and others who should not be driving should share in the financial responsibil- ity for damages caused by their negligent operation of a motor vehicle.
Third Party Bad Faith Claims Liability insurers have a duty to When the
attempt to settle claims within their insured’s policy limits.40
client has catastrophic injuries, and there is inadequate insurance coverage, inadequate assets to satisfy a judgment, and when there are no other theories of liability to trigger additional insurance policies and/or additional defendants, then a written demand for the defendant tortfeasor’s policy limits should be made to the liability-insurance carrier.41
The 40
Sweeten, Adm’r. v. Nat’l. Mutual, 233 Md. 52, 194 A.2d 817 (1963), Fireman’s Fund v. Continental Ins. Co., 308 Md. 315, 318, 519 A.2d 202, 204 (1987), State Farm v. White, 248 Md. 324, 236 A.2d 269 (1967).
demand package should include enough information so that the insurance carrier can exercise its judgment, and either offer the insured’s policy limits, or refuse to offer the policy limits. If the insurance carrier refuses to offer its insured’s policy limits, and if a judgment is obtained in excess of the insured’s policy limits, then the insured tortfeasor may have a viable cause of action against the insurance carrier for its bad-faith refusal to settle within policy limits. If an excess judgment against the insured is obtained, then the insurer will be li- able to its insured unless its refusal to settle within policy limits “consisted of an informed judgment based on honesty and diligence.”42
The determination of
whether an insurance company’s refusal to settle for policy limits is essentially a question for the jury, and there are
41
Make sure your client is fully aware of this and that they are in agreement with making the policy limit demand.
no hard and fast rules as to whether a particular course of conduct by the insurance company will alleviate its bad-faith liability. In a Maryland third party bad faith claim, the jury will be instructed as follows: In evaluating the company’s de- cision, factors to be considered include the severity of the plaintiff ’s injuries giving rise to the likeli- hood of a verdict greatly in excess of policy limits; lack of proper and adequate investigation of the circumstances surrounding the ac- cident; lack of skillful evaluation of the plaintiff ’s disability; failure of the company to inform the insured of a compromise offer within or near the policy limits; pressure by the company on the insured to make a contribution towards a compromise settlement within poli-
42
State Farm v. White, 248 Md. 324 at 333, 236 A.2d 269 (Md. 1967).
Structured Settlements
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20+ Years of Experience in Maryland Quality and Knowledge Exceeding
24
Trial Reporter
Summer 2008
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