Car Crash Property Damage Bad Faith Lawsuit Heats Up

State Farm forced to defend itself in Court

An Arizona couple is suing State Farm for breaching their auto policy contract and for insurance bad faith because the insurance company allegedly botched their property damage claim.

The evidence made public so far doesn’t look good for State Farm.

Case background:

A GEICO customer crashed into Jason and Melissa Wilhelm’s Nissan Pathfinder. The SUV needed a new quarter panel. Their repair shop wrote an estimate to use a new, OEM Nissan part. GEICO wrote an estimate for much lower than the repair shop’s estimate and refused to budge. The couple turned to their own insurance company.

State Farm, though, insisted on using a (junk yard) quarter panel and refused to pay for many other procedures the shop insisted were necessary to make the Nissan safe to drive.

According to Coachworks Auto Body, a repair using the after-market part was impossible. The shop published a detailed video about how an entire OEM assembly was needed because mechanic simply wouldn’t have the necessary access to weld after-market panel to Nissan’s tolerances. The mechanic explained that a junk yard repair would make the vehicle less safe in another crash. Nissan has also issued guidance for years now that it recommends only genuine Nissan structural replacement parts.

State Farm still refused to pay for the Nissan part.

The Wilhelm’s authorized Coachworks Auto Body to perform a pre-loss condition repair using Nissan approved parts and procedures. The total bill exceeded $20,000. State Farm under-paid the property damage claim by over $10,000.

Coachworks Auto Body won’t release the vehicle to the Wilhelms until they pay the charges in full. The Wilhelms – like most vehicle owners – don’t have $10,000 spare change in the couch cushions. So the Nissan has been sitting at Coachworks. For three years. Accruing $100 in storage charges every day (making it all the more impossible for the Wilhelms to pay the bill).

Insurance bad faith lawsuit:

The Wilhelm’s sued State Farm for insurance bad faith as well as breach of contract. The breach of contract allegation is simple: “State Farm should have paid the repair in full, but they didn’t, so they owe the difference.”

Insurance bad faith claims are more complicated and more serious. The Wilhelms must prove that State Farm’s property damage claim handling was unreasonable, frivolous, or unfounded. If they win, State Farm owes not only the balance of the bill, but also consequential damages like those storage charges and loss of use. State Farm would also have to pay the Wilhelms’ attorney’s fees.

Based on Court filings and statements, State Farm appears by now to understand that its adjusters screwed up this claim.

State Farm blames its estimating software for recommending an unsafe repair. The Wilhelms’ attorney has stated – correctly – that insurance companies are responsible for the decisions they make, and software is only a tool to make those decisions more efficiently.

State Farm has delayed trial in the case to find an expert witness to help it defend itself.

The insurance company has denied that it acted in bad faith, arguing that even if it botched the claim, the dispute was a “good faith difference of opinion.”

Of course, State Farm denies its responsibility for Coachworks’ storage charges, arguing that the Wilhelms owed State Farm a duty to pay the repair shop’s bill. In other words, the couple was negligent for refusing to give State Farm a 5-figure, no-interest, indefinite-period, unsecured loan while they resolved the case in Court.

The case appears set for trial August 31 of this year.

Galileo Law’s Practice

Galileo Law routinely encounters property damage claim short-payments. When vehicle owners choose high-quality repair shops or want OEM parts, adjusters usually pay less than the shops charge. We have brought dozens of lawsuits against major insurance companies for these practices. Many of our injured clients wouldn’t even have sought an attorney consultation if their insurance company hadn’t botched their property damage claim. If you’re facing a situation like the Wilhelms faced, we’re here to help.

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