Armeen ran a stop sign and hit the Smith's car, killing their child. He had $1.5 million in insurance. The Smiths offered to settle the case for that amount, but Liberty State, Armeen's insurance company, refused and proposed $300,000 instead. At trial, the jury awarded the Smith's $1.9 million, which meant that Armeen was liable for $400,000 rather than the zero dollars he would have had to pay if Liberty had accepted the Smith's offer. What is Liberty's liability? Under what theory?