Insurance Company’s Unfair Offer Rejected by Arbitrator

Oregon may be the only state in the country where you do not have any power to hold your own auto insurance company accountable for unfairly evaluating the value of your claim.  What does that mean? Here’s an example.

As we all know, bad driving happens. A careless driver may crash into your car while you are driving down the road. Maybe you or your loved one is severely injured, resulting in enormous medical bills and loss of the ability to earn a living for some time. These type of injuries can cause losses into the six and even seven figures. To make things worse, the careless driver who is liable for causing these harms to you or your family has only the minimum coverage under the law, $25,000.  To say the least, the other driver’s insurance does not start to meet the losses he caused. Because of that risk,  many of us carry additional underinsured motorist (“UIM”) coverage with our own insurance companies, ranging  from $50,000 to $1,000,000. Under these policies your insurance company is supposed to pay you for the total amount of the harm you suffered from the careless driver regardless of the amount of insurance the bad driver carries, up to your own UIM limits. This is one way we protect ourselves and our families.

Many people trust their own insurance companies (after all, we are barraged by commercials that tell us we are in good hands and have good neighbors) and believe that when the insurance company offers a payment on their losses that it is based on a fair investigation of the injuries and losses. However, more and more we see insurance companies refusing to fairly assess the losses that their customers suffer from an underinsured bad driver. Instead, even after the customer has faithfully paid the premiums for years, the insurance company sometimes offers their customer only a fraction of what is due in light of the severity of the injuries and losses. Because of the trust in their own insurance company, some injured persons will take those offers, and as a result the insurance company avoids paying the full amount that it is obligated to pay. Other injured persons recognize the evaluation as unfair and contact an attorney to bring a case against the insurance company so that a neutral third party, such as an arbitrator, will be used to make a fair evaluation.

Recently, we took such a case to arbitration. The Farmers Insurance company had offered our client, who was a doctor, only $50,000 of additional money on her underinsured motorist policy. This was after a driver hit her at a stop light, resulting in her having neck surgery and suffering permanent injury that caused her to lose part of her past and future income. The bad driver’s insurer settled for $100,000. The facts were simple and the insurance company had very weak evidence to counter the overwhelming evidence that the doctor indeed suffered serious medical, physical, and financial losses. The arbitrator fairly evaluated the claim at $380,000.

We have heard of other attorneys in Oregon who have also noticed  similar conduct by Farmers Insurance and other insurance companies, where the insurer refuses to fairly assess their insured’s underinsured motorist claims and the only way for the injured person to fairly recover is to bring the case to trial or arbitration.

In other states, insurance companies would be subject to a bad faith claim if they ever chose to unfairly evaluate their customer’s claims. Those bad faith claims could result in punitive damages. That exposure to punitive damages is a deterrent against such conduct by insurance companies in those states. But in Oregon, that is not the case. Here, there is no punishment for an insurance company to act this way.