Court Allows Plaintiff’s Bad-Faith Claim Against Insurance Company to Proceed

Earlier this month, a federal appellate court issued a written opinion in a case brought by a woman who was denied insurance coverage under her own underinsured motorist policy after she was seriously injured in a drunk driving accident. In the case, Peden v. State Farm, the court concluded that since the insurance company failed to conduct a thorough investigation prior to denying the plaintiff’s claim, the company may have acted in bad faith. As a result, the court reversed the lower court’s decision to dismiss the plaintiff’s case and permitted her to proceed toward trial against the insurance company.

VanThe Facts of the Case

Peden was injured in a drunk driving accident as a passenger in a friend’s van. On the day in question, Peden was at a birthday celebration for a friend who had just received a van from her fiancée, Mr. Graf, as a gift. At some point in the evening, several friends piled into the van so that Graf could take a picture. However, Graf unexpectedly got into the driver’s seat and took the van for a joyride while he was intoxicated. Graf crashed the van, injuring Peden, who then filed a personal injury lawsuit against him.

Both Peden and Graf were covered by a State Farm insurance policy. Initially, State Farm settled Peden’s claim involving Graf’s policy, but Peden claimed her damages were not fully covered and filed a claim under her own policy’s underinsured motorist provision. State Farm denied the claim, explaining that Peden got into the vehicle with a driver she knew to be drunk, and therefore she assumed the risk of injury.

Peden then filed a separate lawsuit against State Farm, seeking to compel the company to settle her claim. At some point during State Farm’s investigation of the claim, the company discovered information that led them to settle Peden’s claim. However, once she received payment, Peden claimed State Farm acted in bad faith by unreasonably delaying the approval of her claim.

Initially, Peden’s case was dismissed. However, on appeal, the court reversed the lower court’s decision. The appellate court explained that, as the insurance company carrying Peden’s underinsured motorist policy, State Farm had a duty to fully investigate the claim before denying it. The court felt as though State Farm may not have conducted a thorough investigation, and it reversed the lower court’s decision to dismiss the case.

Have You Had to Deal with a Difficult Insurance Company Following a Car Accident?

If you or a loved one has recently been injured in a Maryland car accident, and you have had to deal with a difficult insurance company in the wake of the accident, you should call the Maryland personal injury attorneys at Lebowitz & Mzhen, LLC. Insurance companies are notorious for taking advantage of unrepresented accident victims by offering low-ball settlements in hopes of settling the claim for as little as possible. However, these initial settlement offers are often grossly inadequate. Make sure you have an experienced ally on your side who will fight for your full and fair compensation. Call 410-654-3600 today to set up a free consultation with a dedicated personal injury attorney.

More Blog Posts:

Determining Liability in Maryland Multi-Car Accidents, Maryland Car Accident Attorney Blog, published November 2, 2016.

Head-On Collisions Are Often a Result of Distracted or Aggressive Driving, Maryland Car Accident Attorney Blog, published November 15, 2016.

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