When auto insurance companies act in bad faith by refusing or unnecessarily delaying a claim by an injured party, they may face court sanctions and penalties, in addition to being forced to pay the original claim.
In cases where an insurer is acting in bad faith by refusing to cover claims made by their at-fault driver insured, injured parties may pursue something known as a “Coblentz agreement.” This involves negotiating a settlement that will bind the insurer, even though the insurer hasn’t participated in settlement talks. The “Coblentz agreement,” named after a previous South Florida car accident case, is when the at-fault insured assigns his or her rights to pursue a bad faith insurance claim against his or her insurer over to the injured party.
Fort Lauderdale car accident lawyers know that in order for a Coblentz agreement to be successful, attorneys for the injured need to make sure there is a strong case establishing the insurer is acting in bad faith in refusing to indemnify its client or pay the claim.
The recent wrongful death case of Rodriguez v. Security National Insurance Co., Inc is a good example of the possible outcome when this doesn’t happen.
Here, a grieving father of a deceased motorcycle accident victim pursued civil action against the owner of the vehicle driven by the at-fault motorist. The victim alleged vicarious liability of the vehicle owner, despite the fact that he hadn’t been on the one operating the vehicle at the time of the crash.
This, however, was not the reason the insurance company denied the claim, which would have otherwise covered up to $20,000 in damages. According to court records, the insurer asserted the vehicle owner’s policy had expired two months prior to the crash.
The defendant vehicle owner entered into a Coblentz agreement with the victim’s father, settling the case for $2.5 million and assigning his right to claim against his insurer over to the plaintiff.
The insurer refused to pay this amount, and in turn, the plaintiff filed a third party bad faith claim, alleging breach of contract, enforcement of judgment and bad faith in denying coverage to the vehicle owner.
Insurance companies have a duty to pay judgments against its policyholders, and failure to do this can be grounds for a bad faith assertion.
However, an insurer can mount a successful defense if it can prove it had no duty to the policy holder or the third party.
In this case, the insurer was able to successfully argue that it didn’t have a duty because the policy wasn’t in effect.
The third party plaintiff asserted the policy remained in effect because the insurer hadn’t given proper notice to its policy holder that the policy was about to expire. Notice was sent by the insurer, but the address on the policy lacked an apartment number, so the notices went unreceived.
The plaintiff argued that because the defendant vehicle owner never received notice, the policy remained in effect. However, Florida’s Third District Court of Appeals rejected this argument, finding favor with the defendant in an affirmation of summary judgment handed down by the lower court.
Call Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights.
Additional Resources:
Rodriguez v. Security National Insurance Co., Inc, April 30, 2014, Florida’s Third District Court of Appeals
More Blog Entries:
Finding of Comparative Fault Can Reduce Your Compensation, May 15, 2014, Fort Lauderdale Car Accident Lawyer Blog