Under what condition is uninsured motorist coverage excluded for claims settled without the insurer's consent?

Uninsured motorist coverage can be excluded for claims settled without the insurer's consent specifically if the settlement prejudiced the insurer's subrogation rights. Subrogation is the process by which an insurer can pursue recovery from the party at fault after compensating the insured for their loss. If an insured settles a claim without the insurer's involvement, it may undermine the insurer's ability to recover costs from the at-fault party, negatively impacting their financial interests.

For example, if the insured accepts a settlement that limits or damages the insurer's ability to reclaim funds from the responsible driver, the insurer may argue that they are no longer liable to pay out under the uninsured motorist coverage. This maintains the integrity of the insurer's rights and protects them from unforeseen financial losses.

In contrast, while factors like the nature of the settlement—whether it was mutually agreed upon—or procedural adherence may be relevant in certain contexts, they do not directly pertain to the insurer's rights in the same crucial manner as subrogation does. Therefore, while settlements can involve various complications, the key reason for excluding coverage lies in preserving the insurer's subrogation rights against third parties.