Court Finds Insurance Company May Have Acted in Bad Faith by Denying Claim Without Sufficient Investigation

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.

The Insurance Company’s Duty to Investigate

The insurance company had a duty of good faith and was required to reasonably investigate her claim. The insurance company claimed the passenger had “assumed the risk” by going for a ride with a drunk driver. However, the passenger claimed she did not know that the driver was drunk or that he was going to drive. She thought they were just going to look at the new car and take a picture. The passenger claimed the insurance company did not adequately investigate because it failed to talk to the other passengers, most of whom claimed they did not know the man was actually going to drive the van. The company also did not interview the passenger directly. For these reasons and others, the court decided a jury could find the insurance company failed to adequately investigate. As a result, the court denied summary judgment and allowed the case to proceed to trial.

Summary Judgment

After discovery is exchanged, a party can make a motion for summary judgment. The court will then consider if there is evidence that amounts to a dispute over an issue of material fact. If the court finds there is no dispute as to a material fact, and the party is entitled to judgment as a matter of law, the court will grant summary judgment. However, if there is a dispute, the court will deny the motion and allow a jury to decide, based on the evidence at trial. Even if a judge finds one party’s version more credible, summary judgment should still be denied, allowing the case to proceed to trial. And if a court does grant summary judgment in a case in which there was a dispute of material fact, the other party can appeal the decision, as in the case above.

Contact an Injury Attorney

If you have been hurt in a car accident, you need to speak to an attorney as soon as possible. At Moll Law Group, our Chicago car accident lawyers represent individuals and their families who have been involved in devastating accidents. We understand how important it is that you obtain compensation for your harm. We retain leading experts throughout the nation to present your case in settlement negotiations and at trial. Call us at 312-462-1700 or use our online form to set up a free consultation.

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