Insurance Companies

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TEXT: TRUE STORY
What happens when an insurance company makes a claim handling mistake?
Presented by Travelers Insurance
Once Upon an Insurance Company Misstep

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Sometimes even insurance companies need extra protection. One snowy December evening, the roads were slick.

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When returning home after a holiday party, Ann lost control of her car and collided with another car,

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Two cars collide.

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significantly injuring the driver. Six months later, the injured driver’s attorneys sent Ann's insurance company,

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Fair Day Insurance, a letter requesting Ann's policy limits of $100,000 in exchange for a full and final release

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payable within 14 days. As if things weren't bad enough, they were about to get worse.

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The letter to Fair Day Insurance landed on claim handler Terry's desk. But because Terry was away on vacation when the letter was received,

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her response was delayed, causing the insurance company to miss the 14-day deadline.

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At that point, the injured driver’s attorney took the $100,000 settlement offer off the table and filed a lawsuit. One year later,

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the case went to trial. The jury found Ann liable for compensatory damages of $2 million. Ann in turn brought a first-party bad faith suit against Fair Day Insurance, claiming that the delayed response exposed her to personal liability and the excess verdict.

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Because Fair Day had a Travelers Insurance Company professional liability policy with a $3 million limit, this story had a happier ending than expected. After Ann's policy limits of $100,000 were paid by Fair Day

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and the $500,000 insurance company professional liability retention was satisfied, the policy covered

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the remaining $1.4 million dollars of the settlement for Fair Day -- an extra level of insurance for the insurance company

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when it needed it most.

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TEXT: Contact your Travelers representative to learn more.

Travelers Casualty and Surety Company of America and its property casualty affiliates. One Tower Square, Hartford, CT 06183

This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers. It is not a representation that coverage does or does not exist for ay particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law. Availability of coverages referenced in this document may depend on underwriting qualifications and state regulations. Claims scenarios are based on actual claims, composites of actual claims, or hypothetical situations. Resolution amounts are approximations of both actual and anticipated losses and defense costs. Facts may have been changed to protect confidentiality.

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