Also known as:duties to settle · insurer's duty to settle
Written by attorneys · grounded in primary & secondary sources — see below
2 senses
1
in probate law
A fiduciary obligation requiring a personal representative to administer and distribute a decedent's estate in accordance with the terms of any probated will and applicable law. The obligation further requires that administration occur as expeditiously and efficiently as is consistent with the best interests of the estate and its successors.
2
Sense 1
1
in probate law
A fiduciary obligation requiring a personal representative to administer and distribute a decedent's estate in accordance with the terms of any probated will and applicable law. The obligation further requires that administration occur as expeditiously and efficiently as is consistent with the best interests of the estate and its successors.
Sources & Authorities· 1 primary source
Select any source to read its text and confirm it supports the definition.
Uniform Acts
Sense 2
2
in insurance law
An implied obligation of a liability insurer to accept a reasonable settlement offer within policy limits when there is a substantial likelihood of a judgment exceeding those limits. The obligation protects the insured from personal exposure to excess liability and arises from the covenant of good faith and fair dealing.
Sources & Authorities· 2 sources
Select any source to read its text and confirm it supports the definition.
Hornbooks
Put it into practice
Test Yourself
6
Practice Questions3
in insurance law
An implied obligation of a liability insurer to accept a reasonable settlement offer within policy limits when there is a substantial likelihood of a judgment exceeding those limits. The obligation protects the insured from personal exposure to excess liability and arises from the covenant of good faith and fair dealing.
Each sense below has its own examples, sources, and questions.
Examples1
Personal Representative Delays Distribution
Dominic Drake was appointed personal representative of his uncle's estate, which included a controlling interest in a family manufacturing business. The will directed prompt distribution of all assets to the two residuary beneficiaries. Drake instead continued operating the business for eighteen months, hiring new employees and renewing leases while drawing a salary, despite an immediate cash offer from a competitor. The beneficiaries petitioned for surcharge, alleging that Drake's prolonged management violated his obligation to settle the estate efficiently.
Frequently Asked2
What standard of care applies to a personal representative when settling an estate?+
A personal representative must observe the standards of care applicable to trustees. The representative must settle and distribute the estate according to the will and governing law as expeditiously and efficiently as is consistent with the best interests of the successors.
Supporting sources
Does administrative convenience justify departing from specific bequests in a will?+
No. Efficiency is a constraint on how administration is carried out, not a license to rewrite the will's dispositive provisions. A personal representative must follow the will's specific distribution scheme.
Supporting sources
Cases
Examples1
Insurer Refuses Reasonable Settlement
Delta Dynamics faced a negligence suit seeking $2.5 million in damages after one of its machines injured a worker. Its liability policy provided only $1 million in coverage. The plaintiff offered to settle for the policy limit, but the insurer rejected the demand and proceeded to trial. The jury returned a $2.8 million verdict. Delta Dynamics then sued the insurer for the excess amount, claiming the carrier had failed to protect it from liability beyond the policy limits.
When must an insurer accept a settlement offer within policy limits?+
An insurer must settle within policy limits when there is a substantial likelihood of recovery in excess of those limits. The duty arises because the insurer controls the defense and any settlement decision that affects the insured's personal assets.
Supporting sources
Can an insured assign a claim for breach of the duty to settle to the underlying plaintiff?+
Yes. The insured's action for breach of the contractual duty to settle may be assigned to the claimant, regardless of whether the policy permits assignments.
Supporting sources
Trusts and Estates Decedents EstatesWills · Powers and duties of personal representativeUBEFoundational