Maryland Insurance Administration Rejects Plaintiff's Claim of Bad Faith

Maryland Insurance Administration Rejects Plaintiff’s Claim of Bad Faith

By Charles L. Simmons

The Maryland Insurance Administration (MIA) held that an insurance company did not act with an absence of good faith in adjusting a first party, under-insured motorist claim filed as a result of a motor vehicle accident.

Plaintiff’s claim consisted of alleged injuries sustained in a motor vehicle accident in September 2005 involving plaintiff and an underinsured driver as the tortfeasor.  Maryland law requires Maryland insurers to include underinsured motorist (UIM) coverage in their automobile insurance policies. UIM coverage serves the purpose of providing financial compensation to the innocent victims who are unable to recover, or fully recover, from the tortfeasors themselves.

In this case, the at-fault driver’s insurance company paid its limits in settlement of the underlying claim. Plaintiff made a UIM claim with his own insurance company, the defendant in the case. When the insurance company did not meet the settlement demand, plaintiff challenged the insurance company’s handling of his underinsured motorist claim. Plaintiff subsequently filed a complaint with the Maryland Insurance Administration arguing that the insurance company failed to act in good faith, as required under Section 27-1001 of the Maryland Insurance Article, during settlement negotiations.

The MIA held that: the insurance company (1) did not violate Section 27-1001 of the Maryland Insurance Article governing the requirements of “good faith” as it (a) made adequate efforts to obtain information related to the loss, (b) made an accurate and honest assessment of the claim, and (c) its conclusion regarding coverage is supported by the record; and (2) did not breach its obligations under plaintiff’s policy to cover and pay the underlying first party claim. The MIA found that plaintiff was entitled to receive a benefit from the insurance company on the underlying first party claim – but only in the amount of the insurance company’s last offer.


Charles L. Simmons, Jr., represented Farmers Insurance Company.

Bruce M. Bender represented A.M.K.