3 Bad Faith Examples from Large Companies
Having insurance should give the policyholder peace of mind. If an unexpected accident occurs, money from the insurance company will help cover medical bills and other expenses. Unfortunately, many insurance companies engage in illegal and unethical tactics to avoid paying claimants what they deserve. Even the largest insurance providers in the world have committed bad faith against their policyholders. Here are three examples of verdicts claimants won in bad faith lawsuits against major companies in the U.S.
In 2018, a jury found GEICO Insurance guilty of bad faith and awarded the plaintiff – a disabled man from Irvine, California – almost $23 million for his damages. According to the lawsuit, GEICO used delay tactics to drag out a car accident insurance settlement for almost six years. During this time, the plaintiff could not return to work because of his crash-related disabilities, and had mounting medical bills he could not pay. He lost two of his homes because of his bills.
After a serious car accident in 2009, Omar Dauod (the plaintiff) underwent multiple surgeries and continuous treatment until 2011. He incurred over $125,000 in medical expenses. In 2012, he requested $400,000 from his GEICO auto insurance policy. Over the following six years, he was in a battle with GEICO to receive this coverage, during which time the insurance company delayed payout without proper cause.
The jury found that GEICO engaged in conduct with malice and fraud, that managers knew of the conduct, and that the insurance company’s conduct caused Mr. Dauod economic and noneconomic losses. The jury ordered GEICO to pay Mr. Dauod over $9 million in economic losses and $13 in punitive damages. Mr. Dauod’s attorneys say the verdict should send a message to other insurance companies in the future.
Farmers Insurance Group
Farmers Insurance Group has had multiple instances of bad faith dealings over the years. In one landmark lawsuit, a jury in Oklahoma found Farmers Insurance Company guilty of underpaying around 76,000 citizens for their claims over the course of 13 years. The jury ordered the insurance company to pay $80 million in damages to the impacted parties for breach of contract and bad faith. The average cost of underpayment was about $575 per plaintiff; however, the jury ordered Farmers Insurance to pay much more as a form of punishment.
Farmers Insurance Group had to pay damages for breach of contract, bad faith insurance practices, and punitive damages. Homeowners impacted by the bad faith will receive 15% in interest on their actual damages, plus reimbursement for attorney’s fees. The total amount Farmers Insurance had to pay far exceeds what it would have paid had it dealt with its claimants fairly over the last 13 years.
In 2014, a successful bad faith claim against Allstate Insurance Co. resulted in the company having to pay a settlement of $22 million. This was the largest bad-faith insurance settlement in Pennsylvania’s history. Allstate and three of its agents were defendants, put on trial for refusing to pay for a judgment against one of its policyholders. The policyholder contributed to a car accident that caused the amputation of the plaintiff’s leg. The plaintiff received a judgment award for his damages, but Allstate refused to pay the award.
During the bad faith claim, the jury awarded the plaintiff $19.1 in damages from Allstate, plus interest and delay damages for a total of around $22 million. Despite Allstate being one of the largest insurance companies in the country and the plaintiff being just one accident victim, justice won out. If an insurance company has not treated your claim fairly in accordance with your policy, speak to an insurance bad faith attorney about filing a bad faith claim.