Lee v. Farmers Insurance, which Cross Border Law settled for $1.2M, was a claim dual-filed as both a third party tort claim in Washington pursuant to the Insurance Fair Conduct Act (‘IFCA’) and an underinsurance (UMP) claim filed in British Columbia. As noted in the Washington Complaint, found here, First Amended Complaint, Lee was a passenger in a Washington-insured vehicle travelling in British Columbia when that vehicle lost control in icy conditions and plummeted down an embankment. Lee suffered disabling injuries including traumatic brain injury. The driver carried third party tort liability insurance of $100,000 with Farmers Insurance of Washington, and had no other assets. Lee carried underinsurance of $100,000 with American Family, and also had PIP coverage of $10,000 for medical expenses.

Many lawyers would look at such a scenario and conclude that such a case should be settled as quickly as possible for $210,000. Fortunately, Lee consulted Cross Border Law before considering doing so.

Owing to a certain Power of Attorney and Undertaking (PAU) which allows Farmers-insured vehicles to remain insured when travelling across the border to British Columbia, Farmers is obligated to increase its applicable coverage to BC’s minimums–$200,000 for third party liability, $150,000 for no-fault medical and rehabilitation expenses and $1,000,000 underinsurance, subject to certain deductions. Had Farmers played it safe from the start, they would have settled this entire case for $890,000–$1M UMP less $100,000 from Lee’s own underinsurance and $10,000 PIP. As it turned out, it cost them $200,000 in third party liability coverage, $150,000 for Part 7 medical expenses, plus a further $1.2M for underinsurance and bad faith, plus Lee kept the $110,000 she collected from her own insurer, for a total of $1.66M.

IFCA is powerful legislation which requires insurers in Washington to follow a strict regimen of fair and thorough evaluation of insurance claims, failing which they face punishment of up to three times actual damages plus attorneys’ fees. After applicable deductions, Lee’s British Columbia UMP claim was probably worth $430,000, but, because they allegedly failed to properly and timely evaluate Lee’s claims and pay for needed medical treatment up front, Farmers faced possible punitive damages in Washington of three times this amount, plus attorney’s fees.

It is imperative that lawyers (and clients) consider the laws in every state affecting the litigation to ensure a maximum recovery from all sources. Please do not consider settling major cross border claims without the assistance of dual-qualified counsel.

*These are excellent results. No trial results can ever be guaranteed, as the outcome of any litigation and/or the amount recovered will vary according to the facts presented by individual cases. Past successes are not necessarily determinative of future results.