This lawsuit involved a claim by the insured that the insurance company engaged in bad-faith claim-handling by underpaying on a theft loss claim. The jury awarded the plaintiff $750,000 in punitive damages, more than seven times the amount awarded for the underlying damages.
The argument which prevailed was that the evidence fell short of proving, by “clear and convincing” evidence, that the insurance company acted with any “evil intent,” and that any mishandling was merely the product of either inexperience or transition problems when the company was purchased by another insurer while the claim was pending.
Lesson for Insurers.
While it is always hard for a defendant to concede it may not have handled a situation “by the book,” it may be beneficial in the long run to own up to mistakes, especially where the plaintiff is pressing for a punitive damage award.
