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Etherton v. Owners Insurance Co. – Bad Faith Insurance After Car Accident

Auto insurance companies make lots of promises. They vow to be “on your side” and “like a good neighbor.” The truth of the matter is, when it comes time to pay a claim, they will do anything in their power NOT to pay it – or at least to minimize the amount they will compensate you. caroncurve

Bad faith insurance action – when an insurance company fails to deal with a customer in good faith – the penalties may be quite severe. If a judge or jury holds an insurer liable for bad faith action, the insured may be paid triple the original damages. This is intended to deter such action in the first place.

Many actions can be categorized as “bad faith,” but we generally see it manifest in car accident claims through claims that are swiftly denied or wrongly delayed or in low-ball settlement offers that are far below what the claim is actually worth. 

In the recent case of Etherton v. Owners Insurance Co., the U.S. Court of Appeals for the 10th Circuit affirmed a $2.25 million damage award against an auto insurance company for bad faith action. Specifically, the insurance company was held liable for not just the original claim, but breach of contract and unreasonable delay or denial of benefits.

According to court records published by Justia, a drover rear-ended plaintiff’s vehicle in December 2007, causing him to suffer injury to his back.

Although the damage to both vehicles in the collision was relatively minor, his back injuries caused him extensive trouble. In fact, he was forced to undergo three surgeries to repair disc damage in his spine.

The at-fault driver’s insurer paid its policy limit of $250,000.

He ten spent months trying to hammer out a negotiation with his own insurer. The uninsured/ underinsured motorist (UM/ UIM) insurance policy he held was for $1 million. He sought payment of $750,000 – or the policy limit, minus what he’d already recovered from the other insurer. But his own insurance company refused to pay that amount. It tried to settle the claim for $150,000 – far less than the policy limit – but refused to offer any more than that.

When plaintiff asked for an explanation as to why the offer was so low, the insurer said there were “serious questions as to the causation” of his injuries.

Plaintiff was forced to sue the insurer, alleging not only that the insurer should pay the underlying claim but that it should also be held liable for bad faith action.

In support of his case, he presented expert witness testimony from a medical doctor who testified plaintiff’s injuries – and need for surgery – were caused by the car accident. Defendant sought to have that testimony excluded, but trial court declined.

The case went to trial and jurors decided in plaintiff’s favor, initially awarding him $1.5 million. Although the court denied defendant’s motion for a new trial or judgement notwithstanding verdict, the court did grant plaintiff’s motion to up the damage award to $2.25 million, based on defendant’s engaging in bad faith.

Defendant appealed, but the U.S. Court of Appeals for the 10th Circuit affirmed. The trial court had properly considered the validity of the expert witness testimony and the damage award based on bad faith was proper.

Our Fort Myers car accident lawyers know the tactics employed by the insurance companies to try to reduce your compensation. We fight to ensure our clients receive the financial benefits they deserve.

Call Associates and Bruce L. Scheiner, Attorneys for the Injured, for a free and confidential consultation to discuss your rights. 1-888-579-8699.

Additional Resources:

Etherton v. Owners Insurance Co., July 19, 2016, U.S. Court of Appeals for the 10th Circuit

More Blog Entries:

Carter v. Kern High School District: $10M for Student Mascot Injury, July 7, 2016, Fort Myers Car Accident Attorney Blog