Privy Council considers insurer's duty when conducting
defence on behalf of an insured
The insured was driving when she was involved in a road accident
(in Trinidad and Tobago) and was sued by her passenger. Her motor
insurance policy contained the following clause:
"Representation: No admission, offer, promise, or payment
shall be made by or on behalf of the Insured without the consent of
the Company which shall be entitled, if it so desires, to take over
and conduct in the Insured's name the defence or settlement of
any claim for indemnity or damages or otherwise and shall have full
discretion in the conduct of any proceedings and in the settlement
of any claim ...."
The insurers admitted liability without informing the insured
(who did not believe that she had been negligent). After judgment
was entered against the insured (for an amount significantly in
excess of the policy limit, insureds only being required to take
out insurance of up to USD 1 million in
