An agreement to resolve a claim for the maximum amount available under an insurance policy is a settlement reached when the insurer tenders, and the claimant accepts, the full liability coverage provided by that policy. For example, if an individual causes an accident and their insurance policy has a $100,000 limit for bodily injury liability, an accord in which the insurance company pays the injured party $100,000 to release all claims arising from the accident would constitute this type of arrangement.
Such settlements are significant because they represent a complete exhaustion of the available insurance funds, preventing future claims against that specific policy for the covered incident. This can be beneficial to the insured party, protecting them from further financial exposure beyond the insurance coverage. Historically, these resolutions have become increasingly common as a mechanism to efficiently resolve claims, particularly in situations where damages clearly exceed the policy’s capacity.
