Insurance Companies Hold Onto Your Money As Long As They Can

11/17/2008 | Unfair Insurance Practices/Bad Faith

Elizabeth Murfitt's wrist shattered in a car wreck that was not her fault. Erie insurance offered her $45,000 prior to trial. On the second day of trial Erie settled for $800,000. Murfitt filed suit against Erie claiming they acted in bad faith (wrongfully denied her claim or tried to get her to settle for less than it was worth). Ms. Murfitt then sued Erie and demanded they tell her what the reserves were on the claim, but Erie tried to keep it secret. The trial court ordered Erie to disclose what they believed they claim was worth when they offered the $47,000 and Erie appealed. Writing for a unanimous West Virginia Supreme Court, Justice Benjamin wrote "It appears Erie consistently offered to settle Ms. Murfitt's claim for less than her incurred medical bills and without regard for her lost wages for nearly two years prior to the commencement of the trial of the underlying personal injury action," Benjamin wrote. "Then, within the month before the personal injury trial was to commence, Erie's settlement offer increased exponentially without any objective evidence of newly discovered facts justifying such a dramatic increase." This is classic bad faith behavior. Insurance companies have an interest in holding onto their money as long as they can, even if they know they will have to ultimately pay. Or, as Wimpy used to say...

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