The insurer is neither required to initiate an offer to a plaintiff prone to reject it, nor required to acknowledge a silly offer from a plaintiff who documented a paltry lawsuit and can't win against the insured under any theory. This was originally not an issue since it was suspected that insureds' tort liability was typically restricted by doctrines like proximate reason and legal time limits. In other words, it was suspected that no rational plaintiffs' lawyer would sue in 1978 for a tortious demonstration that allegedly happened in 1953, in light of the fact that the risk of dismissal was so self-evident.
The obligation to settle is of most prominent import in the situation where the insured may have some liability presentation, the plaintiff has proof of significant harms which may surpass approach limits, and the plaintiff makes a settlement request either to the insured or straightforwardly to a defending insurer which measures up to or surpasses arrangement limits. The insured loses and the insurer must pay the ensuing judgment against the insured up to as far as possible, or the insured wins, meaning both the insured and the insurer bear no liability. In a few jurisdictions, there is a third obligation, the obligation to settle a sensibly clear case against the insured.