A federal court in North Carolina found that an insurer did not engage in unfair and deceptive trade practices when it only made token settlement offers prior to mediation. Elliott v. Am. States Ins. Co., 2017 WL 1089962 (M.D. N.C. Mar. 22, 2017), appeal filed (4th Cir. Apr. 4, 2017).
The plaintiff was injured in a car accident. The driver of the other automobile was at fault, but his insurance was insufficient to cover the plaintiff’s medical costs. The plaintiff had underinsured motorist coverage through her insurer. The plaintiff attempted to settle with her insurer, which only made unsubstantial token offers. The plaintiff was ultimately awarded substantially more than the insurer’s settlement offer.
The court found that the insurer did not engage in unfair and deceptive trade practices because it had no obligation to settle. It noted that the insurer’s obligation to compensate the plaintiff did not arise until the plaintiff was legally entitled to recover against the tortfeasor, which did not occur until an award was made. The court also noted that determining the value of an insured’s claim is not an exact science and that the plaintiff had failed to allege a deceptive act and dismissed her claims for unfair and deceptive trade practices.