In Dunbar v. State Farm, a federal judge in Oklahoma granted summary judgment to State Farm in what was really a silly bad faith case.
This case involved a pedestrian accident where somebody backed out of their driveway and hit someone. USAA tendered, albeit slowly, its $100,000 limits for the at-fault driver. State Farm did what it does, it slowly increased the offers over time. But in this case, medical records were provided, for whatever reason, over time, making State Farm’s increase in offers seem quite reasonable. Eventually, State Farm tended its entire policy of $200,000. Because it was an uninsured motorist case, that should have resolved the claim. But Plaintiff’s accident lawyer proceeded with the claim under the theory that State Farm should have made the offer sooner but was dragging their feet.
I don’t get it. Neither did the appellate court. The opinion also underscores Oklahoma law – and Maryland’s – that regardless of the severity of the injury, an underinsured claim does not kick in until the underlying policy tenders its limits. So if you have a death case and the at-fault driver has a $30,000 policy, the underinsured motorist coverage obligations do not kick in until the underlying policy has been offered.
This case would never get off the ground in Maryland. We really have no viable first-party bad faith law. Sure, we have a law, but it has absolutely no teeth.
The exception in my mind would be if the insurance company has all the relevant information and refuses to pay the limits up to the day of trial. The plaintiff’s lawyer at this point has already spent all the money that must be spent for trial. If they wait too long, I think there is an argument that they left the insured out to dry when they had every chance to settle the case. One federal court judge in Maryland disagrees with me. But I would like a chance to make my arguments to that judge. I think I’m on the right side of this one.
State Farm Pays Third-Party Bad Faith Claims in Maryland
I’ll give credit to State Farm for one thing. If they insure a client in Maryland who gets sued in an accident and they do not offer the insurance policy limits, they will pay whatever the verdict is without blinking an eye. On a number of occasions, we have hit State Farm with verdicts in excess of the insured’s policy limits. They don’t try to use the excess verdict as leverage, seeking a compromise. They pay the verdict, and that is that.