What best describes how decisions to defend or settle a claim should be made?

• A. Based on intuition and speed of resolution.
• B. Solely by defense counsel's recommendation.
• C. Evidence-based, well-documented, and within authority levels.
• D. The insured's personal preferences.

Answer: (C)

Decisions to defend or settle a claim should be driven by evidence, thorough documentation, and established authority limits. This means starting with a solid factual and legal basis: evaluating liability, assessing damages, reviewing policy terms and exclusions, and considering available coverage. It also involves weighing the financial implications—defense costs, potential settlement ranges, and the relative probability and cost of going to trial versus settling. By documenting the data, analyses, and rationale, you create a transparent, auditable trail that supports consistent, defendable decisions and ensures settlements stay within approved authority levels. Relying on intuition and speed can lead to biased or inaccurate outcomes; deferring solely to defense counsel ignores policy terms and the insured’s interests; and valuing the insured’s personal preferences without an objective risk and coverage assessment can misalign with actual exposure. An evidence-based, well-documented, and properly authorized process best protects both the insurer and the insured.