Insurance companies – whether they are dealing with first-person or third-party claims – owe a duty to act in good faith toward an injured person. Generally, though, the duty owed toward an insured is greater than that owed to a third party. In general, adjusters are not acting in bad faith simply because there is a difference of opinion about the value of the claim. However, improper settlement tactics, withholding specific reasons for a very low settlement offer and some other actions, could be evidence of bad faith.
This is why it’s often beneficial for car accident victims to seek assistance in settlement negotiations with insurance companies, particularly if the injuries involved are serious and the effects long-lasting. There is much at stake in bad faith insurance claims, which can sometimes result in plaintiff being awarded triple the amount of damages.
In the recent case of West v. United Services Auto Ass’n, there were numerous parties involved in this car accident injury lawsuit. Although the district court granted a summary judgment for the plaintiff, holding the insurance company was liable for bad faith and ordered payment of $1.4 million to his guardian ad litem. The state supreme court in Montana reversed.
According to court records, plaintiff was one of four passengers injured in a single-vehicle car accident. Plaintiff suffered personal injuries that were described as catastrophic. The driver of the vehicle held an insurance policy with defendant USAA. All passengers were military servicemen who were covered under TRICARE, which is a form of government insurance for military members and their families. This program paid medical benefits for passengers – and thus had a legal, statutory right to recover the benefits it paid. These liens for medical expenses totaled more than $215,000. However, the bulk of that – $214,000 – were for plaintiff’s expenses alone.
USAA issued an auto liability policy to driver with coverage limits of up to $50,000 per person and $100,000 per accident. The insurer conducted an investigation and concluded driver was 100 percent at fault for the crash. Because of the seriousness of plaintiff’s injuries, the insurer informed the driver he might be personally liable for damages that exceeded his coverage limits.
An attorney for all four injured passengers demanded a settlement agreement with USAA for the policy limits of $100,000. The letter indicated the offer would be withdrawn and claimants would seek full recovery of their damages if the company didn’t agree to pay this limit in 20 days. A week later, a claims adjuster offered to pay the full policy limits, so long as the TRICARE liens were included. Plaintiff’s attorney responded the injured passengers would agree to hold the insurer harmless for the medical liens. But the insurer responded that the offer wasn’t actually sufficient to protect either the company or its insured from these liens. Ultimately, the military insurer agreed to waive its liens and the driver’s insurer issued a check for the policy limits.
After plaintiff received the policy limit, driver agreed to a consent judgment of $1.4 million and assigned his claims against USAA to plaintiff. A separate lawsuit was later filed by plaintiff against USAA alleging bad faith. The district court granted summary judgment to plaintiff, finding the insurer didn’t have any reasonable, legal grounds to condition its payment of the settlement check and that meant the insurer was liable to plaintiff.
The state supreme court, however, reversed. The court held that the insurer’s grounds for conditioning its payment of the policy limits was reasonable based on the law. That means the company did not act in bad faith.
These cases can be complex, but they are often successful. It’s important to trust them only to an injury law firm with extensive experience.
Call Fort Lauderdale Injury Attorney Richard Ansara at (954) 761-4011. Serving Broward, Miami-Dade and Palm Beach counties.
West v. United Services Auto Ass’n, Nov. 9, 2016, Montana Supreme Court
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