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1976 Ins. L.J. 346 (1976)
The Workable Sanction and Solution in Excess Liability Cases: Strict Liability for Insurance Carriers

handle is hein.journals/inslj38 and id is 346 raw text is: The Workable Sanction and Solution in Excess Liability Cases: Strict Liability for Insurance Carriers By DANIEL J. KELLY* The author examines several recent decisions that imposed liability upon insurers who fail to bargain in good faith and to accept reasonable settlement offers within policy limits. He believes that adoption of strict liability in failure- to-settle cases will resolve the problems created by these decisions and will result in a system that is fairer and more easily applied than present law. Daniel J. Kelly is a member of the San Francisco law firm of Walkup, Downing & Sterns; P. C. This article first appeared in the Fall 1975 University of San Francisco Law Review. INTRODUCTION O NE WHO PURCHASES a liability insurance policy enters into a one-sided gpecial relationship' with the insurance carrier. The one-sidedness of the deal usually first becomes apparent when an accident occurs and the insured is sued. Then, he or she soon realizes that the insurer is exclusively in charge of choreographing the law- suit. Most liability policies provide that the insurer ... may make such investigation, negotiation and settlement. of any claim or suit as it deems expedient.'2 Obviously, by reserving the right to accept or reject settlement, the insurer can adversely affect the interests of its insured. It is when the insurer decides not to settle within policy limits and exposes the insured to an excess liability judgment that the insured starts realizing that You're in good hands and the like are merely advertising phrases. Far too often, insurers in this situation * The author gratefully acknowledges the research assistance of William E. Hammonds, member of the law review staff. The insured/insurer relationship has been described as almost a fiduciary one. Note, Good Faith and, 'Fair Dealing in Insurance Contracts: Gruenberg v. Aetna Insurance Co., 25 Hastings Law Journal 699, 713 (1974), or somewhat of a fiduciary one. 7A J. A. Appleman, Insurance Law and Practice 553 (1962). 'Keeton, Liability Insurance and Responsibility for Settlement, 67 Harvard Law Review 1136, 1137 (1954) ; D. Melnick, California Automobile Insurance Law Guide 121 (1973). *346 I L J - June, 1976

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