Insurer's agreement with insured to not pay loss leads to bad faith claim

The father told his daughter that, in his opinion, she had not caused all the damage listed on the repair estimates. Claiming that there was pre-existing damage to the rear of the auto, the family offered the driver of the damaged vehicle $300 to settle the matter, which she rejected.

Although the family did not want the claim submitted to their insurance company, the driver of the damaged car submitted it anyway, attaching the $1,502.14 repair estimate. The matter was referred to a claims adjuster. According to the carrier's records, the adjuster received a call from the father of the insured family, reaffirming that they did not want the insurer involved in the matter. On the same day, the adjuster wrote a letter to the mother (apparently the first named insured) advising her that the carrier would close its file at her request but that she first would have to sign a "waiver of coverage" letter, which she did. At that point, the insurer apparently considered the matter closed.

Some time later, the driver of the damaged car informed the claims adjuster in a letter that her attempts to resolve the matter with the insureds had been unsuccessful. She demanded that the insurer immediately pay her $1,502.14. The adjuster's supervisor replied by letter that the mother of the insured family was responsible for the claim and that "we will not be making payment to you on behalf of our insured."