The Art Villa

The Damron agreement is a legal term that originated in Arizona and has since spread across different jurisdictions in the United States. It refers to an agreement between an insurer and a policyholder that allows the policyholder to settle a claim against a third party for an amount up to the policy limit.

The origin of the Damron agreement can be traced back to a case in Arizona in 1962, where a motorist was involved in an accident and was found to be at fault. The other driver involved in the accident filed a lawsuit against the motorist, who had insurance coverage. However, the motorist’s insurance company refused to defend him in the lawsuit, claiming that the policy did not cover the accident.

In response, the motorist filed a lawsuit against his insurance company, arguing that they had a duty to defend him. The court ruled in favor of the motorist and found that the insurance company had breached its duty to defend him in the lawsuit. As a result, the court allowed the motorist to settle the case with the other driver for an amount up to the policy limit, and the insurance company was required to pay that amount.

The Damron agreement, therefore, allows a policyholder to use their insurance policy to settle a claim against a third party without having to go through a court process. This agreement can be useful when the policyholder believes that the insurer may not defend them adequately in a court case or if the policyholder wishes to settle the case quickly and avoid a lengthy legal process.

However, it is crucial to note that using the Damron agreement may have certain risks and limitations. For instance, settling a claim with a third party for an amount up to the policy limit may still leave the policyholder liable for any amount above the limit. Moreover, using the Damron agreement may affect the policyholder’s insurance rates, as it may be seen as a claim against the policyholder’s insurance.

In conclusion, the Damron agreement is an essential legal tool for policyholders in Arizona and other states across the U.S. However, it is crucial to understand its limitations and risks before utilizing it. If you find yourself in a similar situation, it is advisable to seek the guidance of a qualified attorney to help you navigate the legal process.