Graciano v. Mercury General Corp. – Elements of Bad Faith Insurance Claim

Car accident victims, particularly those who have suffered debilitating injuries or survivors of a wrongful death, should never agree to negotiate directly with an insurance company. The reason is it is standard practice for these firms to low-ball claimants, when they don’t outright deny legitimate claims.
In some instances, there may be opportunity for plaintiff to obtain compensation in an amount higher than policy limits. This is particularly true if there is a successful assertion of a bad faith on the part of the insurer.

Some examples of bad faith actions by auto insurers include:

  • An insurer delays, discounts or denies payment of legitimate claim without reasonable basis for the delay, reduction or denial.
  • Failure to acknowledge or reply promptly upon notification of a covered claim.
  • Failure to pay a covered claim due to failure to initiate a proper, prompt and thorough investigation as to reasonable liability based on available information.
  • Failure to affirm or deny coverage within a reasonable time frame.
  • Failure to offer or attempt to offer prompt, reasonable and fair evaluation of damages and equitable settlements in an appropriate time frame where liability is reasonably clear.
  • Insurer tries to settle for less than the amount to which a reasonable person would know they are entitled, requiring insured/injured party to initiate litigation.

Our accident attorneys in Anderson know that when it can be proven an insurer acted in bad faith, claimants may be entitled to treble (triple) damages. It may seem like this would be incentive enough for insurers to treat claimants fairly – and certainly that’s the intention – but it still doesn’t always happen.

Still, bad faith insurance claims aren’t an issue courts take lightly, and there can be significant challenges in bringing such a claim. The recent case of Graciano v. Mercury General Corp. before a California appellate court is one such example.

Here, plaintiff suffered serious injuries when she was hit by a drunk driver who reportedly fell asleep at the wheel. The at-fault motorist held an auto insurance policy issued by defendant, which had a policy limit of $50,000. Three weeks after plaintiff’s attorney contacted defendant about the crash, defendant completed its investigation, noting plaintiff incorrectly identified the name of the driver and applicable insurance company (based on official accident report information). Insurer supplied the correct information and offered to settle for the full policy limits offer.

Plaintiff did not accept, and subsequently filed a lawsuit. Plaintiff asserted insurer acted in bad faith for wrongful failure to settle, arguing the company should have earlier discovered the facts and made the full policy offer more quickly.

Trial court jury agreed with plaintiff, offering a much higher award. Defendant appealed, however, and appellate court reversed as a matter of law, finding there was no evidence to support the assertion defendant acted in bad faith by unreasonably failing to settle plaintiff’s claim.

Contact the South Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.

Additional Resources:
Graciano v. Mercury General Corp., Nov. 12, 2014, California Court of Appeal, Fourth Appellate District, Division One

More Blog Entries:
Walters v. Holiday Motor Corp. – Jury Awards $20M to Paralyzed Crash Victim, Nov. 9, 2014, Anderson Car Accident Lawyer Blog

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