Policyholder Voids Insurance Coverage by Settling Claim Without Insurer’s Involvement

Most insurance policies include a clause requiring the insurance company to defend and indemnify the policyholder should the policyholder become the target of a lawsuit that falls under the insurance company’s policy. When an Amco Insurance policyholder found itself in the crosshairs of a former employee, the policyholder tendered the claim to the insurance company but then settled the case without the insurance company’s knowledge or consent. The Ninth Circuit Court of Appeals upheld a lower court’s decision that the policyholder’s settlement released the insurance company from their obligation to pay the claim. Find out the details.