CACI No. 2334

Settlement Demand Within Liability Policy Limits—Essential

Factual Elements

[Name of plaintiff] claims that [name of defendant] breached the obligation

of good faith and fair dealing because [name of defendant] failed to accept

a reasonable settlement demand for a claim against [name of plaintiff]. To

establish [name of plaintiff]’s claim against [name of defendant], [name of

plaintiff] must prove all of the following:

1. That [name of plaintiff] was insured under a policy of liability

insurance issued by [name of defendant];

2. That [name of claimant] made a claim against [name of plaintiff]

that was covered by [name of defendant]’s insurance policy;

3. That [name of claimant] made a reasonable demand to settle [his/

her/nonbinary pronoun] claim against [name of plaintiff] for an

amount within policy limits;

4. That [name of defendant] failed to accept this settlement demand;

5. That [name of defendant]’s failure to accept the settlement demand

was the result of unreasonable conduct by [name of defendant];

and

6. [That a judgment was entered against [name of plaintiff] for a sum

of money greater than the policy limits.]

6. [or]

6. [That [name of defendant]’s failure to accept the settlement

demand was a substantial factor in causing [name of plaintiff]’s

harm.]

“Policy limits” means the highest amount of insurance coverage available

under the policy for the claim against [name of plaintiff].

A settlement demand for an amount within policy limits is reasonable if

[name of defendant] knew or should have known at the time it failed to

accept the demand that a potential judgment against [name of plaintiff]

was likely to exceed the amount of the demand based on [name of

claimant]’s injuries or losses and [name of plaintiff]’s probable liability.

However, the demand may be unreasonable for reasons other than the

amount demanded.

An insurance company’s unreasonable conduct may be shown by its

action or by its failure to act. An insurance company’s conduct is

unreasonable when, for example, it does not give at least as much

consideration to the interests of the insured as it gives to its own

interests.

New September 2003; Revised December 2007, June 2012, December 2012, June

2016, November 2021, May 2022