Alaska Injury Law Blog

Mr. O’Donnell recently successfully concluded an insurance “bad faith” case against Allstate Insurance Company. After a two-week trial, the jury found that Allstate had failed to disclose and pay Mr. O’Donnell’s client $100,000 in Underinsured Motorist Coverage that was available from a prior class action settlement. The jury not only awarded Mr. O’Donnell’s client the underlying $100,000, but also awarded an additional $300,000 for financial distress resulting the delayed payment of the claim. The jury further found that Allstate had acted with reckless disregard of its insured’s interests. In Alaska, a jury can only hear evidence of the defendant’s financial condition, and determine the amount of a punitive damage award, after first finding that the plaintiff is entitled to an award of punitive damages. In that situation, the jury reconvenes to hear evidence of the defendant’s financial condition. The case settled here for a confidential amount the morning that the punitive damage phase of the trial was to begin with plaintiff’s CPA expert witness about to testify that Allstate made $2.4 billion last year. Mr. O’Donnell has handled, and continues to handle, numerous insurance “bad faith” cases against Allstate. The attorneys at the Alaska Personal Injury Law Group, including Mr. O’Donnell, have extensive experience with claims against insurance companies for failing to fulfill the special fiduciary duties they owe their insureds.

Over the years we have handled numerous “insurance bad faith” claims against auto insurers. These cases often involve situations where, following a serious auto accident, the insurance company fails to disclose and pay all the insurance coverage that is owed to the injured insured. We have seen that auto insurers often treat insureds as if they are adverse parties. They leave it up to the injured person to figure out which insurance policies apply. They leave it up to the injured insured to figure out what benefits they are entitled to under a 30-page or longer fine print contract. This approach to claims handling is both improper and illegal. Insurance companies owe their insureds an obligation of good faith and fair dealing. Alaska insurance regulations specifically require insurance companies to “fully disclose” to insureds “all relevant benefits and other provisions of coverage under which a claim may be covered.”

Determining what insurance policies and what coverages apply is often a complicated task, particularly in the event of a death or a serious injury. In a recent case, Allstate’s handling of a claim where a woman’s husband died in a head-on collision came to our attention many years after the fact. Our investigation determined that Allstate had denied underinsured motorist (UIM) coverage to the widow under a second household auto policy through a tortured and self-serving “interpretation” of the policy that the Allstate claims managers never disclosed to the widow. Indeed, Allstate never even told the widow (who was not represented by an attorney) about the possibility of coverage under this policy. After Allstate’s conduct came to light and we filed suit, the court granted summary judgment in the widow’s favor ruling that a “coverage determination based on arcane legal doctrine [followed by Allstate] is at odds with Alaska’s reasonable-lay-interpretation doctrine, which expresses clear Alaskan public policy.” The moral of the story is that unfortunately there is a need, in the event of a serious injury or death, to verify that you are actually receiving the “Good Hands” treatment your insurer promised and is required to provide as a matter of Alaska law.