The United States Court of Appeals for the Fifth Circuit, applying Texas law, held that an insurer was potentially liable for settlement payments its insured made to a claimant who had threatened legal action, even where the claimant never filed suit and the statute of limitations on the underlying action had passed. HM Int’l, LLC v. Twin City Fire Ins. Co., 2021 WL 3928970 (5th Cir. Sept. 2, 2021). The court rejected the insurer’s argument that the insured was not “legally liable” to make these payments, finding that contractual liability to pay a settlement constituted sufficient legal liability.
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