## Facts

- A single automobile accident caused by the insured driver resulted in one passenger’s death and injuries to two other passengers.
- The driver was covered by an automobile liability policy with a $10,000 per-accident bodily-injury limit, and the insurer controlled investigation, defense, and settlement.
- The insurer settled the two nonfatal injury claims for $1,000 and $5,250, leaving $3,750 of the policy limit.
- The estate of the deceased passenger obtained a $10,000 wrongful-death judgment against the insured.
- The insured was unable to pay the judgment.
- After judgment, the insurer offered the estate the remaining $3,750; the estate refused and sued the insurer, claiming the insurer unreasonably and wrongfully allocated limited proceeds by exhausting most coverage on the other claimants.

## Issues

1. Whether, when multiple claims from one occurrence exceed policy limits, a liability insurer becomes liable beyond the policy limits for allegedly negligent or bad-faith allocation of settlement payments among claimants.
2. Whether the insurer’s settlements with two claimants and tender of only the remaining policy balance to the wrongful-death claimant were shown to be unreasonable or in bad faith.

## Decision

- The court affirmed judgment for the insurer.
- The insurer did not incur liability beyond the remaining policy limits based on its prior settlements and subsequent tender of the balance to the estate.
- The record did not establish that the insurer acted unreasonably, negligently, or in bad faith in settling the other claims or in allocating the limited policy proceeds.

## Legal Principles

- A liability insurer with contractual authority to investigate, defend, and settle claims may negotiate and settle separate claims arising from a single accident, even if doing so substantially reduces or exhausts the available policy limits.
- The insurer’s settlement discretion is constrained by duties of good faith and due care, but the insurer is not strictly liable whenever its allocation decisions contribute to an excess judgment.
- In multi-claimant, limits-insufficient situations, the existence of a large judgment against the insured does not alone prove improper claims handling; liability beyond policy limits requires proof that the insurer’s settlement decisions were unreasonable or in bad faith.

## Conclusion

The court held the insurer was not responsible beyond the policy limit where it reasonably settled two claims, tendered the remaining coverage to the wrongful-death claimant, and the evidence did not show bad faith or unreasonable allocation of limited proceeds among competing claimants.


Bartlett v. Travelers Ins. Co., 167 A. 180 (Conn. 1933)