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Mobile, Alabama Personal Injury Lawyer Blog | Long & Waite

Tuesday, September 30, 2008

Jury Determines Farmers Insurance Guilty of Bad Faith

Last week, Farmers Insurance Company, a subsidiary of Zurich Financial Services (note again the tie between insurance companies and investment firms), was ordered by a jury to pay $130 million to a group of homeowners in Oklahoma in a bad faith insurance lawsuit. The jury found that Farmers Insurance systematically underpaid general contractors, leaving homeowners with sometimes thousands of dollars in unpaid bills.

The group of homeowners includes about 76,000 homeowners who made claims on their Farmers Insurance policies from June 1994 to mid-2007. The homeowners alleged that Farmers was guilty of breach of contract, bad faith, and fraud, because, although its policies stated that it offered full insurance coverage for repairs, Farmers did not build overhead and profits for general contractors into the amount it paid for claims. The jury agreed with the homeowners, and awarded $50 million for breach of contract, $50 million for bad faith, and $30 million in punitive damages for a total of $130 million. However, the total award will be considerably less because the awards for breach of contract and bad faith are coincident and cannot both be collected, so the verdict is actually $80 million, although the homeowners will receive 15 % interest on actual damages and attorneys' fees.

This kind of bad faith practice is unfortunately endemic to the insurance business, a deliberate kind of bait-and-switch that insurance companies practice for profit. If you suspect that your insurance company is not living up to its full obligations under the policy you purchased, contact the experienced bad faith insurance lawyers at Long & Waite, Attorneys at Law, P.C. in Mobile, Alabama, today for a free consultation and case evaluation.

posted by Dr. Candelaria at 11:01 AM