Reservation of Rights
April 12, 2011
The appellate court in Santa Ana has held that an insurer that issues a timely and clear reservation of rights to its insured may thereafter settle the claim against the insured and sue the insured over the coverage issue and the amount of the settlement. Such a result requires that the insurer notify the insured that it intends to settle the underlying claim and gives the insured the option to take over his own defense or waive any excess bad faith judgment.