Earlier this year, a state court issued an opinion in a car accident case involving where the insurance company’s settlement offer was at issue. The case highlighted some challenges that can arise during settlement negotiations in the aftermath of an accident. The court was asked to decide whether an insurance company acted “in bad faith” when their offer to settle included a broad release of all claims against the driver at fault, but gave the victim’s attorney the option to revise the terms.
Do Insurnace Companies Need to Act in Good Faith?
Yes, insurance companies are required by law to act “in good faith” when trying to settle in order to protect the financial interests of the people they insure. That means they should make timely and reasonable settlement offers that try to fully compensate victims, making it likely that they will agree to settle. Drivers buy liability insurance all the time because they expect the insurance company to protect them from financial liability. In some states, like Maryland, drivers are required to have a minimum amount of liability insurance to cover potential bodily injury and property claims that may result from car accidents.