Frivolous Insurance Company Conduct

We have all heard the stories of people filing frivolous or ungrounded lawsuits in an attempt to get a quick settlement from the insurance company. This practice is, for the most part, unfounded and is condemned by the various Bar Associations. And only a few unethical attorneys engage in this sort of thing, as the settlements tend to be fairly low and the attorney’s fees do not amount to much. Of course, on those few occasions when a frivolous case results in a large settlement, the news media and certain radio and television talk show hosts can’t criticize it and the legal system enough.

What is much more common is the wrongdoer’s insurance company refusing to pay a reasonable sum to compensate the injured victim even where their insured is clearly at fault, the amount of damages are reasonable and substantiated by such things as medical bills and lost wages, and the limits of the insurance policy easily cover the amount demanded. If a person filed a frivolous lawsuit in order to get a quick settlement, the insurance company can usually get the case dismissed before trial. But there is nothing stopping an insurance company from asserting a frivolous defense.

For example, suppose a person is injured in an automobile accident that is clearly the fault of the insurance company’s insured. Liability is so clear that the police officers who investigate the aftermath of the accident issue one or more traffic tickets to the other driver. There is a $100,000 insurance policy, and your damages are only $25,000. The insurance company says it will pay only $7,500 and not a penny more to settle the claim; otherwise, you have to take them to court and have a full-blown trial.

The insurance company tries to intimidate you by flooding your attorney with paperwork that takes hours to complete. The insurance company hopes to wear down your lawyer so he or she will advise you to accept the paltry offer. As long as the insurance company is doing nothing to delay the case, it is within its rights to aggressively engage in pre-trial investigation (“discovery”), such as taking your deposition.

Insurance companies sometimes mount frivolous defenses to send a message to the plaintiffs’ bar that if its inadequate settlement offers are not accepted, the lawyers can expect to spend hours upon hours working on the case, preparing it for trial, and then trying the case.

Unfortunately, while an insurance company (through its insured) can sue a person who unsuccessfully sued them for “malicious prosecution,” the injured victim has no right to bring a “frivolous defense” lawsuit against the insurance company, regardless of how outrageous or trivial the insurance company’s defense was.

The truth is that there are many more legitimate cases that are being denied fair and full compensation than there are frivolous cases that are being settled successfully.


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