Holloway v. Direct Gen. Ins. – Filing Bad Faith Claim Against Auto Insurer

Auto insurance companies seek always to protect their bottom line. Many customers find themselves on the other end of a frustrating tug-of-war as they seek to obtain compensation for legitimate losses.caraccident6

One of the ways the law keeps insurers in check is by allowing bad faith claims, either by the policyholder or sometimes a third party. An insurance company that acts in bad faith – by failing to settle, not timely responding to a claim, offering a sum that is far too low when facts are not in dispute – can be penalized by an order to pay triple damages. Bad faith insurance claims are litigated separately from the auto accident claims.

Some examples of bad faith include:

  • Refusing to pay a claim it owes;
  • Not timely paying a claim it owes;
  • Requiring paperwork that is unreasonable or unnecessary;
  • Failing to explain why a claim is denied;
  • Refusing to settle a claim when doing so is appropriate.

Not all instances of refusal to settle constitute bad faith, so it’s important to discuss your case with an experienced auto accident lawyer in Charlotte.

In the recent case of Hollaway v. Direct Gen. Ins., recently before the Kentucky Supreme Court, the question was whether plaintiff’s bad faith insurance claim was wrongly decided on summary judgment in favor of the insurer.

In order to succeed in a third-party bad faith claim, a plaintiff has to prove not just an insurance company’s unreasonable failure to respond to a claim taht is legitimate, but also prove the insurer acted with reckless indifference to plaintiff’s right to recover. (This is under Kentucky law.)

According to court records, this started as a low-speed crash in an apartment complex parking lot. Plaintiff was in the passenger seat of her own car, being driven by another, when they were rear-ended by another vehicle. The driver of that car disputed this account, claiming plaintiff’s vehicle was being driven too quickly in the wrong direction around a curve.

Everyone was wearing their seat belts and no airbags deployed. Defendant’s vehicle sustained no physical damage while plaintiff’s car sustained $470 in damage. The police were never called to respond to the accident scene.

However, plaintiff later sought medical treatment for an injury to her back and hip that required her to undergo physical therapy. She exhausted her no-fault insurance benefits and later lost her job because she couldn’t physically perform the duties required

Defendant driver was insured by Direct General Insurance Company if Mississippi Inc. Plaintiff sought third-party compensation from Direct. The insurer investigated the accident and learned there were disputed accounts as to the cause.

The insurer initially concluded its client was liable and paid for the property damage. However, the personal injury claim was disputed. Plaintiff sought $125,000 or the policy limits. She provided the insurer with medical records, billing information and records pertaining to wage loss.

Defendant insurer offered to settle for $5,000. She rejected this offer and defendant made no counter offer. After a breakdown of negotiations, plaintiff sued for negligence (also pursuing underinsured motorist benefits from her own auto insurer) as well as for bad faith insurance by Direct.

Insurer, at the end of the discovery phase, sought summary judgement, arguing it hadn’t acted in bad faith because it had the right to insist plaintiff prove her case before it had any duty to settle. Plus, the defendant noted evidence of pre-existing injuries on the same parts of her body she contended were injured in this crash. Trial court agreed and granted summary judgment. This decision was affirmed by both the appellate court and, most recently, the state supreme court.

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

Additional Resources:

Hollaway v. Direct Gen. Ins., Sept. 22, 2016, Kentucky Supreme Court

More Blog Entries:

Pedestrian Hit-and-Run Victims Must Seek Legal Counsel to Recover Damages, Sept. 21, 2016, Charlotte Car Accident Lawyer Blog

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