Is Your Insurance Company Treating You Unfairly?
Insurance Bad Faith
"Insurance Bad Faith" refers to an insurance company's breach of its duty to deal in good faith with its policy holder. Every insurance policy contains a covenant, implied by law, that the Insurance Company will deal with its insureds fairly and in good faith. If an insurance company treats you unfairly (breaches this duty), you can recover, in addition to the benefits under the policy, tort damages including emotional distress and substantial monetary penalties in the form of punitive damages.
Punitive damages are amounts awarded to punish and deter malicious, fraudulent or oppressive conduct. The purpose of punitive damages is to punish or make an example of and more importantly to deter conduct of the wrong doer in the future.
The Law Offices of Steven R. Young has prosecuted many claims where we recovered substantial amounts in excess of policy limits because the Insurance Company wrongfully withheld policy benefits for its insured. While an insurance company's failure to pay benefits does not automatically entitle the policy holder to tort damages and punitive damages, we know that juries look with a jaundiced eye on insurance companies mistreating their policy holders.
If an Insurance Company mistreats you or refuses to deal in good faith with you, I can help you. I know how to deal with this problem. Please let my staff know you learned of us from the Internet and ask to speak directly to me, or go to the Contact Us page and send your facts and questions to me. I will promptly respond.
Washington State Court Finds AllState Liable for "Unauthorized, Negligent Practice of Law"
On January 14, 2000, Washington State Superior Court judge Phillip G.Hubbard issued an historic ruling that Allstate Insurance Company was engaged in "unauthorized, negligent practice of law" for instituting a policy of portraying themselves as legal representatives for auto accident victims in an attempt to settle cases, and dissuading them from contacting attorneys. Moreover, the court found Allstate to be "liable for the injuries and damages … caused by their agent’s unauthorized practice of law and negligence." While state bar associations or attorneys general in some of states have stopped or modified Allstate’s practice, this ruling finds the company liable for damages. The case was filed by Seattle attorney John Budlong on behalf of Janet Jones, a severely injured automobile accident victim. Budlong presented evidence of Allstate’s internal Claims Manual, which directs claims adjusters to contact injured policyholders who are not already represented by counsel, portraying themselves as the victim’s claims representative. Accident victims are then to receive a follow-up letter "pledging" that the company would do a quick and fair investigation of the claim. They also provide victims with a brochure called "Do I Need an Attorney" arguing that claimants "do not need attorneys to receive fair treatment or a fair settlement." According to the company, settlement amounts for accident victims who are represented by counsel are typically two to three times higher than those not negotiated by an attorney.>
The judge said, "the course of conduct and the claimant’s behavior all are consistent with the failure of a plainly adversary posture between agent and claimant" and that "it was clearly negligent … to in this situation either advise the Joneses to sign the release or allow them to sign it without advising them of the consequences. [Allstate] had an interest in getting a quick release and getting out of the case."
Liability Insurer Cannot Assert the Comparative Bad Faith of Its Insured As An Affirmative Defense in a Bad Faith Action
Kransco v. American Empire Surplus Lines Insurance Co. (2000)
Kransco tendered defense of a personal injury action to its primary liability carrier, American Empire ("American"). Kransco wanted to accept a $750,000 mid-trial settlement offer plaintiff made, but American countered with a $450,000 offer that Plaintiff rejected. The jury ultimately awarded plaintiff $12.3 million. Kransco settled and paid the plaintiff $7.5 million. Kransco and the plaintiff agreed to bring an action for bad faith against American, and to equally split the award. At trial, Kransco obtained an award of $13.6 million against American. The California Supreme Court affirmed the award holding American breached the implied covenant of good faith and fair dealing by not settling within policy limits at the initial settlement. Kransco's conduct at trial was not available as an affirmative defense because tortious conduct cannot be offset comparatively by Kransco's implied covenant breach. Only if the breach was the proximate cause of American's tortious behavior could there be reduction in responsibility. The Supreme Court held American liable for the full amount of damage for breach of the covenant of good faith.