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Not their fault? Insurer appeals $18 million bad faith verdict p3

Tue Aug 5th, 2014 on     Bad Faith Insurance,    

A woman we know remembers being in a two-car accident. Her vehicle was drivable, but there was significant damage. When it came back from shop, everyone agreed that it just didn’t drive or ride as well. It was soon a family joke to comment that the Jeep just hadn’t been the same since the accident.

Many of us are familiar with the feeling. The car just isn’t the same, but there doesn’t seem to be an explanation. The family we’ve been talking about got an explanation about a year after their accident. Someone who had worked for the repair shop called to tell them that their vehicle was not safe, that there was damage to the vehicle that the repair shop had not fixed. An inspection proved the ex-employee right.

The insurer, Nationwide Mutual Insurance Co., had ordered a second assessment of the damage after the repair shop initially reported that the vehicle was totaled. The shop came back with a lower estimate, and Nationwide authorized the repairs.

The family filed a lawsuit in 1998. It is still going on.

The family accused the company of concealing evidence of the first assessment and the faulty repairs. They also accused Nationwide of knowingly adopting and adhering to a stalling strategy. Company-wide, Nationwide’s policy was to drive up the costs of litigation as a way to discourage policyholders from suing, the plaintiffs said.

The trial court ruled for the plaintiffs. In the opinion, which Nationwide is now appealing, the court brought up two important facts that worked against the insurance company. First, Nationwide spent $3 million or more to litigate a claim that was worth $25,000. Second, the company’s failure to accept the garage’s first assessment of the damage — that the car was totaled — put not only the plaintiffs but the public in harm’s way.

For the court, that conduct amounted to bad faith.

We will finish this up in our next post.

Source: Insurance Journal, “Penn. Family Awarded $18M in Bad Faith Suit Against Nationwide,” July 14, 2014

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