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

We don’t often have the chance to discuss a bad faith lawsuit against an insurance company. The cases may settle out of court, or they may not be interesting enough to get the attention of even legal periodicals. Whatever the reason, an excellent example of bad faith crossed our desks in a case about a couple’s decades-long fight over an auto claim.

The case is out of Pennsylvania, not Florida, but the original claim will sound familiar to many drivers here in the Sunshine State. Before a recent court decision, the insurance company, Nationwide Mutual Insurance Co., had spent $3 million defending a claim that could have been settled for $25,000. In June, a court decision added $18 million in punitive damages to the insurer’s costs. Nationwide is now appealing the award.

The claim arose from a 1996 accident involving the plaintiffs’ Jeep Grand Cherokee. They took the vehicle to one of Nationwide’s direct-repair garages. The garage said the Jeep was totaled, “the whole body was twisted.” The claim would have cost Nationwide $25,000 to replace the vehicle.

Nationwide, however, contacted the garage and insisted that it conduct a second appraisal. This time, the results were different: The vehicle could be repaired for half the cost of replacement. Nationwide said nothing about any of this to the plaintiffs.

The plaintiffs said that they got the car back, but it was never quite right. Almost a year later, they learned why. They received a phone call from a man who had worked for the garage when their car was repaired. He warned them that the Jeep could be dangerous, that there was the possibility of structural repair failures.

The couple sued, and that’s when things got really unpleasant.

We’ll continue this in our next post.

Sources:

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

Berg v. Nationwide Mut. Ins. Co., Inc., 44 A.3d 1164 (Pa.Super.,2012), via Westlaw

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