In multiple-claim situations, such as a multi-vehicle freeway accident with some very serious bodily injury claims, there is a risk that policy limits could be exhausted before all the claims become known. The insurer should avoid exhausting its limits early unless it can avoid all exposures faced by the insured. The defense costs saved could result in serious punitive damages. The duty of good faith requires consideration of the interests of the insured over those of the insurer. If the limits are low, exhausting the limits with one claimant may expose the insured to defense costs and excessive judgments beyond the limit.
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