When does the insurer's duty to settle or defend come to an end?

The insurer's duty to settle or defend a claim typically comes to an end when the policy limits of liability have been paid. This is because the duty to defend is generally tied to the limits specified in the insurance policy. Once the maximum amount of coverage available under the policy has been exhausted due to payment for settlements, judgments, or any other liabilities, the insurer is no longer obligated to provide further defense or settlement. The rationale behind this is that the insurer fulfills its contractual obligation to protect the insured within the confines of the agreed-upon coverage limits.

The other scenarios do not terminate the insurer's duty in the same way. Cancellation of a policy or a request from the insured does not automatically end the duty to defend claims that are still within the coverage period. Likewise, simply filing a claim does not conclude the duty to settle or defend; in fact, this is when the duty is likely to be activated. Therefore, the key point here is that the duty is largely defined by the financial limits of the policy, ensuring that once those limits are met, the insurer's responsibilities conclude.