THIS IS EXCERPT TWO FROM A LECTURE ON
INSURANCE COMPANY BAD FAITH
GIVEN BY ATTORNEY SCOTT MARKS

For more information on Insurance Company Bad Faith Problems, please visit Scott A. Mark’s website or call 1-888-638-2693.

The Los Angeles personal injury lawyers of The Marks Law Firm Specialize in Representing Those Experiencing Insurance Company Bad Faith Problems. Mr. Marks has achieved superior results in serious personal injury cases and is a particularly effective insurance bad faith attorney. The Firm has assists residents throughout Southern California including Los Angeles, West Los Angeles, Encino, Woodland Hills, Sherman Oaks, Tarzana, Santa Monica, Reseda

Uninsured/Underinsured Bad Faith
By Scott A. Marks
Los Angeles Insurance Bad Faith Lawyer

EMOTIONAL DISTRESS DAMAGES CAN BE QUITE SIGNIFICANT

IN BAD FAITH CASES

Emotional distress damages can be quite significant in bad faith cases. See Clayton v. United Services Automobile Association, supra, 54 Cal.App.4th at 1160, 1162 [$400,000 award as compensation for emotional distress upheld by the appellate court as reasonable based upon the insurer’s bad faith attempt to settle the underinsured motorist claim for a fraction of the policy limits, even though the insured did not suffer any financial hardship from the delay in payment of the claim]; Jarchow v. Transamerica Title Insurance Company (1975) 49 Cal.App.3d 917 [$200,000 award as compensation for emotional distress caused by the insurer’s conduct in forcing plaintiff to institute judicial proceedings against the insurer in order to obtain benefits due and owing to her.

In addition to these compensatory damages, in cases where the insurer has acted with malice, fraud and/or oppression, the insured may recover punitive damages. The same acts which constitute a breach of the implied covenant may also be shown to demonstrate liability for punitive damages when such acts occur within the context of malice, fraud and/or oppression.

Where an insurer handles a first party claim in a manner designed to minimize, or completely deny, benefits due and owing under a policy, it not only breaches the implied covenant but also subjects itself to punitive damage liability. For instance, evidence that an insurer ignored facts in its file which supported the claim while focusing on the facts justifying denial constituted a breach of the implied covenant and supported an award of over $3,000,000 in punitive damages. Similarly, a bad faith judgment awarding plaintiff $100,000 in compensatory damages and $5,000,000 in punitive damages was upheld, in part, by evidence that a claims adjuster testified that he was instructed by his supervisor that the purpose of the claims department was not to find ways to pay claims, but rather to find ways to deny claims.

Likewise, the appellate court held that an insurer’s defacto policy of minimizing payment of claims, as inferred through the testimony of its claims adjusters and policy manuals, not only constituted a breach of the implied covenant, but supported an award of punitive damages as well. The Court specifically held that the nominal amount of compensatory damages awarded $146.71, combined with a modest amount of general damages for emotional distress, $5,000, and supported a punitive damage award of $200,000. The Court of Appeal specifically rejected the defendant insurer’s argument that the amount of the punitive damage award was excessive based upon evidence that its net annual profit exceeded $200 million.

Finally the appellate court upheld an award of $429,310 in compensatory damages and $3,900,000 in punitive damages, based upon an insurer’s misconduct in attempting to settle an underinsured motorist claim for a fraction of the available policy limits.