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Insurance Claims - Typical Bad Faith Insurance Lawsuits and Awards

The document discusses typical bad faith lawsuits against insurance companies. It provides examples of lawsuits and their outcomes, including a $2 million award for denying coverage and failing to disclose policy limits, a $33.65 million settlement for denying an earthquake claim based on a policy exclusion, and a $3.9 million award for an unreasonable $10,000 offer on a $300,000 policy after a child was killed. Bad faith can involve unwarranted denial of claims, failure to investigate or communicate, and failure to attempt reasonable settlements.

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524 views4 pages

Insurance Claims - Typical Bad Faith Insurance Lawsuits and Awards

The document discusses typical bad faith lawsuits against insurance companies. It provides examples of lawsuits and their outcomes, including a $2 million award for denying coverage and failing to disclose policy limits, a $33.65 million settlement for denying an earthquake claim based on a policy exclusion, and a $3.9 million award for an unreasonable $10,000 offer on a $300,000 policy after a child was killed. Bad faith can involve unwarranted denial of claims, failure to investigate or communicate, and failure to attempt reasonable settlements.

Uploaded by

nujahm1639
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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2/4/2020 Insurance Claims: Typical Bad Faith Insurance Lawsuits and Awards

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Insurance Claims: Typical Bad Faith Insurance Lawsuits and Awards


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by FreeAdvice staff
When you file an insurance claim with an insurance company, by law, in any state, that company Tweet
owes you a duty to act in good faith. Simply put, this means that the insurance company must not
look for ways to escape its obligation to investigate the claim or to pay you. Doing so would constitute bad faith.
Bad faith claims and lawsuits may stem from one or more of a number of actions or inactions by the insurance
company from denial of coverage to failure to negotiate a settlement. Here are some of the typical reasons
insurance companies get sued for bad faith:

Unwarranted denial of coverage


Failure to communicate pertinent information to the claimant
Failure to conduct a reasonable investigation of the claim
Refusal to pay the claim without investigating
Failure to deny or pay the claim within a reasonable period of time
Failure to confirm or deny coverage within a reasonable period of time
Failure to attempt to come to a fair and reasonable settlement when liability is clear
Offering substantially less money to settle than the true value of the claim
Failure to promptly provide a reasonable explanation for denial of a claim
Failure to enter into any negotiations for settlement of the claim
Failure to respond to a time-limit demand
Failure to disclose policy limits

Bad faith litigation can take many different forms and will, like the underlying cases they stem from, either result
in a settlement with the insurance company, an arbitration decision, or a verdict one way or the other. Here are
some different types of cases and their outcomes. Keep in mind that the cases presented here are for illustrative
purposes only. Each case is unique, including yours, and no one case will have exactly the same result as another.

Boicourt v. Amex Assurance Co.

Award: $2,006,000

A boy severely injured in a vehicle accident settled for more than $2 million pursuant to a policy that provided
only $100,000 in coverage, because the insurance carrier initially refused, in bad faith, to disclose the policy
limits.

Matson Terminals v. Home Insurance Co

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2/4/2020 Insurance Claims: Typical Bad Faith Insurance Lawsuits and Awards

Settlement: $33.65 million

Home Insurance Company denied coverage for a $10 million earthquake claim, and a California jury concluded
the denial, based on a policy exclusion, was in bad faith. The jury awarded $11,000,000 in punitive damages.
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Zip Codethe award
The appeals court, in affirming that included $23.5 million in compensatory damages, held that the
insurer led the policyholder to believe there was coverage, and encouraged it to initiate repairs.

David Clayton v. United Services Automobile Association

Award: $3.9 million

A California jury found the insurance company's offer of $10,000 on policy limits of $300,000 to parents whose
only child was killed in an auto accident was unreasonable and in bad faith. An appellate panel affirmed the
award. The California Supreme Court denied review of the case.

Vann v. The Travelers Insurance Company

Award: $26.5 million

The former owner of an auto repair shop was asked to vacate the premises after his landlord died. Following, he
was sued for causing environmental damage on the property. He asked his insurance company to provide him
with a defense. First they denied he had a policy, and then, after admitting such a policy existed, they inundated
him with burdensome and harassing requests for information with which he could not comply. After denial of the
claim, Mr. Vann sued for bad faith and the jury agreed. The Travelers’ appeals all the way up to the U.S.
Supreme Court were unsuccessful.

For a no-cost, no-obligation evaluation of your case, fill out our free case evaluation form and an experienced
attorney will contact you. Our Insurance Advice site has links for all state departments of insurance.

For more information about bad faith insurance practices and claims, see the following articles:

How to File a Complaint with Your State Department of Insurance

Insurance Claims: How an Insurance Bad Faith Attorney Can Help

Don’t Be Afraid of the Big, Bad Insurance Company!

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