covenant not to execute

Often a victorious plaintiff, as a judgment creditor, will settle with a losing policyholder, as a judgment debtor, by promising not to levy against the policyholder’s assets in return for an assignment by the policyholder of rights under the policy. A covenant not to execute is distinct from a release in that a covenant does not extinguish the policyholder’s liability to the plaintiff. Preserving such liability may be essential to perfecting a claim against a defaulting insurer, whose contractual promise is to pay on behalf of the policyholder for existing liability to the plaintiff. See, Article: Compendium of Cases: Collusion.

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