Essay on Alternative Dispute Resolution

651 Words3 Pages
Donna Driver unintentionally ran a red light, and caused a car accident with Vic Victim. Vic sustained severe injuries. Donna’s auto insurance policy with Gekko has liability coverage limit of $100,000.00. Vic’s medical bills alone run close to that, and there’s also his loss of work and pain & suffering to be taken into account. Vic wants to settle the entire case for $100,000.00, and Donna pleads with Gekko to do so since it is obvious that he could recover more than that based on the facts of this case. Gekko tells her that they will only offer $50,000.00, and if it’s not accepted, they will take their chances at trial.
Vic is awarded $200,000.00 at trial. Gekko pays $100,000.00 in accordance with Donna’s auto policy coverage, and
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It did not, however, defend Donna in good faith when it refused to negotiate and could have settled the case for the amount of the coverage provided in her auto policy. Therefore, in accordance with the findings in Schaeffer, Donna has a valid claim against Gekko.

Schneider v. Eady, 2008 Ohio 6747 (Ohio Ct. App. 2008) emphasizes that,
"[a]n 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." Pasipanki v. Morton, 61 Ohio App. 3d 184, 185, 572 N.E.2d 234 (1990) (quoting Bean v. Metro. Prop. & Liab. Ins. Co., 9th Dist. No. 13543, 1988 Ohio App. LEXIS 4275, 1988 WL 114464 at *1 (Oct. 26, 1988)). Gekko did not act in good faith to settle Vic’s claim against Donna, and their failure to do so enables Donna has a cause of action against Gekko.

This court further finds, as did the court in Shaeffer that the duty "runs only from the insurer to the insured, not to third parties." Id. (quoting Bean, 1988 Ohio App. LEXIS 4275, 1988 WL 114464 at *1). A third party, therefore, generally "has no cause of action for bad faith against the tortfeasor's insurance company." Id.; see also Chitlik v. Allstate Ins. Co., 34 Ohio App. 2d 193, 197-98, 299 N.E.2d 295 (1973).” So it is clear that Vic Victim will not be able to file a suit
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