A No-Fault Approach to the Duty to Settle

8 Pages Posted: 10 Oct 2015

Date Written: October 1, 2015

Abstract

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

Hay, Bruce L., A No-Fault Approach to the Duty to Settle (October 1, 2015). Rutgers Law Review, Vol. 68, No. 3, 2016 Forthcoming. Available at SSRN: https://ssrn.com/abstract=2671268

Bruce L. Hay (Contact Author)

Harvard Law School ( email )

1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-496-8277 (Phone)

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