Client Gets $5M Verdict in "Bad Faith" Case Against Insurance Company


Insurance companies are required to operate using “good faith” practices, which includes handling claims in a timely manner. Failure to carry out good faith practices can lead to a policyholder suing the insurance company for acting in “bad faith.”

Our law firm, Shoop | A Professional Law Corporation, recently obtained a major win for a client in one of these types of cases.

On April 12, 2013, our firm helped a client secure a $5,036,489 verdict, which included $3,500,000 in punitive damages, which is noted in our recent announcement regarding the case. The case—Palm Springs Pump, Inc. vs. Peerless Insurance Company (Case Number INC 1109263—was tried in Riverside Superior Court.

Case Details

When insurance companies in California receive claims under first-party property insurance policies, they are required by law to fully investigate the property for the claimed damage and determine whether the policy covers such damage. If the policy is supposed to cover the damage, the insurance company is then required to provide the policyholder with prompt payment.

This particular case involved a lawsuit filed by Palm Springs Pump, Inc. (a third-generation family-owned business) against Peerless Insurance, a Liberty Mutual Company, for bad faith claim handling practices—or essentially failing to meet the requirements outlined above.

Our firm's client, Palm Springs Pump, Inc., had purchased an all-risk insurance policy that cost $38,000 a year to provide coverage for the company's water well drilling rig. (The family business had purchased the drilling rig for about $700,000.) After the rig catastrophically failed under regular operation in December 2010, the company turned to its insurance company. Our firm's client submitted a notice about the equipment failure to the Peerless Insurance in a timely manner, asking the insurance company to ship the rig to a manufacturer in another state so that it could be repaired. Palm Springs Pump also asked that the rig receive further inspection for other damaged items.

Unfortunately, Peerless Insurance did not respond in a timely or adequate fashion, therefore causing Palm Springs Pump to suffer from major economic losses (amounting to more than one million dollars). In this case, the jury found that the insurance company refused to ship the rig to the out-of-state manufacturer due to a reservation of rights for inspection and repair. It was also determined that the coverage opinion by the insurance company was unreasonably delayed for almost six months and full payment through the policy was delayed for the span of almost a year. Shoop | A Professional Law Corporation provided Palm Springs Pump with much-needed assistance, helping the company sue Peerless Insurance for breach of contract, as well as for breath of the implied good faith and fair dealing covenant. With our Los Angeles product liability law firm's help, the client was able to come out of its trial well-compensated for the losses that occurred.

Those who turn to Shoop | A Professional Law Corporation can trust that their cases are being handled by seasoned legal professionals who know the ins and outs of working with insurance companies. Our firm has a history of reaching big-time case results for clients, as our lawyers have successfully tried many multi-million-dollar cases. Contact our office to learn more about our legal services.

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