Dewalt

Insurance Code section 11583 provides in part that “[n]o advance payment or partial payment of damages made by any person, or made by his insurer under liability insurance . . . shall be construed as an admission of liability by the person claimed against .... Any such payments shall, however, constitute a credit and be deductible from any final settlement made or judgment rendered with respect to such injured or deceased person which does not expressly take into account such advance payments.” (Italics added.) According to defendants Berkeley Forge & Tool, Inc., and The Chubb Group of Insurance Companies, section 11583 requires that a written settlement agreement specifically refer to the advance where the parties intend to exclude it from the total settlement. Defendants argue that section 11583 is both (1) a substantive rule prescribing the content of the document embodying the terms of the settlement, and (2) an evidentiary rule precluding the use of oral evidence to explain the circumstances surrounding the settlement or the meaning of extrinsically ambiguous words in the written agreement.

As we shall explain, we reject this expansive interpretation of section…