Nationwide ordered to pay $8.1M for bad faith over deadly crash

Sometimes, bad faith by an insurance company can be more subtle than rejecting a claim for a dubious reason. In a recent case, a federal judge has ordered Nationwide Mutual Insurance Co. to pay the family of a deceased woman more than $8.1 million in damages because the insurance company wanted extra conditions on the family’s settlement offer.

The underlying case is tragic. A woman and her 2-year-old son were hit by a drunk driver in 2005, killing the mother, according to a report on the case.

Later, the family sent Nationwide, the drunk driver’s auto insurer, a letter requesting that the company pay them the policy’s $100,000 limit. In exchange, the family would grant the driver, who was sentenced to prison, limited liability release, except “to the extent that other insurance coverage was available,” the judge noted.

The letter, prepared by an attorney for the family, gave Nationwide 10 days to respond. The company failed to meet the deadline, and demanded the family accept a general liability release that would have required them to repay Nationwide the value of any other claims they received related to medical liens.

A year after this impasse, the plaintiffs successfully sued the driver for wrongful death and were awarded $5.85 million by the jury. The driver assigned the plaintiffs his right to sue Nationwide for bad faith for failing to settle the claim prior to trial.

That bad faith case finally went to trial last year, with the jury finding for the plaintiffs. The task of determining damages was left to the court, which earlier this month ordered Nationwide to pay more than $8.1 million. The judge will also determine how much of the plaintiffs’ legal fees Nationwide must pay.