3 New Appleman on Insurance Law Library Edition § 16.07


  • [1] Liability Insurance Protects the Insured Against Adverse Judgments
    • [a] No Contractual Duty Is Owed to the Injured Party Unless and Until There Is a Judgment or Settlement Agreed to By the Insurer

      Although it is true that almost all cases settle, and although insurers constantly settle directly with third-party claimants without involving their insureds, it is important to remember that the insurance contract as written only obligates the insurer to pay damages that the insured is “legally obligated to pay,” which refers to a final judgment for damages in a civil action.617Link to the text of the note