Is it unfair to compel an insured to sue by offering an inadequate settlement?

• A. Yes
• B. No
• C. Only if policy requires
• D. Only if the insured is unrepresented

Answer: (A)

The key idea is that insurers must handle claims in good faith and fair dealing. Offering an inadequate settlement to pressure an insured to sue is an unfair practice because it exploits the insured’s need for funds and uses a lowball offer to coerce litigation rather than negotiate a fair resolution. This undermines the policyholder’s rights and the integrity of the settlement process; it’s a tactic that suggests bad-faith handling of a claim. Since the goal of claims handling is to resolve disputes fairly, pressuring someone to go to court with a deliberately insufficient offer violates that standard, making the action unfair. The other options don’t fit because fairness isn’t conditional on policy language, representation status, or requiring litigation; even if there’s a policy provision or if the insured is unrepresented, using an inadequate offer to compel suit remains improper.