The issue arises from a 2007 car accident. According to court documents, Jared Wolfe suffered soft tissue damage to his neck and back when his car was hit by a vehicle driven by Karl Zierle, who was driving while under the influence of alcohol and drugs. Zierle was covered by Allstate, with a limit of $50,000.Wolfe asked for damages from Allstate in the amount of $25,000, but Allstate reportedly refused that amount and offered only $1,200. As a result, Wolfe filed a lawsuit against Zierle for compensatory and punitive damages. Court documents for Wolfe note that before trial, Zierle’s lawyers encouraged Allstate to increase their offer, but they did not.
The lawsuit went to a jury, and Wolfe was awarded $15,000 in compensatory damages and $50,000 in punitive damages. Although Allstate paid the $15,000, the company refused to pay the $50,000 punitive damages, arguing that punitive damages were not included in the policy coverage.
Zierle assigned his rights against Allstate to Wolfe, to allow Wolfe to file a claim of bad faith insurance against Allstate for refusing to settle the lawsuit within the $50,000 coverage limit. The new lawsuit went to a jury trial, where Wolfe was awarded $50,000, but Allstate appealed and the appeals court asked the state Supreme Court whether an insured can assign his or her bad faith claim to an injured third party.
Generally, bad faith insurance claims are filed against an insurer by the policyholder. They usually involve cases where an insurance company has refused to pay out a claim made by the policyholder. For example, a long-term insurance claimant who has been unfairly denied payout of a legitimate claim may file a bad faith insurance lawsuit against his or her insurance company for using unethical tactics (if they were used) to deny the claim.
In the case of this car accident, however, Wolfe filed a claim against Zierle’s insurance company because Zierle was responsible for the car accident (court documents note that responsibility for the accident is not in dispute). Because it is Zierle’s company the claim is filed against, Zierle had to assign his rights against Allstate to Wolfe, so the bad faith insurance claim could be filed.
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But Wolfe’s attorneys argue that allowing assignment of rights allows all parties to have equal footing with the insurance carrier.
By refusing to settle the case prior to going to trial, “Allstate placed Zierle in the position of suffering a punitive damage verdict, for which he had no coverage.” The brief further argues that if Zierle had filed the bad faith claim himself, it is reasonable to assume Allstate would have been found liable to its own policyholder because the courts have already found that Allstate’s actions constituted bad faith.
READER COMMENTS
Claudia
on
I was bitten by a cat that had been adopted from a rescue organization. I filed a claim against the owner of the cat and their insurance denied liability but agreed to pay medical. The law states "cat owner knew or had reason to know, of cat's aggressive nature" to be found liable. I found the rescue that the cat had been adopted from and I received an email stating "cat was nippy, bitter.." and they emailed me the adoption agreement as well. The rescue never advised owner of cat's aggressive nature. The adoption contract also states, both the rescue shares ownership with the adoptees. And, are actually primary owners and have the right to repossess the cat, if they feel fit to do so.
I filed a claim w the rescue's insurance company AllState. The adjuster called me and had a brief conversation and said, she saw no liability bc the rescue had no knowledge of the cat's aggressive nature bc she only had the cat for 4 days. I immediately emailed several emails from the rescue, requesting the cat back from the adoptees, the email referring to the cat being nippy, bitter.., and the contract. Again, denied liability on the cat was not adopted at the insured's home, Allstate was wrong, I drove to the address listed on the adoption agreement and it was the UPS store, I knew the adoption organization and knew it was at the insured's home, the adjuster tried denying on "business clause" but a 501c is non-profit and can't be considered a business, adjuster again denied on "assumption of risk" but, I was never made aware of the cat's aggressive behavior and now, trying to deny on "insured/rescue does not own the cat" wrong again, the contract clearly states "co-owners for the rest of the cat's life" and the rescue is primary owner, as contract states "if cat is lost and in our possession, we can make the decision to keep the cat.
It is very frustrating to argue and argue with an insurance adjuster but I used to work for Farmers Insurance and know a little more than the average person.