INSURANCE-LIABILITY OF INSURANCE COMPANY FOR NEGLIGENCE IN EXERCISING ITS OPTION TO SETTLE OR DEFEND

Authors

Abstract

In a recent New Hampshire case, the plaintiff had insured with defendant company against liability for personal injuries to plaintiff's employees not exceeding $5,000.00. The policy under the title of "Service" provided that defendant would investigate all claims and settle them "according to the law". The defendant insurer also agreed to defend such suits as might be brought against plaintiff because of such injuries. One of plaintiff's employees was injured and though he offered to settle for $1,300.00, the defendant refused the offer. Thereupon the employee sued and recovered $13,500.00 in an action defended by defendant company according to their contract. The plaintiff then sued the defendant company for negligently failing to settle the suit out of court, it knowing that the plaintiff would be liable for a judgment in excess of the face of the policy. The court held that the defendant was liable for the entire judgment recovered by the employee against the plaintiff. Douglas v. U. S. Fid. & Guaranty Co. (N. H. 1924) 127 Atl. 708.

Recommended Citation

INSURANCE-LIABILITY OF INSURANCE COMPANY FOR NEGLIGENCE IN EXERCISING ITS OPTION TO SETTLE OR DEFEND, 24 Mich. L. Rev. 173 (1925).
Available at: https://repository.law.umich.edu/mlr/vol24/iss2/8