Section 5.5 which such insured shall become legally obligated to pay as damages . . .

• Library: Insurance Practice 2015

What does, and does not, constitute legal responsibility has been litigated in the courts of many states, and the most usual finding is that it means “obligated by settlement contract or final judgment.” Accordingly, it may be unwise for an insurer to pay out liability policy proceeds before a settlement or judgment. Interpleading the policy’s liability limits without any guarantee of a release or satisfaction of judgment extinguishing the insured’s liability to the injured party seems equally problematic...