In a recent case, the New Mexico Court of Appeals reversed a jury verdict that found an automobile insurance company liable for acting in bad faith. The case involved Progressive Casualty Insurance Company (Progressive), which alleged that a family’s insurance had expired when one of the family members was involved in an accident.
In 2002, the family contacted Progressive to add a car to its existing policy. Progressive then provided conflicting information about the date in which the policy premium was due to be paid. A notice from the company indicated one date, but in a follow-up call the company’s automated phone system provided another date. The family then paid the premium, but only after one of the family members was involved in an auto accident. One person was killed and another severely injured in the accident.
Progressive sued the family, alleging that its policy had lapsed by the date of the accident. The family countersued, believing that the company was acting in bad faith by refusing to provide coverage. A jury sided with the defendants, finding that the family was covered when the accident occurred and that Progressive had acted in bad faith. The jury then awarded the family $37,000 in compensatory damage, $11.7 million in punitive damages, and $1.4 million in attorney fees.
Progressive appealed this decision, and the appeals court agreed with the jury that the family was covered on the date of the accident. However, it disagreed with the jury’s finding that Progressive acted in bad faith, and it sent the case back for another trial on this issue. In doing so, the appeals court reversed the jury’s award of punitive damages and attorney fees totaling $13.1 million.
Insurance Companies Must Act in Good Faith When Providing Automobile Insurance
By law, drivers in New Mexico are required to maintain at least $25,000 in automobile liability insurance. This means that all drivers legally operating a vehicle have little choice but to work with an insurance company after an accident has occurred. It also means that drivers have to be diligent in paying their premiums in order to maintain continued coverage at all times. Payment installments vary, but most insurance premiums are paid monthly, bi-annually, or yearly.
As with the family above, it is often hard to know exactly when a premium payment is due, especially if there are any changes in coverage along the way. Getting through to an insurance carrier on the phone may be difficult, and mail from the insurance carrier may contain outdated information by the time it is received by the insured. It is essential that a driver know exactly when a premium payment is due and when coverage will lapse if payment is not received by the carrier.
If a covered driver is involved in an accident, insurance companies must act in good faith when analyzing a claim. Under New Mexico law, this means that in insurer can only refuse a car accident claim when it is reasonable to do so under the terms of a given policy. It is considered bad faith if an insurer denies a claim for unfounded or frivolous reasons. In the case with Progressive, the jury originally found the company guilty of bad faith for claiming that the family lacked coverage on the date of the accident. The appeals court reversed the jury’s decision because it believed that evidence favorable to Progressive on the bad faith claim was excluded by the trial court judge. The bad faith claim will now be heard at a new trial, with all evidence put before the jury for consideration.
Have You Been in an Automobile Accident?
The auto insurance world is complicated and complex. When an accident occurs, it is difficult to know who you should be talking with, what you might be entitled to, and how to resolve conflicts. Our Albuquerque car accident lawyers have been successfully answering those questions for over 30 years. We establish close relationships with our clients and provide aggressive representation in times of need. For a free initial consultation, call the Fine Law Firm at (505) 585-FINE.
More Blog Posts:
Family of Man Killed by New Mexico Police Office Files Suit, New Mexico Personal Injury Lawyer Blog, April 1, 2015.
Skateboarder Hit and Killed in Fatal DUI Accident in New Mexico, New Mexico Personal Injury Lawyer Blog, February 25, 2015.