Progressive Bad Faith Claim: New Opinion

Two weeks ago, I wrote a post explaining what car insurance special investigations units (SIU)do and their purpose. Today, I stumbled across a new opinion that went up to the 10th Circuit Court of Appeals. The basis for the lawsuit seems that the plaintiffs were annoyed that Progressive Insurance – undoubtedly an aggressive car insurance company – sent their claim to their special investigations unit.

The case involved the plaintiffs’ claim that someone had stolen and damaged their car. Progressive Insurance referred the claim to its Special Investigations Unit because: (1) the vehicle was for sale at the time of the loss, (2) the column was not compromised, (3) the vehicle was a “gas guzzler” (the claim arose at the height of the gas prices in 2008); and (4) both sets of keys were in the Walkers’ possession at the time of loss.

Progressive Insurance asked the plaintiffs to produce photos from the vacation they were on at the time of the loss. The plaintiffs sent them some pictures which overzealous Progressive thought were altered. Goofy stuff that all got squared away. The Special Investigations Unit concluded the loss was legitimate and paid the claim.

Plaintiffs were not happy and made a federal case out of it, alleging bad faith from Progressive Insurance in paying the claim. It is pretty clear that they did not find a lawyer to make their claim. I guess they were just plain mad and wanted to get back at Progressive.

To establish a first-party bad faith claim in Oklahoma and in most jurisdictions (including Maryland), a plaintiff must show that the insurance company’s action was unreasonable under the circumstances, and that the insurer failed to deal fairly and act in good faith in the claim’s handling. Here, Progressive was wrong and admitted they were wrong and paid the claim. But the court found that they were reasonable to investigate further because there were suspicious things about the claim.

There are two take-home messages here. First, Progressive Insurance is overzealous and difficult to deal with in car accident claims. Alas, this we already knew. The second is another truth that has stood the test of time: filing lawsuits because you are mad is really not a great idea.

You can read the court’s opinion in Walker v. Progressive Insurance here.