Woodland Hills personal injury attorney Barry P. Goldberg loves handling Uninsured Motorist claims because it is one of the few circumstances where the insured has leverage over his or her insurance company. Barry definitely knows what to do when your insurer makes a “Low-Ball” offer in your Uninsured motorist claim—– demand Arbitration! (The same applies to “Underinsured Motorist” claims, as well!)
There are a few guiding principles regarding Uninsured Motorist claims which lead me to this inevitable conclusion. First, the Uninsured Motorist claim is considered a “first party” insurance claim. Attaching to that status are many obligations the insurer has to you that can be summarized by the phrase “good faith.” That good faith requires certain fairness including timeliness and reasonableness that are not associated with a “third party” claim (e.g., a standard motor vehicle accident where the insured “third party” is at fault.) In fact, in the “third party” context, with a few exceptions, an insurer can be virtually unfair and unreasonable to claimants.
You can sue your own insurance company for “Bad Faith.”
The consequence for being “unfair” in the first party Uninsured Motorist context is that you can sue your own insurer for insurance Bad Faith. In the third party liability context, a claimant has no direct cause of action against the at-fault party’s insurance company.
If your insurer unfairly “low-balls” you in an Uninsured Motorist claim, you can sue the insurer for “bad faith:”
“While an insurance company has no obligation under the implied covenant of good faith to pay every claim its insured makes, the insurer cannot deny the claim ‘without fully investigating the grounds for its denial.’ [Citation.] To protect its insured’s contractual interest in security and peace of mind, ‘it is essential that an insurer fully inquire into possible bases that might support the insured’s claim’ before denying it. [Citation.] By the same token, denial of a claim on a basis unfounded in the facts known to the insurer, or contradicted by those facts, may be deemed unreasonable. ‘A trier of fact may find that an insurer acted unreasonably if the insurer ignores evidence available to it which supports the claim. The insurer may not just focus on those facts which justify denial of the claim.’ [Citations.]” (See Wilson v. 21st Century Ins. Co. (2007) 42 Cal.4th 713, 720 (Wilson).)
Uninsured Motorist claims are outside the “normal” litigation context.
By contract and statute, all Uninsured Motorist claims are subject to binding private arbitration. That means that you can get a fair ruling on the valuation of your claim in a relatively short period of time—-if you push for it! In our office, we endeavor to set the arbitration dates immediately unless there are extenuating circumstances. If the insurer resists an arbitration date (they always do), we file a Petition with the Superior Court to Compel an Arbitration.
Insurers throw up many road blocks to this relatively prompt and simple procedure. Those road blocks are not the subject of this Article. However, suffice it to say that the insurers are concerned that they have “low-balled” or seriously under-valued the claim and that a neutral arbitrator will award more. Although there is more to it, insurers want to avoid an adverse arbitration award no matter what. Why? It opens the door to a first-party insurance Bad Faith lawsuit in which the arbitration award provides prima facie evidence that the insurer not only undervalued the case, but forced its insured through an arbitration in order to prove it.
In the third-party liability context, the case must be filed in the Superior Court and await a trial date some two years away. In the meantime, the insurer can wage a war of attrition and risk an adverse judgment with literally very few adverse consequences. Because the claimant has no direct cause of action against the at-fault party’s insurance company, the insurer has no increased monetary exposure. This may certainly explain why otherwise identical Uninsured Motorist cases are settled for more than the third-party counterpart.
Uninsured Motorist Insurers Attempt to Claim the “Genuine Dispute” Doctrine in Nearly Every Case to Shield Themselves From Liability.
Whenever an insurer gets “caught” low balling its own insured, the insurer floats out the “Genuine Dispute” doctrine and contends that one of its doctors did not believe that the insured was really injured to the extent claimed. Some courts have held that this so-called “Genuine Dispute” insulates the insurer from liability.
The insurers argue that an insurer’s denial of or delay in paying benefits gives rise to tort damages only if the insured shows the denial or delay was unreasonable. “[A]n insurer denying or delaying the payment of policy benefits due to the existence of a genuine dispute with its insured as to the existence of coverage liability or the amount of the insured’s coverage claim is not liable in bad faith even though it might be liable for breach of contract.” (Chateau Chamberay Homeowners Assn. v. Associated Internat. Ins. Co. (2001) 90 Cal.App.4th 335, 347.) “This ‘genuine dispute’ or ‘genuine issue’ rule was originally invoked in cases involving disputes over policy interpretation, but in recent years courts have applied it to factual disputes as well. [Citations.]” (Wilson, supra, 42 Cal.4th at p. 723.)
However, an insured can usually get around the “genuine dispute” doctrine by presenting sufficient evidence that the insurer’s investigation was inadequate, delayed or outdated:
“The genuine dispute rule does not relieve an insurer from its obligation to thoroughly and fairly investigate, process and evaluate the insured’s claim. A genuine dispute exists only where the insurer’s position is maintained in good faith and on reasonable grounds. [Citations.] Nor does the rule alter the standards for deciding and reviewing motions for summary judgment. ‘The genuine issue rule in the context of bad faith claims allows a [trial] court to grant summary judgment when it is undisputed or indisputable that the basis for the insurer’s denial of benefits was reasonable—for example, where even under the plaintiff’s version of the facts there is a genuine issue as to the insurer’s liability under California law. [Citation.] . . . On the other hand, an insurer is not entitled to judgment as a matter of law where, viewing the facts in the light most favorable to the plaintiff, a jury could conclude that the insurer acted unreasonably.’ [Citation.]” (Wilson, supra, 42 Cal.4th at pp. 723-724, fn. omitted.)
An Expert’s Testimony will not Automatically Insulate an Insurer.
Courts recognize that “[t]he ‘genuine dispute’ doctrine may be applied where the insurer denies a claim based on the opinion of experts. [Citations.]” (Fraley v. Allstate Ins. Co. (2000) 81 Cal.App.4th 1282, 1292.) “As the Fraley court emphasized, where an insurer, for example, is relying on the advice and opinions of independent experts, then a basis may exist for invoking the doctrine and summarily adjudicating a bad faith claim in the insurer’s favor. [Citations.]” (Chateau Chamberay, supra, 90 Cal.App.4th at p. 348.)
However, under the genuine dispute doctrine, an expert’s testimony will not automatically insulate an insurer from a bad faith claim. Case-by-case analysis is required. In the recent case of Zubillaga v. Allstate Indemnity Co. (June 19, 2017) 4th App. Dist. Div. 3, the court found triable issues of fact regarding the nature and extent of back injuries. In Zubillaga, the insurer offered about $15,000 and the insured obtained a UIM arbitration award of $35,000. The insurer contended that there was a genuine dispute because its expert doctor disagreed that spinal injections were reasonable or necessary. Because the insurer did not continue to consider that the insured had the injections and did not obtain an analysis of the updated condition, the Court found a triable issue of fact for the jury whether the insurer’s investigation was adequate.
An experienced personal injury attorney with significant knowledge of first-party insurance obligations has leverage in most UM/UIM arbitration situations to obtain the maximum amounts possible. This is important when your insurer offers you a “low-ball” settlement in an Uninsured Motorist case!
