How Much Does An Insurance Company Have To Pay On A Claim

A natural question for someone in Grand Prairie, Arlington, Mansfield, Fort Worth, Dallas, Hurst, Euless, Bedford, North Richland Hills, and other places in Texas would be – How much does an insurance company have to pay on a claim? The answer is – It depends on many things?
A Fort Worth Court of Appeals case, decided in 2000, gives some insight into how much an insurance company may have to pay on a claim. The style of the case is, Thomas Carter, Mary Carter, and Ed Carter v. State Farm Mutual Automobile Insurance Company. Here is some background.
In April of 1997, Thomas Carter, Kari Brunson, Jeff Goodman, Michelle Keeffe, and Craig Derrick were traveling west on I-30 in an Isuzu. At the same time, Jennifer Puterbaugh was traveling the same direction at a high rate of speed weaving through traffic and struck the Isuzu from behind. The collision caused the death of Kari Brunson and injured the four other occupants of the Isuzu. State Farm insured Michelle Keeffe, the Isuzu’s owner, against loss caused by bodily injury under a $50,000 per person up to $100,000 per incident uninsured/underinsured (UM/UIM) policy.
On May 15, 1997, State Farm sent a letter to Thomas Carter’s attorney suggesting that the potential claimants to the Keeffe policy meet for a settlement conference. The attorney replied that a settlement conference was premature because Thomas Carter and Jeff Goodman were still receiving medical treatment for the injuries they sustained and they did not know the extent of their damages. State Farm notified Carter’s attorney on June 9, 1997, that State Farm had received a demand for $50,000 from Kari Brunson’s estate and that they had to decide that day whether or not to pay the demand. State Farm accepted the demand of Brunson’s estate and paid out policy limits of $50,000, leaving only $50,000 available for any remaining claims. State Farm notified the potential claimants of that settlement by letter.
Carter and Goodman then demanded $50,000 each to settle their claims. State Farm replied that it stood by its decision to pay Brunson’s estate $50,000 and again encouraged Carter and Goodman to participate in the settlement conference scheduled for August 29, 1997. At the conference, the attorney representing Carter refused to consider settling his claim for less than $50,000, and Goodman said he wanted no settlement on Keeffe’s policy, at that time, because he had uninsured motorist coverage under his own policy. State Farm settled Keeffe’s and Derrick’s claims by paying $35,000 to Keeffe and $10,000 to Derrick. State Farm then unconditionally tendered a check for $4,000 to Carter and a check for $1,000 to Goodman.
In May 1999, the Carters filed suit alleging State Farm had breached the duty of good faith and fair dealing. The trial court granted summary judgment for State Farm.
In arguing its case, State Farm asserted that there was no breach of contract because State Farm’s settlement of the claims presented by Keeffe, Derrick, and Brunson’s estate were reasonable, even though the settlements depleted most of the uninsured motorist coverage available under Keeffe’s policy. The Carters urged the court to consider only whether State Farm’s actions were reasonable as to the Carter’s claims, not whether State Farm reasonably settled the other claims. The court said that an insurance company does not breach its contract by settling with covered persons, even when the settlement depletes or exhausts the policy proceeds.
In this case, the Carters sued for other violations which are not relevant to this posting. What is relevant is showing what an insurance company may have to pay on a claim. The first consideration is the limits of the policy. A policy with a $30,000 limit will not have to pay more than $30,000. A policy with a $50,000 limit will not have to pay more than $50,000. And so on. Most policies actually have two limits, for example, a limit of $30,000 per person or a maximum of $60,000 per incident. This means that one person may get $30,000 and 4 other people injured may have to split the other $30,000, or one person could get $30,000 and another person could get $30,000 and the other three people get nothing.
All of this can be confusing. Of course that this is the reason that an experienced Insurance Law Attorney must be consulted early.