Progressive Insurance Not Alone in Treating Customers Unfairly

The story of Kaitlynn Fisher’s death created a media firestorm recently, generating shock and outrage across the country.  The story received coverage from media outlets such as CNN, ABC, and the Wall Street Journal.  While the events of her death were unquestionably tragic, it was the conduct of Fisher’s insurance company that garnered the most attention.

Progressive Defends the Person Who Killed its Customer

Fisher was a 24-year-old Johns Hopkins graduate who died after another driver ran a red light and struck her vehicle. The driver responsible for Fisher’s death was underinsured, carrying only a $25,000 liability policy.  Fisher carried a $100,000 uninsured/underinsured motorist policy with Progressive. Uninsured/underinsured motorist coverage is intended to protect a policy holder if he or she is injured in a car accident when the responsible party either has no insurance or insufficient insurance coverage.

What many people do not know is that when they file an uninsured/underinsured motorist claim with their insurance company, the insurance company has a contractual right to defend the at-fault driver to avoid paying the fair value of a claim to its own policy holder.  Fisher’s family learned this the hard way.  They were appalled to learn that Progressive’s attorneys defended the at-fault driver by claiming that Fisher was partially responsible for the accident. Sadly, Progressive’s conduct amounted to a simple business decision—-they did not want to pay Fisher’s claim.

Nationwide and Others Have Similar Practices

Many people are confused when they discover that their own insurance company has become their adversary.  Confusion gives way to anger when they see how far their insurance company will go to avoid paying a claim.  Unfortunately, this type of practice is not confined to the Fisher case.  Insurance companies go to absurd lengths to avoid paying legitimate claims in Tennessee every day.

Our firm recently handled a case in which a Nationwide policy holder sustained significant injuries after she was struck by an underinsured driver.  Nationwide summarily denied the claim without ever speaking to the at-fault driver or doing any investigation.  Nationwide’s lawyer even accused our client of causing the wreck, despite the fact that the other driver admitted fault.  Nationwide also denied that its policyholder’s medical bills were related to the wreck. The attorney for Nationwide went so far as to accuse her treating doctor of lying about her treatment.  Ultimately we had to take the case to arbitration and the arbitrator awarded almost two times the amount Nationwide offered to pay as a settlement.

Changes to Tennessee Law Give Added Protections for Insurance Company Misconduct

Due to recent changes in state law, Tennesseans have fewer ways to fight back.  Tennessee law places a general duty on insurance companies to deal with their customers in good faith.  Prior to 2011, the Tennessee Consumer Protection Act (“TCPA”) provided recourse for a consumer or small business when an insurance company breached this duty of good faith.  Under the TCPA, a policyholder could obtain an award of punitive damages or treble damages.  In addition, the TCPA provided payment of the plaintiff’s attorneys’ fees, which helped consumers and small businesses hire an attorney to take their case.

These provisions of the TCPA not only provided a means of redress for the average Tennessean, but encouraged insurance companies to handle claims in good faith.  Unfortunately, the protections afforded by the TCPA are now a thing of the past. The ironically titled Tennessee Civil Justice Act of 2011, which became law on October 1, 2011, removed private citizens’ and small businesses’ rights to sue insurance companies on bad faith claims under the TCPA.  The Act also removed punitive and treble damage awards as a potential sanction.  Thus, insurance companies have even less incentive to act in good faith when handling legitimate claims.  Tennessee law still provides a “bad faith” penalty for insurance companies that breach the duty of good faith. This penalty, however, cannot exceed 25% of the disputed claim.  For many insurance companies, this meager penalty is worth the risk of routinely denying claims because few policyholders can afford to pursue litigation.  Now that the TCPA has been gutted, Tennesseans that find themselves in an adversarial posture with their own insurance company have little means for obtaining fair resolution.

Tennessee Drivers More Likely to Face-off Against Their Insurance Company than Others

Tennessee drivers are more likely than the average American driver to become embroiled in a dispute with an insurance company over an uninsured motorist claim.  A 2011 study by the Insurance Research Council showed that approximately 24 percent of Tennessee drivers are uninsured, which ranked third in the nation for the percentage of uninsured motorists.  These statistics make clear that uninsured motorist coverage is a must for Tennessee drivers.

As the stories of Fisher and our own client illustrate, it is often a lengthy and painstaking process to get an insurance company to comport with its duty of good faith.  Remember, it is always in the best financial interest of insurance companies to either deny or underpay claims filed by policy holders.  Insurance companies only care about the bottom line, not the health and welfare of you and your family.  Tennesseans must understand the realities of dealing with insurance companies, and be ready to seek legal representation when their rights are being abused.