Hart v. Republic Mutual Ins.

Counsel are agreed that this case presents a question of first impression in this court.

Where, as here, a liability insurance company reserves “the right to settle any claim or suit and to make such investigation or negotiation as may be deemed expedient by the company,” what duty does it owe in defending the insured? Is it liable for failure to exercise ordinary care in settling or refusing to settle claims? Or is it liable only in the event that it fails to act in good faith?

Counsel are agreed that there is a diversity of authority on the subject and that the majority rule imposes liability…