DELAWARE SUPREME COURT OPINES ON INSURANCE COMPANY BAD FAITH

Here’s the key takeaway from the Delaware Supreme Court’s opinion affirming the Superior Court’s grant of summary judgment in Enrique v. State Farm:

“[Plaintiff] would have us invoke a hindsight presumption that the failure to offer policy limits or seek remittitur after a verdict in excess of those limits constitutes bad faith. No such presumption exists. Further, such a presumption would ignore the reality of valuing personal injury claims: putting a dollar value on general damages and pain and suffering is inherently subjective.”

Plaintiff was involved in a car accident and exhausted PIP benefits.  She sought UM benefits in excess of her policy limits (huh?) and negotiation ensued.  A number of people…adjusters, attorneys, managers…had a difficult time agreeing on the value of her claim due to pre-existing injuries.  Plaintiff rejected all settlement offers and went to trial and got an above policy limit verdict.  State Farm paid policy limits and Plaintiff proceeded with her bad faith claim (which had been stayed) and the Superior Court granted State Farm’s motion for summary judgment.

As the Court summarized:

“Without more, rational differences in claim valuations do not lead to an inference of bad faith. Here, the record shows that State Farm and Enrique had different views of the value of the claim; State Farm sought advice from two attorneys, attempted to reach a settlement with Enrique, and failed. State Farm had bases for its claim valuations, and there is no evidence that creates an inference that those reasons were pretextual. State Farm thus was not “clearly without any reasonable justification” for its valuations.”

Insurance companies are not charities and like any business, must make smart business decisions.  Read the full opinion here.

Chris Lee

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