Nuisance Value Offer Tied to Reckless Disregard
An insured motorist who suffered whiplash in an automobile collision sued her insurer seeking underinsured motorist benefits for Botox treatment of chronic migraines following the accident. After a jury awarded over $1.4 million, the insured amended her complaint to add a bad faith claim. The court awarded bad faith damages and fees totaling $197,940. A Minnesota Appellate court construed the bad faith statute and ruled as a matter of first impression that an insurer must conduct a reasonable investigation and fairly evaluate the results to have a reasonable basis for denying an insured’s first-party insurance benefits claim. Here the court ruled the insurer lacked that reasonable basis and it knew, or acted in reckless disregard, when it delayed a settlement offer for a year and then offered only nuisance value.