Should an insurance company be required to settle a lawsuit against its insured if liability is clear? If so, how long should the settlement process take? Which party should make the first move? What about situations in which the insurance company and the injured person have very different ideas about the value of the claim?
The Massachusetts Court of Appeals recently considered these and other issues in a lawsuit filed by a disgruntled liability insurance claimant.
Facts of the Case
In a recent case, the plaintiff was a tow truck operator who was rear-ended by a woman who had liability insurance coverage with the defendant insurance company. The accident happened in March 2005. The plaintiff apparently received some payments from his own automobile insurance carrier and his employer’s workers’ compensation carrier, but the defendant did not make any offer of settlement until after the plaintiff’s personal injury lawsuit against the insured had proceeded to trial. During the trial, the defendant first offered the plaintiff $25,000 and then $60,000. The jury returned a verdict in the plaintiff’s favor in the amount of $818,000.
Thereafter, the plaintiff filed the current lawsuit against the defendant, asserting claims of unfair settlement practices under Massachusetts Gen. Laws ch. 93A and 176D. The parties waived a jury trial, and the judge ruled partially in the defendant’s favor and partially in the plaintiff’s favor. Although the judge did not find any unfair settlement practices in the handling of the underlying claim, he ruled that the defendant erred when it offered to settle the claim for the policy limits ($250,000 per person) without also offering post-judgment interest during the pendency of the plaintiff’s appeal.
Ruling of the Court
The court of appeals affirmed in part and reversed in part, agreeing with the trial court judge that the defendant had not engaged in unfair settlement practices in either the personal injury case or during the appeal of the case currently before the court. In so holding, the court pointed out that, while it was true that the defendant did not attempt to settle the liability case against its insured prior to the personal injury trial, the plaintiff had not made a settlement demand before that time. Furthermore, the defendant had acquired information that gave it a “reasonable basis” for regarding the plaintiff’s injury claim as suspicious.
Although the plaintiff ultimately lost his unfair settlement practices case, he certainly got the insurance company’s attention – finally. Perhaps this case and others like it will motivate insurers to be more responsive in settling clear-liability claims against their insured, knowing that they may face a separate lawsuit (and considerable legal expenses defending such a case) if they do not.
Speak with an Experienced Car Accident Attorney
If you have questions or need assertive legal representation with regard to a motor vehicle accident, call the knowledgeable Cape Cod car accident attorneys at the Law Offices of John C. Manoog, III, at 888-262-6664 and ask for a free case evaluation. We have offices in Hyannis and Plymouth, and we make home/hospital visits when necessary.
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