Background
GoAuto Insurance Company hired 2B Claims Services to adjust claims from a car accident. After failing to settle claims within policy limits, GoAuto sued 2B for negligence, claiming it did not receive adequate advice regarding potential bad-faith exposure.
The court’s reasoning
The court reasoned that GoAuto could not succeed on its claims without showing that 2B’s conduct proximately caused its damages. The court concluded that GoAuto’s decision not to deliver checks by the deadline was the cause of its alleged damages, not any negligence on the part of 2B. Additionally, the court found that 2B had no duty to provide legal advice regarding bad-faith liability, as this was outside the scope of its role as a claims adjuster.
GoAuto’s own decision to insist on releases and not send the checks by December 14, not 2B’s conduct, thwarted the policy-limits settlement and caused the subsequent bad-faith claims.
What it means going forward
The ruling clarifies the responsibilities of claims adjusters and reinforces that insurers must act promptly to avoid bad-faith claims.