If you think State Farm will treat you like a good neighbor, think again and read on. The takeaway from this tragic story is to always be aware of your insurance coverages and limits, make sure copies of your declarations page(s) and policies are readily available to you and loved ones, and never hesitate to hold your insurance company accountable. Here's what State Farm did to its policyholder in this case.
The Fatal Accident and Increased Coverage
Five days before the car accident that formed the basis of this case, Andrea Lovato, had increased the limit of her State Farm auto insurance policy from $25,000 per motorist and $50,000 per accident to $1,000,000 per accident. Lovato made this significant increase after her car was stolen and damaged to procure better protection for herself and her loved ones in case of an accident. Five days after increasing her coverage, Lovato was driving with her four year-old nephew in a rental car (while her car was being repaired) when she swerved to avoid a minivan that was traveling 70 mph in a 35 mph zone. The accident resulted in a head-on collision that, tragically, took Lovato's life but, miraculously, spared her young nephew. When Lovato's family filed the claim with State Farm as the result of the fatal accident, State Farm chose to handle the claim in bad faith and find any way possible to avoid paying Lovato the full value of her policy.
First, State Farm Wrongfully Denied the Policy Limit Had Been Increased
By a stroke of luck, Lovato's family—who had been unaware Lovato had increased her coverage before the accident—found a copy of the new declarations page which proved Lovato had increased her coverage just days before the crash. To try to avoid having to pay the higher limit, State Farm claimed the increase was not done at Lovato's request but, rather, was due to a “clerical error” and the coverage was “mistakenly and inadvertently revised” by its agents before the crash. Based on this position, State Farm only offered to pay Lovato's family in accordance with the lower limits of the policy that were in place before Lovato had increased her coverage. It also argued Lovato had maintained the lower liability limit on her insurance policy for years, and that her family could not prove she had requested the change before the accident. According to the Lovato family's attorney, “State Farm frankly took the position that people of modest means are not worth a million dollars.” State Farm's devious, offensive antics, however, did not end there.
Second, State Farm Accused the Driver of Committing Suicide
In an even more egregious effort to avoid its obligation to pay this claim, State Farm chose to attack Lovato personally, even to the point of claiming Lovato had intentionally caused the accident in an effort to commit suicide. In the face of this heinous treatment, Lovato's family was left with no choice but to sue State Farm to recover the full amount owed on the claim. The Lovato family brought suit in the First Judicial District in Santa Fe, New Mexico.
The Jury's $36M Verdict
Following a trial in late October, the jury issued a special verdict awarding Lovato's family $36M in damages. $12M was directed to Lovato's family and estate, while $24M was allotted for State Farm's bad faith handling of the claim and its breach of the contract with Lovato. $20M of the verdict was assessed as punitive damages. The jury found State Farm had breached its contract with Lovato by offering her family a settlement that was significantly lower than the amount it was required to pay pursuant to Lovato's policy and that State Farm had willfully violated New Mexico's Unfair Practices Act and Insurance Practices Act when it acted in bad faith in its dealings with the Lovato family. State Farm stated it disagreed with the jury's verdict and it is planning to explore all legal options, including an appeal of the verdict.
You can read more about State Farm's bad faith handling of this claim and the jury's verdict at www.santafenewmexican.com/news/local_news/jury-orders-state-farm-to-pay-36m-after-fatal-crash/article_830e12d4-7f22-11ee-ba22-334db730b255.html
The Takeaway: Always Know Your Coverages and Limits and Keep Policy Documents Readily Accessible
If the Lovato family had not been able to produce the new declarations page in this case proving the increased coverage, State Farm might have gotten away with paying the lower limits. It was the family's diligence and persistence that State Farm pay the full amount owed that resulted in this verdict. It is, however, tragic that it had to require five years of costly, time-consuming litigation, as well as the stress and trauma brought on the family by State Farm's heinous accusations and bad faith conduct.
The takeaway: Always be your own advocate. Keep your policies and their declaration pages in a location where you and/or loved ones can access them in the event of an accident or other loss and never back down from pursuing the full amount to which you are entitled. As insurance attorneys who have been fighting for policyholders' rights for decades we were thrilled with the justice rendered by the jury in this matter. If you ever feel you are being mistreated or lowballed by an insurance company never hesitate to contact our experienced insurance attorneys for a free, no-cost, no-obligation insurance claim review. At TWWH, we're here to fight for you.