New York Central Mutual Fire Insurance Co., one of the most difficult insurance carriers the Ziff Law lawyers have encountered, has been ordered to pay $1 million to Quincy Mutual Fire Insurance Co. in a car accident case. A federal magistrate judge in Syracuse, NY said New York Central’s insistence on staying with its first settlement offer “epitomize(d)” bad faith negotiations.
The dispute between these insurance companies came up after a New York Central policyholder drove through a stop sign and struck a car driven by a 37-year-old mother of three children. The mother had to have six surgeries and endured depression and post-traumatic stress disorder.
The judge said New York Central acted in gross disregard for Quincy Mutual’s interest when it stuck to a $75,000 settlement offer and lost two opportunities to settle with the victim of a serious car accident caused by a New York Central policyholder.
The report said New York Central could have settled the case for its policy limits of $500,000 or for $750,000 — figures far less than the nearly $1.5 million the car accident victim eventually received through a settlement. Quincy chipped in its full policy limit of $1 million, while the rest was covered by New York Central and its reinsurer, according to the decision.
U.S. Magistrate Judge David Peebles appeared peeved by New York Central’s ultimate payment of $132,479 toward the settlement, which takes into account portions covered by New York Central’s reinsurer. New York Central exposed Quincy Mutual to up to $1 million liability and its policyholder to liability above $1.5 million — all for the risk of paying an additional $57,479 above its $75,000 offer, the judge said.
“Significantly, during the period the case languished, New York Central had the use of, and was therefore able to earn interest on, the full $132,479,” his ruling said. “These facts epitomize bad faith negotiations, suggesting gross disregard for the interests of Quincy Mutual and Warden and placing those of New York Central above them.”
New York Central, which provided a $500,000 auto policy to to the driver who caused the accident, handled the settlement negotiations that followed.
According to the ruling, there was a real chance that the victim would have settled for $500,000 in December 2005, a time when there was little hope that the driver who struck her would escape liability, the magistrate judge found.
New York Central lost another settlement opportunity in 2007, after a trial court “severely criticized” the primary insurer’s decision not to budge from its $75,000 settlement offer and highlighted that liability was firmly established and that interest was accruing.
At that point, the victim was willing to settle for $750,000, an amount that would have triggered Quincy Mutual’s homeowners policy, which provided $1 million in excess coverage, but would have put the excess insurer on the hook for less money.
“Had New York Central tendered its full $500,000 policy at that time, Quincy Mutual would have been responsible for only $250,000, which is $750,000 less than it actually paid,” the ruling said.
The magistrate judge was unconvinced by New York Central’s arguments that Quincy Mutual should have entered into negotiations earlier to help reduce its liability.
The actions New York Central Mutual was punished for here — delaying at every opportunity, making low ball offers, and failing to negotiate claims in good faith — are the same actions I see them take in every case I have with them. There are much better options in the insurance world than New York Central Mutual, and any readers out there who happen to have this carrier should consider this decision when deciding on who their insurance carrier should be, as have seen New York Central Mutual do these same things to their own insureds. All insurance carriers are NOT created equal, so choose wisely!
Thanks for reading,