Missouri and Illinois Personal Injury Law - Insurance Company Duty to Handle Insured's Cases in Good Faith When Considering Demands
Most people outside the personal injury legal profession and liability insurance often do not understand the nature of the parties' relationships when a claim is made against someone for negligence. For example, lets take a Missouri car accident that results in an injury and a driver was negligent. When a personal injury claim is made (the "claimant" or "Plaintiff"), the insurance company for the at fault driver (the "insured" or "Defendant") handles it, if the personal injury claim cannot be settled and the at fault driver is sued the insurance company appoints a lawyer. More times than not, the law firm or lawyer appointed by the insurance company handles many cases for that particular insurance company; however, their ethical and legal duty is to represent the at fault driver or the "insured", that is their client, not the insurance company. This is a line that is all too often blurred in favor of the best interests of the insurance company rather than the insured. Moreover, the insurance company has a duty to defend in good faith and indemnify the insured for any settlement or judgment.
So what does it mean to defend in "good faith", quite simply, it means that the insurance company has a duty to consider the insured's interests and if those interests conflict with the insurance company's interests, good faith obligates the insurance company to sacrifice its interests in favor of the insured's. This was discussed by the Missouri Supreme Court in Zumwalt v. Utilities Insurance Company, 228 SW2d 750 (MO 1950) and affirmed by a recent case which upheld a bad faith judgment against Allstate Insurance Company for a little over 16 million dollars after they refused to settle a Missouri drunk driving case with severe injuries for policy limits of $50,000. See Johnson v. Allstate Insurance Company, 262 SW3d 658 (Mo App Ct WD 2008).
The Johnson case is a perfect example of bad faith by an insurance company involving a Missouri personal injury claim resulting from a Missouri drunk driving collision and subsequent lawsuit. The insured, Davis, had twice the legal limit and struck a car head on when he crossed the center line, both passengers in the other vehicle spent many weeks in the hospital and almost died. Several weeks after the accident the claimants/Plaintiffs were willing to settle the case for $50,000, Davis' (the insured's) policy limits, thus relieving him of any other potential judgment or legal action, done case should have been closed. However, Allstate failed to respond for several months to the demand for a case that was an obvious policy limits case. The demand expired after 60 days because Allstate would not pay its policy limits, why? they were looking out for Allstate rather than their insured. Even if the injuries were not that severe, a drunk driver is open to serious liability after a motor vehicle accident causing injury. The potential for high liability due to the reckless conduct of the drunk driver should have been enough for Allstate to tender policy limits to protect their insured.
So who brings the bad faith claim? In most cases the claimant or Plaintiff takes an assignment of the cause of action from the insured or defendant in exchange for a promise not to try and collect from the insured or defendant personally and just go after the insurance company because they refused to settle the case when they had an opportunity. Under Missouri and Illinois bad faith, the insurance company is liable for any judgment in excess of the policy limits if they refused to settle the case when they had the opportunity and enough information to justify resolving the case for such an amount.
This is a necessary and reasonable tool for Plaintiffs and insureds to have, without it large insurance companies would use their financial clout and resources to spend all victims of personal injury, with viable claims, out of legitimate claims to protect their bottom line and to the determent of victims and their insureds.
Currently we are handling several Missouri and Illinois serious injury claims arising from drunk driving accident wherein the insurance companies are using delay tactics and acting in bad faith while the victims, my clients, are the targets of medical bill collectors, some are close to poverty because their injuries left them with the inability to work, and their lives are forever changed for the worse. These case were previously mentioned int his blog and will be updated:
Good Samaritan struck by drunk driver, severely injured, partial disability
In this above immediately above, we demanded policy limits, Allstate rejected, several months later during the defendant/insured's deposition he testified that he was completely unaware my client had demanded policy limits or that she was willing to settle with in his policy limits. A key indicator of Bad Faith by the insurance company for failure to inform their insured of a settlement offer within auto insurance policy limits. Clear evidence of Allstate looking out for themselves, not their insured. "Good hands", sure they are.
Also, excellent article summarizing Illinois Bad Faith Insurance Law
