Insurance Companies Behaving Badly: The Progressive Fiasco
Thanks to social media, the power is truly back with the people.
It helped revive Betty White’s career, thanks to a Facebook campaign by her fans. It got the Susan G. Komen Foundation to rethink its decision to cut funding for Planned Parenthood, and public outcry further prompted the resignation of five Foundation executives. Social media also sparked a movement to boycott Chick-fil-A, and then a counter-movement to support the chain, after the company president took a public stance for traditional marriage.
Regardless of what side of these issues you fall, social media has proved to be powerful. Now, Progressive Insurance is the latest to be feeling the pain of public outcry in social networking forums.
It started in 2010, when Progressive client Katilynn Fisher was killed in an automobile accident in Baltimore. Among other things, her insurance policy covered her for accidents with uninsured or underinsured drivers.
Nationwide Insurance covered the other driver, and promptly paid out its policy limits of $25,000 to Fisher’s estate.
Under Fisher’s underinsured policy with Progressive, there was another $75,000 available to the estate. A total of $100,000 certainly seems like nothing for the death of a loved one, but that’s all that was available. To make matters worse, Progressive refused to pay out even the $75,000, claiming Fisher may have been at fault for the accident.
Apparently, in the State of Maryland, if your insurance company refuses to settle your underinsured motorist claim, you must prove your damages against the other driver first in court. In this case the other driver’s company had already paid its own policy limits. Nevertheless, Progressive still fought the family.
In California, it would be a little different. After recovering the third party policy, an insured could demand arbitration against its own insurance company if it refused to pay on the underinsured policy.
Progressive refused to settle the matter for anything more than a third of the policy, and then set out to defend the other driver even though he appeared to be at fault.
This prompted Fisher’s brother, Matt Fisher, to post a blog about the insurer on August 13th entitled My Sister Paid Progressive Insurance to Defend Her Killer in Court:
Here I address you, Prospective Progressive Insurance Customer: someday when you have your accident, I promise that there will be enough wiggle room for Progressive’s bottomless stack of in-house attorneys to make a court case out of it and to hammer at that court case until you or your surviving loved ones run out of money…. Which is what Progressive decided to do to my family. 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.
Rather than accepting responsibility for its actions, Progressive posted a response to Matt Fisher’s blog. Progressive stated:
“Progressive did not serve as the attorney for the defendant.”
On August 14th, Fisher posted a response to a statement by the insurer. Fisher pointed out that the Progressive attorney sat at counsel table during the trial, presented an opening statement, questioned the witnesses, and presented the closing argument. As Fisher stated, he was “comfortable characterizing this as a legal defense.”
The posts earned the case some national media attention. Fisher was invited to appear on national television and Progressive’s Facebook page saw an onslaught of negative commentary.
A circuit court in Maryland awarded $760,000 to the Fisher family. Progressive paid the $75,000 it owed to begin with, and then paid an additional undisclosed settlement for the way the company handled its own insured’s claims.
Had Progressive treated its insured fairly, it would merely have paid the $75,000, and saved the insured’s family additional grief. Instead, Progressive paid significantly more and put the family through additional anguish.
I’d like to think Progressive, and other insurers, have learned a lesson here…but we know they probably haven’t. Insurance companies will continue to do whatever they can to pay out as little as they can on all claims.