In the case presented, Donna Driver admitted liability in a car accident with Vic Victim. Her liability coverage through Gekko is $100,000. Vic’s medical bills alone are close to $100,000 and he may be granted more than that because of missed work and pain and suffering.
Donna requested her insurance company to settle the case with Vic’s offer of $100,000. Gekko declines and at trial Vic wins $200,000. Donna had to file bankruptcy because of this loss and is now suing Gekko for not negotiating in good faith.
You have asked me to research how the cases of Shaeffer, Whiting v. Grange Mutual Casualty Company, 1981 Ohio App. LEXIS 14351 (Ohio Ct. App. 1981) and Schneider v. Eady, 2008-Ohio-6747 (Ohio Ct. App. 2008) will affect our case with…show more content… This case shows that the insurance company’s duty to deal in good faith does not extend to the plaintiffs who were not insured under the contract. Because there was no relationship with the insurer, the plaintiffs could not bring a direct action for bad faith against the insurance company to recover an amount in excess of the policy limits.
The facts that the Ohio Court of Appeals presented that is relevant to our case is the common law rule that the insurance company is contractually obligated only to the insured until there is a verdict, and therefore the insurance company is free to make settlement determinations in their own economic interest and without any duty to the claimants.
The other case that was researched, Schneider v. Eady, 2008-Ohio-6747 (Ohio Ct. App. 2008), also reiterates that the third party does not have a legal contract with the insurance company. In this case, the insured negligently drove her car into the third-party. The insurance company refused to negotiate, so the third party sued for breach of a claimed duty of good faith. The appellate court claimed that the third party was only an incidental beneficiary in regards to the insurance policy.
“An insurance company has a duty to act in good faith in settling claims and a breach of that duty will give rise to a cause of action by the insured. That duty, however, runs only from the insurer to the insured, not to third parties.” Id. at page 5.