How To Avoid Getting Into A Legal Battle With Your Own Auto Insurer

In August 2012, New York comedian Matt Fisher made national headlines and sparked widespread outrage when he wrote a blog post titled “My Sister Paid Progressive Insurance to Defend Her Killer In Court.” Fisher’s post outlined the details of sister Katie’s fatal car accident in 2010 and the strange legal battle that ensued.

Now that the auto insurance case has been settled, industry analysts and experts say this could serve as a cautionary tale to drivers everywhere about how to avoid a similar situation.

At first glance, the details of the case seem fairly straightforward. In 2010, Katie Fisher, 24, was killed in a car crash at an intersection in Baltimore. A witness at the scene said the driver of a black SUV, Ronald Kevin Hope III, sped past him, ran a red light and crashed into Katie’s car, killing the young woman almost instantly.

The SUV’s driver was insured with Nationwide for $25,000 in limited liability; Katie had a $100,000 policy with Progressive, which included comprehensive coverage for things like storm damage and theft. However, Progressive refused to pay the claim, saying that “there were conflicting eyewitness accounts as to who was at fault.”

Katie’s Progressive policy included uninsured/underinsured motorist coverage, an add-on that protects drivers if they happen to be struck by an at-fault driver who’s either uninsured or doesn’t have enough coverage. However, a loophole in Maryland law complicated matters greatly.

Why wouldn’t Progressive pay up?

According to Frank Darras, a California attorney who specializes in insurance cases, Maryland law says that to receive the benefits of an underinsured claim, the other driver must be 100 percent at fault. Since there was a potential discrepancy about who was to blame for this accident, Progressive pursued the matter in court.

“Legally speaking, (Progressive) was within its rights, but what they did was despicable and smacks of unreasonableness in my opinion,” Darras says. “Instead of providing peace of mind and security to this policyholder’s family, they added insult to their loss.”

The American Insurance Association, a trade group for the insurance industry, and Progressive declined to comment.

In taking the matter before a jury, Progressive attempted to prove that Katie was partially to blame for the crash and that it was not responsible for the $75,000 owed under her policy. In the process, Progressive effectively defended the driver who crashed into Katie’s car.

Although Progressive declined to comment for this article, the insurer said in a recent statement: “To be very clear, Progressive did not serve as the attorney for the defendant in this case. He was defended by his insurance company, Nationwide.”

Technically, this is accurate, Darras says. Progressive wasn’t officially representing Hope in the case. However, according to court documents Progressive filed as an “interested party,” the insurer was permitted to “intervene as a party defendant … and granted all rights to participate in this proceeding as if it were an original party to this case.”

“So yes, they were essentially defending the guy who killed her,” Darras says.

After a three-day trial, jurors sided with the Fishers and awarded them $760,000 in damages. Progressive is responsible for paying only $75,000; the defendant is responsible for the rest.

“I try to educate my clients on this (type of situation) because it happens all the time,” says Tom Simeone, a personal injury attorney in Washington, D.C. An insurance company typically is interested in paying out as little as possible in an insurance claim, critics say, so hostilities between the company and a consumer often arise, Simeone says.

And, Florida criminal defense attorney Shane Fischer says, insurers have the money to fight these cases for much longer than the average person can.

“Insurers fight these claims all the time in court. They have billions of dollars, so to spend hundreds of thousands on the possibility that they may win is nothing to them,” Fischer says.

Max out uninsured/underinsured coverage

Ending up in court with a claim like this is the last thing any driver wants, says Ray Lehmann, public affairs director at the R Street Institute, a nonprofit public policy think tank.

“These types of claims can often take more than a year of litigation before all is said and done,” Lehmann says. “The Fisher case was relatively quick in that sense.”

Fortunately, drivers can protect themselves by maxing out their underinsured/uninsured motorist coverage.

According to the nonprofit Insurance Research Council, one of every seven U.S. drivers is uninsured. Given this one-in-seven chance of being struck by someone without coverage, Michael Barry, a spokesman for the nonprofit Insurance Information Institute, says drivers need to make sure they’ve purchased as much uninsured/underinsured insurance as possible.

“That’s the best way to ensure the driver is protected,” Barry says. “It’s very cost-effective coverage and provides a lot of peace of mind.”

Darras agrees. He says the difference between $100,000 worth of uninsured/underinsured coverage and $300,000 costs about $50 more a year.

“It’s the most unadvertised piece of insurance in America,” Darras says. “Policyholders need to pick up the phone and call their agent or broker and ask how they can max out this coverage. But most people don’t because they assume they’ve got enough coverage already.”