A No-Fault Approach to the Duty to Settle
8 Pages Posted: 10 Oct 2015
Date Written: October 1, 2015
This paper revisits the old question whether a liability insurer's "duty to settle" should be governed by a fault standard, as it is under current law, or should instead be governed by a rule that would hold the insurer liable without proof of fault when it declines an offer to settle for an amount within policy limits. The paper, part of a symposium on the Restatement of the Law of Liability Insurance project, develops the economic argument in favor of a no-fault (or strict liability) rule, and considers some of the objections that have been raised against such a rule.
Keywords: Insurance, Liability, Settlement, Agency
JEL Classification: K12, K40
Suggested Citation: Suggested Citation