Insurance company who refused settlement hit with $10 million verdict for denying coverage to policyholder

by John Chapman

Donald Cox lost his Ohio driver‘s license due to an accumulation of “points.” Eventually he became eligible to have his license reinstated provided he complied with certain insurance requirements under Ohio law. Specifically, Cox was obligated to obtain an SR-22 certificate of insurance from an insurance carrier.

Cox and his wife to an insurance agent and explained the situation. The agent sold the Coxes a car insurance policy through Personal Service Insurance Company, accepting payment of the initial premium and providing Mr. Cox with an SR–22 certificate of insurance from Personal Service Insurance Company for him to bring to the Ohio Bureau of Motor Vehicles. Because of the SR-22 certificate of insurance, the BMV reinstated his driving privileges and issued him a new driver’s license.

Personal Service Insurance Company later decided to cancel their insurance policy because they considered Mr. Cox to be an “unacceptable risk.” The company complied with the notice of cancellation provisions in the policy. However, the insurance company never filed a notice of cancellation with the BMV. As a general rule, under Ohio law, when an insurer has provided a SR-22 certificate of insurance, the insurance company is obligated to provide the insurance coverage stated in that certificate unless the insurer files a SR-26 form providing notice of cancellation.

After the policy had allegedly been cancelled, Mr. Cox was in serious accident. Cox travelled into the oncoming lane of traffic and struck another vehicle. Brian Bigler, the other driver, was killed and Brian’s father, Howard Bigler, was injured. Mr. and Mrs. Cox were injured as well.

After the accident, the Coxes demanded coverage, but Personal Service asserted the policy had been cancelled weeks earlier. The Biglers’ attorney likewise asked the Coxes’ insurance company to settle for the full policy limits of $50,000. Personal Services rejected the offer and asserted there was no coverage on the date of the loss.

The Biglers sued Mr. Cox and a judgment was entered awarding $3 million in total to the three Bigler plaintiffs. The Biglers and Coxes then entered into an agreement that assigned to the Biglers a portion of any judgment the Coxes might recover from Personal Services Insurance.

The Coxes (and Biglers) sued Personal Services for a “bad faith” denial of insurance coverage. Under Ohio law, an insurer fails to exercise good faith in the processing of a claim of its insured where its refusal to pay the claim is not predicated upon circumstances that furnish reasonable justification for their actions.

Cox alleged he was still covered by the policy as the time of the accident because the insurance company never filed a notice of cancellation with the Ohio BMV. Cox alleged the relevant law was clear and thus the company had no reasonable justification for denying his claim. The trial court granted a summary judgment for Cox as to coverage. The trial court ruled that there was coverage as a matter of law because the SR–22 certificate of insurance was filed with the BMV but the insurance company never filed the statutorily required SR–26 notice of cancellation with the BMV.

A jury trial was held to determine damages. The jury awarded $8 million in compensatory damages, $2 million in punitive damages, and reasonable attorneys’ fees.

An Ohio court of appeals has now affirmed the judgment. The court of appeals summarized:

Mr. Cox was informed by the BMV that he had to do certain things to get his license back: one of which was to provide proof of certified insurance. The SR–22 certified that this insurance company issued a policy with a February 5, 2003 effective date. A policy was in fact issued covering Mr. Cox with that same effective date. The certificate assures that it would continue until terminated in accordance with the financial responsibility laws. The SR–22 was delivered to the BMV. The BMV accepted the document and reinstated Mr. Cox’s driving privileges. In other words, the insurance company issued a certified policy and allowed its insured to deliver the SR–22 to the BMV to provide proof of insurance …

Bigler v. Personal Serv. Ins. Co., 2014 WL 1384572 (Ohio App. 7 Dist. March 31, 2014).

The insurance company acknowledged that an SR–26 must generally be filed in order for the cancellation to be effective after an SR–22 has been filed in the BMV. And the insurance company admitted that the SR–22 was “delivered to” the BMV and that they did not file an SR–26.

The court of appeals rejected the insurance company’s arguments that a SR- 26 notice of cancellation was not required under the circumstance. The court of appeals also rejected arguments that the damages awarded were excessive. The judgment in favor of the Coxes and Biglers was affirmed in its entirety.

Trouble with your insurance company?

If you believe your insurance company is not treating you fairly, you should consult with an attorney experienced in pursuing “bad faith” lawsuits against insurance companies. The insurance company has an army of lawyers looking after its interests. It only makes sense that you have a lawyer looking after your interests.

At Heygood, Orr & Pearson, we stand up for individuals and companies who find themselves in the unenviable position of having an insurance company refuse to treat them fairly and reasonably. When an insurance company fails to treat a customer appropriately and denies a legitimate claim that should be paid, the lawyers at Heygood, Orr & Pearson are willing to take them on, expose their actions and make them pay for their improper and illegal conduct

Heygood, Orr & Pearson also has the financial resources to handle bad faith insurance cases from start to finish. In fact, there are many instances in which we invested hundreds of thousands of dollars in a case in order to take it to trial. At Heygood, Orr & Pearson, we are committed to achieving justice for our clients, whatever the cost.

Contact the lawyers at Heygood, Orr & Pearson for your free case evaluation and to learn more about your legal right to compensation. You can reach us by calling toll-free at 1-877-446-9001, or by filling out a free consultation form.