The Duty to Defend and the Duty to Settle in Arizona
Arizona frames the settlement duty around equal consideration: the insurer must weigh its insured's exposure as seriously as its own money. That framing reaches further than the rule in many states.
Defending under a reservation of rights
An insurer may defend while reserving its coverage position. The reservation must be handled properly, and the conflict it creates affects who controls the defense and how the insured's interests are protected.
Equal consideration
When deciding whether to settle within limits, an Arizona insurer must give the insured's interests equal consideration to its own. Treating the policy limits as the insurer's money to protect, rather than the insured's exposure to manage, is the error the rule exists to prevent.
Failing to pursue a settlement at all
Arizona has gone further than many states in recognizing that an insurer may face liability for failing to solicit a within-limits offer where the circumstances called for it — not merely for refusing one that was made.
Excess exposure, and the coverage fight
An above-limits judgment leaves the insured exposed and supports a bad-faith claim that may be assigned. Separately, Arizona insurers may bring a declaratory-judgment action to resolve coverage, which can move that fight earlier.
Common questions
Does my insurer have to try to settle in Arizona?
It must give your interests equal consideration, and Arizona recognizes liability for failing to pursue a within-limits resolution where the situation warranted it.
What if the verdict exceeds my policy limits?
You are exposed for the excess, and if the insurer handled settlement unreasonably, it may be responsible for it.
Is your insurer treating you unfairly?
A free, confidential review can tell you whether what happened crosses the line — no cost, no obligation.
Related Arizona law
General information about Arizona law, not legal advice. Every policy and every claim is different.