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The case of Katie: Progressive doing unwell in social media

| 14 Comments


A Tumblr complaining about Progressive has gone viral. The author's sister, "Katie," died in a Maryland car accident; the other driver's insurance paid its limits, and Katie's family went to Katie's insurer, Progressive, to seek coverage for the underinsurance of the other driver. Progressive refused, so the family sued the other driver to prove liability, and found themselves adverse to Progressive in court, and the author was furious, as are readers of the story. (A jury found for Katie, so her family will recover from Progressive after all.)

Without more facts, however, it seems Progressive is being viewed unfairly. Maryland is one of the few remaining contributory negligence states: if Katie was 1% at fault in the accident, there is no liability to the other driver or Progressive. As the author himself admits, there was a "possibility that Katie was at fault in the accident." Is Progressive supposed to give money away when they aren't legally obligated to do so? The author says "One indication that the case was pretty open-and-shut was that the other guy's insurance company looked at the situation and settled with my sister's estate basically immediately." But because "that payment didn't amount to much," that insurance company could have reasonably decided that there was little point in spending the small insurance limits on attorneys instead of just writing a check. Progressive had more money at stake and more reason to defend.

Yes, "[c]arrying Progressive insurance and getting into an accident does not entitle you to the value of your insurance policy." But that's true for all insurance companies when the policy holder is not in a no-fault state. Progressive isn't unique in that regard.

As of 2007, Maryland permits recovery on a "bad faith" theory against insurers who refuse to pay claims where liability is not "fairly debatable." One would expect that Progressive would not have taken the action it did, and risk liability, if their position was not "fairly debatable." (See the entertaining story of Rex DeGeorge for examples of insurance companies being quick to pay when bad faith might be at issue.) The author seems to concede that Progressive's position was fairly debatable; he also makes no mention about further litigation against Progressive for its initial refusal to pay.

One sympathizes with the author for the tragic loss of his sister. But his fury at Progressive is misguided. Katie, and other Maryland drivers, pay as little for auto insurance as they do precisely because insurance companies don't have to immediately pony up when they are not liable. One could ask for different rules, but consumers would be paying for those different rules up front. Related: Consumerist.

14 Comments

"But his fury at Progressive is misguided. Katie, and other Maryland drivers, pay as little for auto insurance as they do precisely because insurance companies don't have to immediately pony up when they are not liable. One could ask for different rules, but consumers would be paying for those different rules up front."

The title of the post is "My Sister Paid Progressive Insurance to Defend Her Killer In Court" and no where in your rebuttal do you make mention of that. He took the issue of who was at fault to court to prove that his sister didn't have even "1% negligence". It's not a matter of believing you're entitled to the value of your plan because he's going through proper channels to settle that. The reason this has gone viral is in the title of the blog post. And it's about how far insurance corporations will go to protect their bottom line. I don't think it's misguided to feel "fury" when, instead of paying for your own client's policy, you hire a legal team for the defendant in an attempt to not pay anything.

Nothing in there says defending the one responsible for the death of your sister just so you don't have to payout isn't a disgusting and foul thing to do.

Progressive Insurance should not have secured their own legal team to defend the other driver in court. Period. Some level of fault was in question because there were no cameras at the scene? Fine. Let the case be tried in court WITHOUT their involvement, and be prepared to pay up if the presumed at-fault party was indeed found to be at fault. It's about human decency. It’s sickening to me that anyone can accept as a matter of course that a company’s bottom line justifies acting in such a despicable manner.

As for the insinuation that the family not pursuing further litigation at this time is somehow indicative of Progressive being in the right, it might shock you to realize that litigation is expensive, painful, and time-consuming for people that are not lawyers, especially those mourning a family member, and that it is usually a long process to collect money on the other end. So perhaps they're hoping that Progressive finally pays up now that fault has been established and that they can move on with their lives.

Thank you for this post. Way back in the day, my Business Law prof taught a simple rule to those of us not destined for a legal career. If your "Ain't Right" meter is pinging when you read about a legal issue then you most likely do not have all the facts. Thank you for the clear explanation of this case.

The insurance company here didn't just contest its obligation under the terms of its policy; they actually paid for lawyers to defend an unaffiliated third party (the at-fault driver, who was not a client of theirs) in the suit to determine liability filed by their own client. That is, they paid to defend the person who killed their customer, in order to avoid making good on the terms of their policy with that customer, who had previously been paying premiums to them.

Obviously they thought it was financially beneficial to them to do so. Equally obviously, it's heartless, and hostile to their own client. Going far beyond merely establishing clear liability, they used their financial resources (some of which they had been collecting from that client for years) to harm their own client, and did so by protecting the person who killed her. Her family did not simply "find themselves adverse" to their insurance company; they (or, the dead woman) had a longstanding contractual relationship with that company, which the company chose to attempt to sever the moment it was asked to live up to its side of the bargain, and, again, did so by extending its protection to its client's killer. The company *made itself* adverse to its client and her family, again, I note, by protecting the person who killed her violently and tragically.

Oddly, people object to that and kind of hate the company that did it. I guess that's just another cost of doing business. If you're going to do business that way. Which they chose to do.

If your home insurance company thinks your house fire is arson, they'll investigate you personally. Those who are offended by the fact that buying an insurance policy does not mean buying a friend are confused about what it means to have insurance. No insurance company is always on the policyholder's side, and you would refuse to pay the gigantic premiums of one who was.

Kudos Ted!

Maryland's contributory negligence law incentivizes this type of behavior by Progressive. This is another reason why it should be changed to comparative fault.

Progressive did not hire counsel to defend the other driver. The blog author's assertion is untrue.

Nationwide hired the other driver's attorney. This can be discovered pretty easily by looking the case up.

To all those whining about Progressive and/or Nationwide defending the other driver, what were they *supposed* to do? This was a UIM claim. Their role was exactly the same as that of the at fault driver's carrier. If liability were clear, they should have simply paid. It wasn't, so they did exactly what an auto insurer is *supposed* to do.

I don't expect a blogger to *like* the fact that the insurer didn't take his word from the get-go that the driver was at fault. I also don't expect a family member of a murder victim to *like* the fact that his tax dollars pay for a public defender to defend the killer against the murder charges. That doesn't mean either has done anything wrong.

Erik - Did Progressive advance Nationwide's policy limits to keep Nationwide in the case?

I know that if you attempt to defraud the ins co you go to jail, so why aren't the people who defraud the customers or at least attempt to defraud sent to jail?Insurance is a good idea in theory,but alot of ins co's don't want to pay out legitimate claims.This story is totally absurd action by ins co.HEy progressive you took her money(premiums) pay up or get out of the ins business.I will never use progressive now and i had thought about it recently.Maryland needs to change some laws too!And you might not be buying a friend when you get the ins that will always be on your side,but they sure make you feel like it!

@Erik - The author states that the defending attorneys specifically identified themselves in court as being from Progressive, and Progressive has nowhere denied this.

"Progressive did not hire counsel to defend the other driver. The blog author's assertion is untrue.

Nationwide hired the other driver's attorney. This can be discovered pretty easily by looking the case up."

Well that's pretty darn convenient. I'm sure Progressive had NO idea, and would have completely disagreed with this course of action, had they only known!

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

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