Demonstrating why the American Association for Justice has named Allstate the worst insurance company in America, a Missouri appellate court has upheld a $16 million judgment against it for failing to settle for the $50,000 policy limits in a clear cut case of its insured’s liability.
Allstate’s insured drove left of center on a highway causing a head on collision with another vehicle resulting in life threatening injuries to its two occupants, Edward and Virginia Johnson. The Johnsons required extensive hospitalization and treatment. After Allstate refused to settle for the policy limits, the Johnson’s reached a $5 million settlemement with the tortfeasor in which they agreed not to collect against him but allowed the Johnson’s to bring a bad faith refusal to settle claim against Allstate.
Allstate defended the case by arguing that it was uncertain whether the collision caused the Johnsons’ injuries. Not surprisingly, the jury didn’t buy it and awarded the Johnson’s $5.8 million in compensatory damages and $10.5 million in punitive damages. In July of this year, the Missouri Court of Appeals affirmed finding the verdict justified: "Allstate’s failure to recognize the severity of the Johnson’s injuries and the probability that the claim would far exceed Davis’s policy limits; its failure to investigate the claim and respond to the demand in accordance with insurance industry standards and its own good faith claim handling manual; and its failure to advise Davis [the tortfeasor] of the demand, his likely exposure for an excess judgment, and his right to reain counsel, are all circumstances supporting a reasonable inference that Allstate’s refusal to settle was in bad faith."
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