Suing Your Auto Insurer for Punitive Damages

According to a recent public opinion survey from the Insurance Research Council (IRC), a majority of Americans feel that laws permitting individuals to sue their own auto insurer for punitive damages, along with obtaining benefits for their insured claim losses, are not a good idea.

The findings show that 26 percent of individuals surveyed indicated that permitting such lawsuits was a bad idea, with 31 percent noting it was only a fair idea.

A first-party bad-faith lawsuit occurs when individuals sue their own insurer due to the fact they believe the company utilized “bad faith” in the settlement of their claim.

As it stands, only a small number of states permit consumers to sue their own insurer in this format, although several states have recently discussed, and rejected, legislation allowing first-party bad-faith lawsuits.

The survey also looked into whether respondents would be open to paying more for insurance in order to allow first-party bad-faith lawsuits.

Forty-seven percent indicated they were “not at all willing” to pay additional money and 24 percent stated they were “not very willing” to pay more. Even among those who believed that permitting first-party bad-faith lawsuits was a good or an excellent notion, one-half (51 percent) stated they were not willing to pay added money for insurance in order to permit the lawsuits.

According to a IRC spokesperson, “These findings indicate a substantial lack of public support for legislation that would generate more lawsuits and higher costs for insurance companies.”

Given that many individuals are tired of seeing issues end up in court, one should not be overly surprised of these results.

It should also be noted that with everyone watching their dollars these days, don’t look for consumers to be happy about spending any more money than they have to.

The report, Public Attitude Monitor 2010: First-Party Bad-Faith Legislation, is based on phone interviews with more than 1,600 adults countrywide from Dec. 15, 2009, through Jan. 6, 2010.