Visitor Question

Can I sue Allstate for bad faith after a car accident?

Submitted By: Anonymous (Pensacola, Florida)

I was hit by a careless driver who was 100 percent liable for the accident. We both have Allstate. My car was only 5 days old and sustained severe damage (bent frame & airbags deployed)

The problem is that Allstate doesn’t want to pay my damages. They low balled the repair estimate of $15,000 and it will take months to repair. They don’t want to pay for a rental car for enough time to repair the car, nor pay loss of use of my new car. They also don’t want to pay diminished value on the car if it were repaired.

This is financial ruin for me, and unfair to put an innocent person through months of hell to fix a car that has severe damage. The car dealership says even if fixed to perfection, they would have to put the car into salvage because the structural damage makes the car unsafe.

What can I do? Any information you can give me will be helpful.

Disclaimer: Our response is not formal legal advice and does not create an attorney-client relationship. It is generic legal information based on the very limited information provided. Do not rely upon the information in our response, or anywhere else on this site, when deciding the proper course of a legal matter. Always get a personalized case review from a local attorney.

Answer

Dear Anonymous,

Thank you for your question. Given the facts in your message, it would be worth your time to contact an attorney to discuss a potential bad faith action against Allstate Insurance Company.

Acting in Bad Faith

Auto insurance companies have a legal duty to act in good faith. Good faith means the company has to treat you reasonably and fairly. It’s against the law in the U.S. for insurance companies to engage in bad faith tactics.

In most states, insurance companies act in bad faith when they:

  • Fail to follow claim processing procedures
  • Fail to acknowledge or respond to your claim filing
  • Deny your claim without giving a rational reason for doing so
  • Make unreasonable demands for medical records and other documents
  • Make an unreasonably low settlement offer
  • Unreasonably delay in settling a claim
  • Fail to investigate your claim or conduct a poor investigation

Florida laws allow third-party bad faith claims against insurers, so you would have legal standing for a claim if bad faith is proven.

Insurance adjusters often negotiate aggressively because they want to protect the profits of their employer. Aggressive negotiation tactics are permissible. However, if an adjuster avoids your calls, lies, or offers unreasonable settlement amounts, then the acts may rise to the level of acting in bad faith.

Allstate and Bad Faith

The settlement offer of $15,000 might seem low, especially considering that the other driver was 100 percent at fault for the accident, and your car was brand new.

The low offer is also supported by the dealership’s statement that they’d have to put the car in salvage even if they fixed it. That begs the question as to why the car wasn’t considered a total loss by the insurance company.

However, note that Florida law requires drivers to carry at least $10,000 of property damage liability insurance.

Allstate’s offer of $15,000, albeit low, is $5,000 above the minimum policy limit requirements. Given this, the offer might not come across as extremely low. We’d have to learn more about the applicable policies in play to determine if the offer is truly a lowball one.

Allstate may have offered you the property damage policy limits. If the at-fault driver didn’t carry enough insurance to cover all your damages, unless you’ve waived your rights, you might be able to pursue the at-fault driver personally for the remainder of your damages.

We’d also need to learn more facts regarding the insurer’s failure to pay for a rental car and diminished value. These failures could give rise to bad faith acts if they were outright refusals to pay without any reasonable investigation into your claim or a reasonable explanation for the determinations. Again, you may have been offered all the available funds.

Extra-Contractual Punitive Damages

If you can show that Allstate acted in bad faith, a court may award you with extra-contractual damages. We use the term “extra” because bad faith insurers have to pay these damages in addition to the compensation they provide for your underlying claim from the policy (contract) limits.

Actions to Take

It’s a good idea to write a letter to the adjuster’s supervisor and explain what you feel are the specific bad faith tactics taken by the agent. Mention that you’d like to work with the company to reach a favorable settlement. But also mention that you’ll seek legal representation if the company refuses to work with you in good faith.

If your letter doesn’t work, then you should contact a personal injury attorney for help.

You or your attorney can also file a complaint with Florida’s Office of Insurance Regulation. The department will start an investigation of your case once it receives your written complaint.

Learn more here: Bad Faith Auto Insurance Claims

The above is general information. Laws change frequently, and across jurisdictions. You should get a personalized case evaluation from a licensed attorney.

Find a local attorney to give you a free case review here, or call 888-972-0892.

We wish you the best with your claim,

Published:

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