O’Connor v. Country Mutual Insurance Company, 2013 IL App (3d) 110870 (O’Brien)
Facts: Plaintiff suffered a broken leg in a motor vehicle collision, incurring $24,000 in medical expenses. She had a $250,000 UIM policy with the defendant with additional coverage for $10,000 in medical payments. She obtained a recovery of $105,000 from the at fault driver and pursued her UIM claim. She made an initial demand of $135,000 which represented the available coverage after reducing all set-offs applicable to the policy and then reduced her demand to $97,500. The defendant evaluated the claim through two sets of attorneys, both in house and outside counsel, with a value of between $145,000 to $155,000. The defendant’s attorney made a final offer of $40,000 prior to arbitration. The arbitrators awarded the plaintiff $213,295, which after the set-offs were applied resulted in a net award of $98,295. Defendant promptly paid the arbitration award. Plaintiff then filed a section 155 complaint seeking damages for unreasonable and vexatious delay in settling the case, citing the award of more than double the offer as evidence of unreasonable and vexatious conduct. Plaintiff further cited provisions of section 154.6 relating to the lack of a manual for evaluating the claim as further evidence of unreasonable and vexatious conduct. The trial court heard evidence from the defendants attorneys relating to their process and rationale for evaluating the claim and found that the defendant had “fully engaged in attempting to present a bona fide defense” and ruled in favor of the defendant. Plaintiff appeals the trial court’s ruling in favor of the defendant.
Holding: (1) The arbitration award that was more than double the pre-arbitration offer, standing alone, did not establish that the offer was unreasonable and (2) the defendant presented sufficient evidence that it used reasonable standards in evaluating claims despite the absence of a manual for such evaluations.
Filed in Trial Book Under: Bad Faith, Section 155
Commentary: The mere fact that an insurance company got their evaluation wrong does not mean that their deficient offer is automatically unreasonable and vexatious. I think that 155 claims are really designed for egregious circumstances, which is why the statute uses strong terms like “unreasonable and vexatious”. Here, they just saw the claim differently than the plaintiff and she was right.