No, no, no. The problem is that the insurance company did something that was BAD and EVIL … they BETRAYED their client. You know, the person who had been paying them money just in case something bad happened to them? There may be a legal rationale for it, but it’s still ALL kinds of WRONG. What is LEGAL is not the same as what is MORAL.
Assuming I’m not being whooshed here and you are serious:
The ability to pay in no way, legally or morally, carries with it the responsibility to pay. Insurance premiums are calculated based on anticipated losses and known risks. The risk of paying a UM claim in Maryland is affected by this crazy, but by no means secret, law and one must assume the premium is appropriately adjusted. One must assume this because every company in every state has to have its rates approved by the state’s insurance commissioner–a government level consumer advocate.
So if Progressive expexts to pay out $20 million/year in UM claims in Maryland, they’re collecting premiums to cover, and setting aside, $20 million. They risk their own solvency and ability to honor all their other policyholders’ legitemate UM claims if they knowingly pay claims they don’t owe (and haven’t collected premiums for). How is putting their other policyholders at risk right or moral (it’s not) just because it feels bad to not pay the family of someone who died? jtgain did a good job of explaining why Progressive had the right & obligation to defend against a claim they felt was invalid based onthe black & white policy contract and state law. The grey area of liability was decided in court, which is where you go when you need a disagreement settled.
If they did in fact betray their client, there would be no legal basis for it. In Canada at least (can’t speak for state laws, I just assume they are similar) every contract has an implied term that the contractual duties will be carried out “in good faith” - that is, that a party will not attempt to deprive the other of what he or she has bargained for, using methods that are contrary to generally-considered-in-the-community standards of honesty and fair dealing.
To my mind, it would seem that the company would be facing a stiff case on the facts as I understand them.
Claim with who, and paid by who? My main problem here is that Progressive’s actions put their client’s $25k claim with the defendant at risk.
I don’t know about you, but I don’t pay money for insurance so that I can have my insurance company’s lawyers working to prevent me from getting money from someone who is not them. I can accept my insurance company disputing their liability to me, but they’re crossing the line when they dispute a third party’s liability to me.
I would be happier if the client could simply sue Progressive for non payment, and hash it out that way, rather than have to sue the other driver and put the whole settlement at risk.
But in this case, Progressive’s liability to her family was the same issue as the third party’s liability to her family. She chose not to purchase full coverage insurance that protected her when she was at fault. She only purchased liability for herself and un/under insured motorist protection when someone else was at fault.
If the third party is liable, they are liable.
If the third party is not liable, they are not liable.
They can’t possibly dispute liability to her while not disputing the third party’s liability.
It certainly can. Remember, the standard for summary judgment is that there are no material facts in dispute. If one witness testified that the dead chick was at fault, that’s a fact in dispute, regardless of that witnesses’ credibility or the weight of the contrary evidence.
In tort law, you basically only see summary judgment on issues which are not relevant to the actual occurrence. You only get them on issues of ownership of a particular piece of property, coverage, statutes of limitation/repose, and the like.
There’s also the “no reasonable juror” standard. If Progressive’s claim was that outrageous, the judge didn’t think so..
I work in “the biz” as a liability claims adjuster (not for either company at hand).
As several have also stated upthread, I see no bad faith here on Progressive’s part. Bad PR, yes, but bad PR != Bad Faith.
Un(der)insured motorist bodily injury claims can be strange, confusing beasts. In a UIM claim the insured is filing a liability claim against her own policy. The insurer then “stands in the shoes” of the un(der)insured motorist, defending the claim just as if they would defend a bodily injury claim against their insured. They have an ethical, contractual and fiduciary duty to properly investigate and evaluate the UIM claim, just as they do with a BI claim. The rights and duties of the company will be spelled out under the Un(der)insured Motorist section of the policy, and in many ways the language will be quite similar (if not identical) to the language in the Liability Coverages section of the policy.
It sounds strange, but if the company did not conduct a fair, impartial investigation of the loss (under the UIM coverages), they would be in violation of several Maryland unfair claims practice statutes. So, long story short, they have every right, justly, to investigate and defend the UIM claim asserted against the policy.
Progressive is not beholden to Nationwide’s liability decision. From a PR perspective, it didn’t help them whatsoever, but the issue is Progressive’s handling of the explanation, not the actions in the case itself. EVERY insurer - regardless of venue - would seek to defend the claim against the policy under both the Liability and UIM coverages, and in that the company is now the defendant, they should investigate in the same manner regardless of whether it’s a liability or UIM claim.
