policy. A claimant might demand the policy limits but release only one of the insureds. In such a situation, the insurer could face bad faith claims from one insured for refusing to settle and from the other for agreeing to settle.

An interpleader action may not be the answer. Interpleading policy limits can leave the insurer vulnerable to accusations of artificial exhaustion, abandonment of the duty to defend, and a bad faith claim that the insurer shirked its duty to use policy funds to limit the remaining liability of the insured.

Listen as our panel discusses these issues and reviews the best strategies for resolving the claims while avoiding bad faith litigation.



  1. Multiple claimants and insufficient policy limits
    1. First come, first served
    2. Settle as many as possible
    3. Settle based on the severity of the injury
    4. Prorate proceeds based on some formula
  2. Multiple insureds and insufficient funds to release all
    1. "Majority" view
    2. "Minority" view
  3. Interpleader
  4. Impact on the excess carrier


The panel will review critical issues, such as:

  • Should the insurer settle with multiple claimants on a "first come, first serve" basis, settle the most severe claims first, or attempt to "pro-rate" settlements with all claimants?
  • What can be done if fewer than all potential claimants assert claims or file suit?
  • Does exhaustion of the policy limits through settlements terminate the duty to defend the insured?
  • Should the interpleader of the policy proceeds be considered?


Kronenberg, Chet
Chet A. Kronenberg

Simpson Thacher & Bartlett

Mr. Kronenberg, senior Los Angeles litigator, represents clients in a wide range of complex commercial litigation,...  |  Read More

Oshinsky, Jerold
Jerold (Jerry) Oshinsky

Law Office of Jerry Oshinsky

Mr. Oshinsky has almost five decades of insurance coverage experience representing corporate and individual clients and...  |  Read More

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