In a recent case, a passenger sued after she was injured in a car accident. A man had bought his fiancée a van for her birthday. On her birthday, the couple was drinking with some friends, and the man gathered the friends in the van. He then drove the van and crashed it, causing one of the passengers serious injuries. The passenger received compensation for her injuries from the man’s insurance, but she said the amount she received did not cover her injuries and made an additional claim for underinsured motorist benefits. Since the man’s coverage did not cover her expenses, she claimed he was “underinsured,” so she should receive underinsured motorist benefits from her insurance policy and from the driver’s fiancée’s policy.
The insurance company denied the claim at first. The passenger then sued the insurance company, claiming the company unreasonably denied her claim or delayed in paying her. The insurance company eventually paid her additional compensation. However, the passenger still claimed the insurance company unreasonably denied or delayed payment—essentially stating that the company acted in bad faith in doing so.
A federal trial court granted summary judgment in favor of the insurance company, finding it did not unreasonably deny or delay payment. But the passenger appealed, and a federal appeals court reversed the decision, deciding a reasonable jury could find the insurance company failed to reasonably investigate her claim.