STATE LAW – NEBRASKA LIBRARY – GUIDE 12
Nebraska Third-Party Failure to Settle & Excess Exposure
When liability and damages may exceed available limits, an insurer’s handling of settlement opportunities can affect both the insured and the insurer.
Settlement control creates a duty to consider the insured’s interests
Hadenfeldt holds that when an insurer controls settlement, it must exercise good faith toward the insured’s interests.
A reasonable within-limits opportunity can matter
Bad-faith refusal to accept a reasonable within-limits opportunity can expose the insurer to liability beyond policy limits where the insured suffers excess loss.
Mistaken judgment alone is not bad faith
A mistaken prediction or ordinary error in judgment is not by itself bad faith. The reasonableness of the insurer’s position must be evaluated in context.
Document excess exposure and causation
Preserve demands, deadlines, liability/damage proof, insurer evaluations, communications with the insured and the actual excess judgment or settlement.
Authority map
Nebraska authorities for this topic
Use the linked statutes, rules and opinions with the applicable policy and date of loss. An official index locates opinions; secondary-host text does not complete source custody or citator review.
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