Web Desk
A Nevada jury has ruled against USAA in a high-profile bad faith insurance case, ordering the company to pay $114 million.
The verdict includes $100 million in punitive damages and $14 million in compensatory damages.
This ruling stems from USAA’s handling of a claim filed by policyholder Timothy Kuhn following a 2018 car accident.
The Incident: A Crash, a Claim, and a Dispute
Kuhn’s BMW was stationary when a Ford F-150 truck rear-ended it at approximately 45 mph. USAA initially determined that the other driver was fully at fault.
However, when Kuhn sought compensation for injuries, including symptoms of a traumatic brain injury (TBI), the insurer shifted its stance.
It later argued in court that Kuhn shared responsibility for the collision.
Kuhn experienced memory loss, headaches, and cognitive impairment, leading to costly medical treatment and rehabilitation.
Despite these expenses, USAA initially offered him just $10,000 to settle the claim. His legal team accused the insurer of following a strategy known as “delay, deny, defend” to minimize payouts.
Before the trial, USAA eventually agreed to pay the full $250,000 policy limit. However, this decision came only days before the court proceedings began, leaving the jury unimpressed.
Policyholder’s Argument: A Breach of Trust
Kuhn’s lawyers contended that USAA’s handling of the claim was unfair, needlessly prolonging his financial hardship.
They emphasized how the company initially accepted the other driver’s fault but later changed its position during litigation.
“This case is about more than money,” said Kuhn’s attorney, Joshua Berrett. “It is about ensuring insurance companies uphold their duty of good faith toward their policyholders.”
The jury’s award of $100 million in punitive damages reflected their belief that USAA’s actions warranted more than a financial penalty.
It served as a warning to insurers prioritizing legal defense over fair treatment of customers.
USAA’s Defense: Justified Process or Unfair Practices?
USAA defended its actions, stating that the delay in settlement resulted from the complexity of Kuhn’s injuries, not bad faith.
The insurer questioned the severity of Kuhn’s TBI, citing evidence that he used his phone shortly after the accident.
A company spokesperson responded to the ruling: “We respectfully disagree with the verdict and believe the evidence presented does not support it.” USAA is considering an appeal.
The Industry Impact: Policyholder Rights and Insurance Practices
While this case revolves around a single claim, its implications extend across the insurance industry.
Many consumers have expressed frustration with claim delays, low settlement offers, and litigation tactics used by insurers.
A 2023 survey revealed that over 30% of insurance customers were dissatisfied with their claim experiences, with delays and undervaluation being top concerns.
This verdict aligns with a broader trend where courts are holding insurers accountable for bad faith practices.
For insurance companies, the lesson is clear.
Short-term cost savings from minimized payouts may lead to significant financial and reputational losses when policyholders challenge unfair practices.
