Maryland Injury Lawyer Blog

As a Baltimore City resident, I carry very high liability limits not because I'm at risk for causing accidents but that's the only way to get acceptable unisured/underinsured motorist coverage limits. There are plenty of "financially irresponsible" people driving in the Baltimore area with minimum limits, or worse, with no insurance at all. So, like everyone else, I certainly have an interest in fair treatment from insurance carriers if and when the need arises. But the insurance contract does not say that I get my policy limits for any accident, without reference to actual loss, does it? It would be simpler if it did, but such a contract would be expensive, and pose certain moral hazards, to say the least.

And therein is the rub -- what is fair when you're quantifying loss from physical injury? I suppose one could have some metaphysical standard for fairness which in my experience dealing with plaintiff's counsel means policy limits in nearly every case, regardless of those limits. Almost as common is a ridiculous first offer from the carrier. So, how do we decide what's fair? A jury can decide for us, but since the idea here is to resolve the case without the assistance of a jury, we need some other basis to decide what's fair. The practice, as far as i can tell, is that "full value" is a proxy for "fair." So what does full value mean? It means, for both plaintiffs and defendants, the value that they think they can get from a jury. So, in a sense, we back to square one. So, if anyone can suggest another method to evaluate fairness here, I'm all ears.

I agree with everything you have said, actually. But in third party cases, there is no duty of good faith and fair dealing. Good faith to me means tell me exactly what you think the case is worth. Why are we even negotiating? Offer the full value from jump street. To me, that is good faith.

The allegations here go beyond that. The computer spits out values that the adjuster does not like so she/he changes the data. We can agree this is not good faith and fair dealing to your insured, right? I don't really have a problem with this in third party cases. It is the first party bad faith cases where I object to all of these tactics because you are paying for the insurance and you should at least get what the insurance company honestly thinks is the value.

Do we agree on this?

I think we do. From what we know about it, computer programs are anything but fair, especially if an adjuster manipulates the input to reach the result that his/her management is looking for. I don't think the carriers I worked for used a computer program to calculate value, but State Farm was notorious for that approach. From the defense lawyer perspective, I think State Farm's counsel is probably left scratching their heads on these cases. I'm as computer friendly as they come, but I readily acknowledge that computer programs can assist decision-making, but they can't make judgments, much less honest judgments. As you say, maybe that's the touchstone -- in first-party cases, the customer has paid a premium for the carrier's honest judgment on value. That's a barebones but workable principle, and one on which everyone should be able to agree. Neither is it an unfamiliar principle because the same concept shows up in other areas of the law, eg. the business judgment rule, mistake, etc.