Does an insurer have a duty to act in good faith by stipulating that a settlement pursuant to a "deems expedient" clause in a personal injury policy is not enforceable?

There are limits, though, to the latitude afforded insurers in effecting settlements pursuant to "deems expedient" clauses and those of similar import. Ivy v. Pacific Automobile Ins. Co., supra, 156 Cal.App.2d 652, 320 P.2d 140, provides an example of an insurer's exceeding those limits. The appellate court found the insurer had violated the duty to act in good faith by stipulating, without the insured's knowledge or consent, to a judgment that exceeded the policy limits. (Id., at pp. 660-663, 320 P.2d 140.) Although the insurer obtained a covenant not to execute against the insured on the stipulated judgment, the insured was not fully protected, because the covenant did not bind assignees of the judgment, and the judgment impaired the insured's credit. (Id., at pp. 662-663, 320 P.2d 140.) The circumstances of the Ivy case present an instance where the insurer protected its own interests first and, as a result, damaged interests of the insured that the policy was supposed to protect, thus denying him the benefits and frustrating the purposes of his liability insurance.