Alternative Dispute Resolution
Donna Driver unintentionally ran a red light, and caused a car accident with Vic Victim. Vic sustained severe injuries. Donna’s auto insurance policy with Gekko has liability coverage limit of $100,000.00. Vic’s medical bills alone run close to that, and there’s also his loss of work and pain & suffering to be taken into account. Vic wants to settle the entire case for $100,000.00, and Donna pleads with Gekko to do so since it is obvious that he could recover more than that based on the facts of this case. Gekko tells her that they will only offer $50,000.00, and if it’s not accepted, they will take their chances at trial.
Vic is awarded $200,000.00 at trial. Gekko pays $100,000.00 in accordance with Donna’s auto policy coverage, and Donna is forced into bankruptcy because she cannot pay the remaining $100,000.00. Donna sues Gekko in Ohio civil court because they had a duty to negotiate in good faith, and refused to.
Shaeffer, Whiting v. Grange Mutual Casualty Company, 1981 Ohio App. LEXIS 14351, 3-4 (Ohio Ct. App., Franklin County Feb. 26, 1981) clarifies that a third party cannot sue an insured’s insurance company, but rather a third party can sue the insured after a court-ordered judgment against them. “Direct actions are not permitted in Ohio by third parties against a tortfeasor's liability insurance carrier. chitlik v. Allstate Ins. Co. (1973), 34 Ohio App. 2d 193. The injured party may sue the insurer only after obtaining a judgment against the insured.”
Therefore Vic Victim could not sue Gekko directly for the unpaid balance of $100,000.00. Vic can sue Donna Driver for the remainder of the judgment amount. However, Donna Driver, as the insured does have the right to sue Gekko.
In Shaeffer, the court found that “an insurance company has a duty to defend in good faith Grange's remaining duty under the insurance contract was owed to their insured, which was to defend in good faith and to pay any judgment assessed against its insured which was
Vic is awarded $200,000.00 at trial. Gekko pays $100,000.00 in accordance with Donna’s auto policy coverage, and Donna is forced into bankruptcy because she cannot pay the remaining $100,000.00. Donna sues Gekko in Ohio civil court because they had a duty to negotiate in good faith, and refused to.
Shaeffer, Whiting v. Grange Mutual Casualty Company, 1981 Ohio App. LEXIS 14351, 3-4 (Ohio Ct. App., Franklin County Feb. 26, 1981) clarifies that a third party cannot sue an insured’s insurance company, but rather a third party can sue the insured after a court-ordered judgment against them. “Direct actions are not permitted in Ohio by third parties against a tortfeasor's liability insurance carrier. chitlik v. Allstate Ins. Co. (1973), 34 Ohio App. 2d 193. The injured party may sue the insurer only after obtaining a judgment against the insured.”
Therefore Vic Victim could not sue Gekko directly for the unpaid balance of $100,000.00. Vic can sue Donna Driver for the remainder of the judgment amount. However, Donna Driver, as the insured does have the right to sue Gekko.
In Shaeffer, the court found that “an insurance company has a duty to defend in good faith Grange's remaining duty under the insurance contract was owed to their insured, which was to defend in good faith and to pay any judgment assessed against its insured which was