UJI 13-1704. Bad faith failure to settle.

An insurer [or agent] must act in good faith in determining whether to settle a claim against its insured. It must settle a claim against its insured when practicable. In deciding whether to settle a claim, an insurer must exercise honest, informed judgment and fairly balance its own interests and the interests of the insured. An insurer that fails to do so acts in bad faith. An insurer that acts honestly and fairly in not settling a claim, after conducting a diligent, competent, and reasonable investigation of the claim, is not liable for bad faith. [When there is a substantial likelihood that a claim will result in a recovery that exceeds policy limits, the insurer has a good-faith duty to minimize, if not eliminate, its insured’s liability.] [The insurer has a duty to accept reasonable settlement offers within policy limits.]