Uninsured Motorist Case: What is the ‘Genuine Dispute’ Doctrine?

Uninsured Motorist Case: What is the ‘Genuine Dispute’ Doctrine?

As a Los Angeles personal injury lawyer who routinely handles uninsured motorist cases, this is a question that comes up from time to time.

I’ve discussed previously how, when one presents an uninsured motorist case to one’s own auto insurance company, the insured driver has significant leverage over his or her insurance company.

That’s because the insurance company has to treat its own customer as it would treat itself.  The law forbids insurance companies from playing their usual games to try and deprive injured claimants of their rightful compensation.

A common strategy insurance companies use to try and get around this requirement is to argue that it has a “genuine dispute” with its insured driver as to the value of the case.

Not so fast, said the Court of Appeal in the recent case of Zubillaga v. AllState Indemnity.

The plaintiff in that case was severely injured when a car ran a red light and plowed into her.  The other driver was at fault, and the plaintiff settled with that driver’s insurance for the minimum policy amount of $15,000.

The plaintiff then presented an underinsured motorist claim to All State, her own insurance company, for her own policy amounts of $50,000, (less the $15,000 she received), for a total of $35,000.

All State delayed.  They lowballed the plaintiff even though she was a paying All State customer.  All State argued that her future medical treatment was not necessary or related to the collision.

The plaintiff demanded arbitration, and at the hearing, the arbitrator awarded her the full $35,000.  After All State paid it, plaintiff sued All State for bad faith. She argued that All State committed bad faith by not paying the $35,000 when it was originally demanded.

The trial court dismissed plaintiff’s case, agreeing with All State that it had a “genuine dispute” as to the reasonableness of plaintiff’s future medical care.

The Court of Appeal disagreed.  It held that the genuine dispute rule does not relieve an insurer from its obligation to thoroughly and fairly investigate the insured’s claim, and a genuine dispute exists only where the insurer’s position is maintained in good faith and on reasonable grounds.

In this case, the Court ruled that an objective jury could find that All State did not have objective grounds for low-balling the plaintiff’s claim.

Every once in a while, insurance companies, who are well aware of their duties in first-party uninsured motorist cases, will try getting away with this chutzpah.

Make sure you have an attorney in your corner who won’t let them!

For questions about your Los Angeles area uninsured or underinsured motorist case, my office is ready to assist, 24/6!