Maryland (and VA/DC/NC), being a contributory negligence venue, gives Progressive even more reason to judiciously investigate the loss and act accordingly. It’s the law, it’s the ethical, contractual and fiduciary duty of the company to do so.
In this case, the third party admitted liability and were prepared to pay $25k.
I don’t mind Progressive disputing the liability, it’s just that they’re trying to reverse a decision that has already been settled in their client’s favor. People who have a perfectly legitimate UIM claim have to worry that submitting such a claim will void the settlement they already made with the third party.
I think that the law should allow for this dispute to be between Progressive and the insured, and not involve the settlement money. There is no reason that you can’t have one party declining to fight a claim and another party fighting the same claim.
I’m not sure it is so simple. Like insurance, the doctrine of the implied duty of good faith and fair dealing (as in is known here in Canada) is a strange beast. I can’t of course speak for state law specifically, but here at least a breach of the duty of good faith in contract performance is taking some self-interested action that, while it may strictly speaking be “legal”, offends the hypothetical “objective observers” notions of fairness because it deprives the other party of what they reasonably believed they had bargained for.
To some degree, this injects community notions of fairness (that is, stuff that results in “bad PR”) into the law of contract - exactly why many commentators find the doctrine objectionable (as it dilutes legal certainty and predictability, leading to palm-tree justice) .
Now, not saying that this case would be a slam dunk. But there is certainly a litigation risk to the company. Particularly if it was a jury trial.
Whether or not the claim had a chance of success has no necessary bearing on whether or not bringing the claim was a breach of the contract between insurer and insured. The two are not directly related.
Judges spend too much time in the courts. Our legal system has an erosive effect on morality.
I notice you did only mentioned morality and ethics once, and that was to say that opposing the interests of their own client in court WAS the ethical thing to do. I think you have been working in insurance too long. Why do you think so many Dopers and citizens are outraged by this case? It must be quite a mystery to you.
Only because it’s inconsistent & unpredictable enough to make it worthwhile to push bogus claims to trial, just to see if a jury will let their emotions trump applicability of law.
Actuarial tables and insurance claims don’t run on emotion. Insurance is a business.
In this particular case their own client was also their claimant. When you file a UIM claim you and your attorney need to be aware of what that actually MEANS; you are suing your*** own*** insurance company since you can’t (realistically) sue the actual tortfeasor. (Well, you can, but blood from turnip etc. And when you settled with the tortfeasor’s carrier, you also signed a release releasing them, their insured, family, lienholder, etc from any further financial obligation to you.)
If you are sued, you would defend yourself (or hire an attorney to do so), would you not? Why should that right be denied to Progressive? In what way is it proper for them to roll over and capitulate, from the word go? This was not a slam dunk liability scenario; there were reasonable questions that needed to be resolved as to liability by the trier of fact: the courts. Until the judge/jury issues their verdict, the parties could settle (which they ultimately did). Under Maryland law, they had the right, obligation and** contractual duty** to investigate the claim to the best of their ability.
I would argue that if Progressive’s insured was plowed into by a minimum-liability-limits drunk driver, while standing on the street corner waiting for a crossing signal, and in that case Progressive attempted to find that magic 1% negligence on their suddenly-suing-under-UIM-coverage insured, that would be a much stronger case towards bad faith and unfair claims practices. In this actual scenario, however, Progressive was doing what every other insurer would do, every time.
No. “Removing emotion” is just code word for removing consideration of morality, and no immoral being has the right to exist. If that means that all insurance companies would do the same thing, then they are immoral and have no right to exist, either.
So then…don’t buy insurance, and don’t file claims. * Bing * they don’t exist for you anymore.
I’m still confused about the series of events. Did Nationwide actually pay $25k? If so, why didn’t they get a release for their client? If there was a release, then he couldn’t be sued for the accident (because the family would have accepted $25k in full satisfaction of the claim).
If they just OFFERED $25k, that’s not an admission of liability at all. That’s a “take this money and go away” If that is the case, then Progressive is not legally or morally bound by a financial decision by Nationwide.
ETA: Remember Progressive is on the hook for $75k. Nationwide for $25k. Nationwide could have made a strategic decision that it is not worth fighting for $25k, but would be worth fighting for $75k. I’m still not seeing the outrage.
jtgain is right except as far as liability is concerned, an offer and a tender of money are the same. The release language specifically states that in exchange for $XX,XXX.XX, the signer agrees they can’t sue the payer for any more money that the payer expressly denies any liability. It’s legalese, but it’s saying that in all settlements, the payer is not accepting liability. By not accepting liability, the payer has the ability to defend themselves against possible companion suits on their own merits.