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What Can Be Done if You Believe the "At Fault" Driver's Insurance Company is Acting Unreasonably and in "Bad Faith"? By Atty. John Peterson

One of our clients was helping a friend put a new window into his house. Our client went out to his car to get some tools. His friend's pickup truck was parallel parked directly behind our client's car. As our client opened his trunk to retrieve his tools, a negligent driver struck the rear of the pickup and drove a large hook mounted to the front bumper of the truck through our client's leg.

The driver was neither drunk nor otherwise intoxicated. He was driving down a quiet, residential street in full daylight and simply was not paying attention. Tragically, our client lost his leg just below his knee. Because of the traumatic nature of the amputation, he will always have difficulty fitting his prosthesis to the remaining part of his leg, resulting in lengthy periods off work as a welding supervisor and difficulties playing with his two small sons.

Unfortunately, the "at fault" driver had only $1.3 million dollars in insurance coverage, which we quickly realized would not be enough to provide for our client's medical expenses, loss of his lifetime earning capacity to provide for his family of four, and the disruption of his entire life. That said, our client did not want to ruin the future of the "at fault" driver, a father and husband himself, who had just made a terrible mistake. Accordingly, our client directed us to tell the insurance company that he and his wife would be willing to settle for the available insurance. The company did not just refuse our offer, but became bellicose in their defense of the case. At one point, the insurance company actually hired a private investigator to go door to door in our client's neighborhood asking if our client's claim about the impact of the loss of his leg on his life was legitimate.

In Wisconsin, as in most states, the "at fault" driver's insurance company has no duty to the injury victim to act in "good faith." The company's obligation is to defend its insured. This obligation includes the duty to settle the case within the policy insurance limits when it becomes clear that its insured is exposed to liability far in excess of his/her coverage. In this case, we decided to file a formal "offer to settle" with the court. The law in many states and the Federal courts states that if such an offer is turned down, interest may be assessed on the entire amount awarded at trial. The entire verdict amount determines the interest owed, not the applicable policy limit.

Ultimately, the "at fault" driver in our case realized that his insurance company was not acting in his, much less our client's, best interest. He retained an attorney of his own, who again persuaded our client to agree to settle for the total amount of insurance available. Remarkably, again the insurance company refused.

Before trial, mediation was scheduled. Mediation is a method used to attempt to resolve disputes. It is a formal settlement conference presided over by an experienced trial lawyer who is a neutral party agreed upon by all the parties. The mediator, an experienced trial attorney, explained what he thought were the strengths and weaknesses of the case to each respective side. Finally, the insurance company realized they had placed themselves and their insured, in a terrible position. If the case was tried and the jury returned a predictable verdict, both the company and its insured would be exposed to liability far in excess of the $1.3 million dollars of insurance coverage. The insurance company ended up paying the client and his family more than $1.9 million to release the company and its insured from all liability from the accident, rather than face a trial by jury.

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