Terminating the Duty to Defend: Can the Insurer Extinguish the Duty by Settling Less Than All Claims?

The insurer's duty to defend ends when the policy limits are exhausted by settlement or payment of a judgment. But can the insurer terminate its defense obligation short of settlement of all claims or all suits?

The insurer's ability to settle less than all claims or with less than all claimants is limited only by its duty to act in good faith. The parameters within which an insurer can terminate its duty to defend also varies among jurisdictions. Thus, insurers must be careful to avoid exposure to a claim of bad faith when reaching such settlements.

Listen as our authoritative panel of insurance practitioners analyzes the ability of the insurer to terminate its duty to defend by settling less than all claims and suits by tendering the policy limits in a settlement with the plaintiff. The panel will examine the rationale employed by courts on this issue and strategies and risks for insurers and policyholders.