Comedian Matt Fisher is angry at Progressive Insurance for supposedly defending his sister's "killer":
On June 19, 2010, my sister was driving in Baltimore when her car was struck by another car and she was killed. The other driver had run a red light and hit my sister as she crossed the intersection on the green light.
Now, I don’t discount the possibility that Katie was at fault in the accident, but it never really looked that way. The only witness who gave a statement on the day said that Katie had the light, etc. The totality of the evidence left some room for argument, but that will be the case any time there’s a catastrophic car accident that doesn’t happen underneath an array of video cameras. ...
... the other driver was underinsured ..., but my sister carried a policy with Progressive against the possibility of an accident with an underinsured driver. So Progressive was now on the hook for the difference between the other guy’s insurance and the value of Katie’s policy.
Progressive refused to pay without a judicial determination that the other driver was negligent, which understandably left Fisher quite angry:
In hopes that a jury would hang or decide that the accident was her fault, they refused to pay the policy to my sister’s estate.
Out of a sense of honor, and out of a sense of the cost of my sister’s outstanding student loans, my folks opted to try to go after the money through legal channels. At which point they learned another delightful thing. In Maryland, you may not sue an insurance company when they refuse to fork over your money. Instead, what they had to do was sue the guy who killed my sister, establish his negligence in court, and then leverage that decision to force Progressive to pay the policy.
Fisher claims that a Progressive attorney represented the defendant in the negligence trial.
I can understand and sympathize with Fisher's anger and sadness. But his post went viral and lots of people who obviously knew nothing about the situation or the law started chiming in. Former child actor Wil Wheaton (a.k.a., "the Jar Jar Binks of the Star Trek universe"), for example, called upon his readers to boycott Progressive:
Let’s get enough attention focused on this to force Progressive Insurance to do the right thing for Matt and his family.
And if you’re shopping for auto insurance, don’t give your money to this morally bankrupt company.
I hate insurance companies as much as the next guy. Indeed, my experiences as an expert witness for one insurance company is a big part of why I don't do expert witness work anymore.
But something about all this smelled wrong.
First, as lawyer Doug Mataconis correctly observed:
This is what typically happens in cases involving underinsured or uninsured motorists when the policy holder, or their representatives in this case, are unable to settle with the insurance company. Without knowing the facts of the case, I can’t say that there’s anything at all unusual about it.
Fisher is incorrect about one thing. The underinsured motorist coverage does not mean that Progressive is liable for the difference between whatever the other guys insurance company paid and “the value” of his sister’s policy. It means they are liable for the difference between what the other insurance company paid and the actual damages suffered in the accident.
Indeed. In part, Progressive's insistence that the Fishers sue the uninsured driver is explicable because their liability is based on the actual damages suffered, which requires a trial to be determined. In addition, as Doug notes, it is typical for insurers like Progressive to provide counsel to the uninsured motorist, so as to ensure an adequate defense of the claims. If Katie was responsible, after all, her family shouldn't prevail simply because the uninsured motorist can't afford a lawyer.
Next, Ted Frank brought our attention to a highly relevant peculiarity of Maryland tort law:
Maryland is one of the few remaining contributory negligence states: if Katie was 1% at fault in the accident, there is no liability to the other driver or Progressive. As the author himself admits, there was a "possibility that Katie was at fault in the accident." Is Progressive supposed to give money away when they aren't legally obligated to do so? The author says "One indication that the case was pretty open-and-shut was that the other guy's insurance company looked at the situation and settled with my sister's estate basically immediately." But because "that payment didn't amount to much," that insurance company could have reasonably decided that there was little point in spending the small insurance limits on attorneys instead of just writing a check. Progressive had more money at stake and more reason to defend.
Yes, "[c]arrying Progressive insurance and getting into an accident does not entitle you to the value of your insurance policy." But that's true for all insurance companies when the policy holder is not in a no-fault state. Progressive isn't unique in that regard.
... Katie, and other Maryland drivers, pay as little for auto insurance as they do precisely because insurance companies don't have to immediately pony up when they are not liable. One could ask for different rules, but consumers would be paying for those different rules up front.
Suppose you were a Progressive shareholder. Would you have wanted Progressive to cave on this case and pay out money for which it may not have been liable? After all, money paid to policyholders is money that doesn't go into earnings and profits. How many Katies would you want to subsidize in this way? How many millions would you want Progressive to give away annually before you'd want them to start fighting these cases?
Or suppose you were a Progressive policyholder. Your insurance premiums are based, in part, on your pro rata share of Progressive's expenses. If your premium goes up $1 when Progressive caves in Katies' case, would that be okay? But suppose there are 1,000 Katies per year. Now do you want them to case?
A key problem with these sort of debates is that only one side is at the table. You have attractive and sympathetic spokespeople, whose stories play on our emotions. But who speaks for the other policyholders, shareholders, and other stakeholders who would be adversely affected if Progressive caved in every uninsured motorist case?