When one purchases a liability insurance policy he is contracting with the insurer for the insurer to stand in his place and to pay all liability claims brought against the insured for which the insured is legally liable. In essence, the risk of financial loss is transferred from the shoulders of the insured to those of the insurer, to the extent of the policy limits. The rights and duties of the parties created by a typical automobile liability policy are clearly stated in the policy.
John L. Heaslip, Insurer's Failure to Settle, 12 Clev.-Marshall L. Rev. 85 (1963)