Auto insurance companies owe a duty to act in good faith when faced with claims of liability for a crash.

accident1-300x200Courts take claims of bad faith very seriously, and if a finding of bad faith is entered, insurance companies could end up paying double or even triple the original judgment.

Some examples of bad faith insurance action:

  • Company delays, discounts or denies payment absent reasonable basis;
  • Company fails to acknowledge or reply promptly to notice of a covered claim
  • Insurer fails to pay covered claim due to failure to conduct a thorough, prompt and proper investigation;
  • Insurer does not affirm or deny coverage within a reasonable amount of time;
  • Company attempts to settle a claim for far less than that which a reasonable person would know is fair, forcing that person to initiate a lawsuit.

These are just a few examples of insurance bad faith following a Cape Coral traffic accident. Bad faith claims are important to bring not only for compensation to the client, but for the common good of all consumers, as successful cases serve as a deterrent to future wrongdoing.

That said, these cases are not easy to prove. They require a skilled legal team with extensive experience.

The recent case of Purscell v. Tico Ins. Co. highlights some of the difficulty plaintiffs can have in establishing bad faith. The case was heard recently on appeal by the U.S. Court of Appeals for the Eighth Circuit.

According to court records, this case was unusual from the beginning in a number of respects.

Defendant driver in this case had known his passenger for just a few weeks through work. She came to his home drunk and distraught and asked him for a ride. He agreed. She directed him to a local cemetery. After some time, they left and as driver drove, his passenger unbuckled her seat belt, slid over near his side of the car and used her foot to begin pressing down on the accelerator.

He told her to stop, but she did it again. He yelled at her to stop, but she did not. The car flew through a stop sign traveling nearly 70 miles-per-hour, t-boning another vehicle.

Defendant driver’s passenger was thrown from the vehicle and killed. The two occupants of the other vehicle, husband and wife, were seriously injured after the vehicle overturned and caught fire. The husband nearly died.

It would later be revealed that grave site belonged to a friend of the passenger’s killed in a drunk driving crash while decedent/passenger had been driving.

Defendant held an insurance policy that covered individual bodily injury up to $25,000 and total accident liability of up to $50,000. This would be nowhere near enough to cover the damages sustained by all parties (which is why it’s always a good idea to have uninsured/underinsured motorist coverage, which helps make up the difference in that situation).

The husband and wife in the other vehicle had incurred nearly $100,000 in medical bills just in the first weeks after the crash, and the bills were continuing to mount. They made an offer to the insurance company to settle for policy limits at that time.

However, the insurance company declined to settle, saying the crash was still under investigation (it had only been three weeks) and they were unsure about whether coverage extended to this situation, given the intentional conduct of the passenger.

The offer to settle for policy limits was later withdrawn and plaintiffs filed a lawsuit against the driver and his insurance company. Meanwhile, the parents of the passenger who’d had her foot on the accelerator also filed a wrongful death lawsuit, both against the insurance company and the driver.

Insurance company notified defendant he might wish to secure his own personal attorney as he may be open to excess liability. The insurance company set aside the full policy limits in an account with the court, indicating its intention to pay that amount (called an interpleader action).

Passenger’s parents settled their wrongful death case for $8,000. Meanwhile, the case against defendant driver went to trial, and a judgement was handed down for $830,000 for husband’s injuries and $70,000 for that of the wife. Although plaintiff’s own attorney said defendant driver was perhaps between 1 percent and 5 percent liable for what happened, jurors determined he and his passenger were equally liable, so he was personally responsible for half that amount. His insurance company was only responsible to pay $50,000 of that, leaving him with a substantial judgment against him.

He then filed a bad faith action against his own insurance company, arguing it should have settled the case for policy limits after plaintiff’s first offer and that failure to do so opened him up to substantial personal liability.

However, the court did not find the insurer had acted in bad faith. The court noted indicating bad faith would have required proof the insurer tried to escape its responsibility to pay the policy limits, and that was not the case here.

If you have been a victim of a traffic accident, call Chalik & Chalik at (954) 476-1000 or 1 (800) 873-9040.

Additional Resources:

Purscell v. Tico Ins. Co. , June 22, 2015, U.S. Court of Appeals for the Eighth Circuit

More Blog Entries:

Kimminau v. City of Hastings – Government Liability for Truck Spill Cleanup, July 24, 2015, Cape Coral Car Accident Lawyer Blog