Dumas v. Hartford Accident & Indemnity Co.

The authorities are divided concerning the liability of an indemnity company that has final control over settlement for negligence in failing to settle a claim when possible to do so within the policy limits. “According to the old majority rule, the insured could recover the excess of a judgment above the policy limits from the insurer, because of its failure to effect a settlement for a smaller sum, only if the company was guilty of actual fraud or bad faith. It should be noted, however, that this bad faith rule is tending to become the minority rule, being displaced by the rule of…