American Family had issued to Jamie E. Becker an auto liability policy which provided for uninsured motorists coverage. On February 28, 1992, Becker was involved in an auto accident with Pamela Stone, who had no insurance. American Family denied liability alleging that Becker's father had canceled the policy. However, in April, American Family discovered that the policy had been canceled through error and agreed to reinstate it if Becker would sign an affidavit that he had not received the returned premium. Becker signed it and the affidavit was received by American Family on August 10, 1992.
Meantime, a claims analyst for the company took statements from Becker and Stone. After also reviewing the police report, the analyst concluded that Becker was more than 50% at fault for the accident and recommended that the claim for uninsured motorists coverage be denied. This was done on August 14, 1992. This action was filed by Becker against Stone and American Family on April 20, 1993. The trial court entered the judgment, upon the jury's verdict, in favor of Becker for $6,875. The jury found that Becker had been 45% liable for the accident. It also found that American Family had not breached its duty of dealing in good faith. Becker appealed.
The higher court decided that the company's two-month delay in acting on Becker's claim, because it erroneously believed the policy had been canceled, did not amount to a lack of good faith and diligent investigation. Furthermore, Becker did not sign the affidavit claiming nonreceipt of the returned premium until August 10, 1992.
The court, on appeal, noted that the jury's verdict showed a rational basis for the denial of the claim, and it established that it was difficult to determine which party was primarily liable for the accident. As a matter of law, the company's delay and denial of the insured's claim did not amount to bad faith.
The judgement entered in the trial court for $6,875 in favor of Becker was affirmed, as was the trial court's finding that American Family was not liable to Becker for damages for its alleged bad faith in handling his claim for uninsured motorists benefits.
Jamie E. Becker, Appellant v. American Family Insurance Group--No.
25A03-9612-CV-463--Court of Appeals of Indiana--July 28, 1998--697
North Eastern Reporter 2d 106.