Should an Insurance Company Have a Duty to Defend Its

Essay

Should an insurance company have a duty to defend its insured when the defense will cost the insurance company more than it will cost to simply pay the claim? For example,should an automobile insurer have a duty to spend $10,000 to defend an insured when the claim is under $10,000? What ethical problems arise when the outcome would affect the insured's driving record,and therefore the rates that the insurance company would charge? What ethical problems can arise with this duty to defend when both drivers are covered by the same insurance company?