Your ability to force them to make you a reasonable settlement offer depends pretty much on your ability to scare them. Their actual duties to you are limited.
The insurance company has a duty (1) to negotiate with you in good faith and (2) More important, to act in good faith toward its own insured.
The first duty – to negotiate with you in good faith – does not carry severe consequences for its violation. If a court finds the insurance company did not attempt in good faith to settle the case, it can order it to pay interest on the judgment amount at a rate determined according to a formula determined by the legislature, which as of August, 2011 is 4% per year.
The second duty – to act in good faith toward its own insured- carries more substantial consequences for its violation. The Ohio Supreme Court says that good faith means that the insurance company has to act “with reasonable justification” toward its own insured.
What does this mean? It means that if the insurance company is defending a lawsuit against a driver it insures, it has to act “reasonably”; but if the jury returns a verdict larger than the policy limits, and the insurer has been warned that this was a possibility, it has a good chance of being held responsible in a bad faith lawsuit not only for the amount the driver owes beyond the policy limits – typically called the “excess judgment” – but also for punitive damages.
In short – if its lawyer evaluates the case as being close to, or greater than the limits of coverage, and the insurance company doesn’t offer limits, it can really get hit.
Some insurance companies handle this situation simply by telling their insureds that the company will be responsible for any excess judgment. Some take their chances. Some offer policy limits as soon as the threat of an excess judgment becomes apparent.
I have been a lawyer over 30 years. I give lectures on bad faith and insurance to other lawyers, and have successfully sued insurance companies seeking damages for bad faith. If you want to talk about your lawsuit, speak with an Attorney – call me, Bill Strubbe, at 513-621-4775.
Because all situations are different, and because there may be other facts pertaining to your case that I don’t know about, you should not rely on this answer for legal advice. I am not your attorney, and no lawyer client relationship has been formed.