Insurance Expert Witness On Bad Faith Cases – Part 10

In Negotiating and Settling Insurance Bad Faith Cases , insurance expert witness Guy O. Kornblum of GK Consultants, LLC, writes:

THE SEVEN POINT TEST FOR EVALUATING A “BAD FAITH” CASE Here is a quick checklist for looking at the potential for bad faith and punitive damages in an insurance tort case:
1. What is the personal plight of the insured/claimant plaintiff? In short, how sad is the story? Will the story justify “ringing the bell” in the minds of the jury?
2. What is the amount of the contract claim? Is the amount sufficient to justify a substantial compensatory award? Is the fact that plaintiff has been deprived of these sums sufficient justification for a significant emotional distress award?
3. What is the amount of compensatory damages that is likely to be awarded for economic loss, emotional distress and attorneys’ fees? The greater the amount of compensatory damages, the larger the potential for punitive damages. This is particularly true in a “cap” state such as Indiana in which three times the compensatory award may pose a much greater exposure to punitive damages than the monetary cap of only $50,000.
4. How long has the plaintiff been a policyholder (in a suit by an insured)? A jury will expect the insurer to “give slack” to an insured who has been a policyholder for a substantial period of time. Reluctance by the insurer to give the benefit of the doubt to long-standing insureds who have continued to fuel the company coffers with premium payments may create a jury climate for a punitive claim.
5. What is the length of time from claim to compensation? The longer the period from the time of the initial injury to trial (or payment of what was rightly owed), the higher the punitive potential. A lengthy period of denial only bolsters the perception that insurance company claims personnel are taught to hold on to the insurer’s money for as long as possible in order to maximize profits.
6. What is the likely credibility of the company witnesses? The story of the claims handling is influenced by the believability of the insurance company’s witnesses, who may be subject to impeachment and/or may be shown to have taken an adversarial posture against the insured, which is inconsistent with the principles of good faith claims handling.
7. What is the overall perception of the insurance company? That is, what picture will the jury have of the insurer? Promises of “Good Hands,” “Good Neighbor” and “Piece of the Rock” give the jury the impression that the insurer can be trusted, but these advertising slogans may be perceived as just marketing tools for attracting customers, with no intention of meeting these standards of customer concern, care or treatment. Also, if the insurer is perceived as being very wealthy (even if the jury will not hear evidence of financial wealth until a later aspect of the trial), this perception can affect the jury’s determination.