Duty of Primary Insurer to Excess Insurer
In excess and umbrella policies, courts imply, as they do in all insurance policies, a duty of good faith and fair dealing that neither party to a contract will do anything to impair or injure the other’s right to receive the benefits of their agreement. Excess insurers often, by their right of equitable subrogation, get involved in bad faith law suits. They claim that a primary insurer with exclusive control over the settlement of a claim against its insured, fails or refuses to settle within its policy limits because it allegedly placed its financial self-interest ahead of the insured’s interests.
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