Comsys settled a lawsuit against its client for $275,000 within its insurance policy limits. The insurance company Twin City refused to defend Comsys and later denied coverage, claiming the settlement was made without the insurer's consent. The Texas court ruled that an insurer cannot refuse to defend you and then use a settlement-without-consent clause to deny coverage. The insurer must prove it was harmed by the settlement to enforce such clauses.
If your insurer refuses to defend you in a lawsuit, they cannot later deny your claim based on a settlement-without-consent clause when you settle reasonably within policy limits.
Settle disputes promptly and document everything—if your insurer won't participate in mediation or settlement talks, that strengthens your position if they later challenge the settlement.
Keep detailed records of all communications with your insurer about claims, including their refusal to defend or participate in settlement negotiations.