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Allstate pays secret settlement and lifts contempt order

Allstate Insurance Company is regularly described as the "worst insurer" in the country.  Several months ago, a Missouri judge held the company in contempt for failing to comply with an order requiring it to produce documents relating to its settlement practices.  At issue, in particular, were documents relating to the "Good Hands or Boxing Gloves" approach the company allegedly adopted in order to punish claimants who did not accept a compromise figure calculated by Allstate to reduce claim pay-outs.  The Kansas City Star reported yesterday that Allstate settled the recent case against it on a confidential basis, apparently to avoid public disclosure of the material it was required to produce.

The entire "Good Hands or Boxing Gloves" program is described in an earlier web log entry on this site [August of 2007], as is a recent survey that confirmed the low regard which most trial attorneys have for Allstate's claims handling.   

In the recent case, when Allstate refused to produce the documents sought by the Judge, he ordered that it pay $25,000.00 per day until it came into compliance with his discovery order.  After the fines added up to more than 7 million dollars, Allstate finally settled the underlying claim one week before trial.  The settlement amount was "confidential" and cannot be disclosed by the claimant's attorneys.  The entire case arose out of Allstate's defense of a September, 2000, collision in which an Allstate insured struck the victim's car at the Intersection of I-70 and I-65:  the victim had been stopped in a construction zone and was struck by Allstate's insured at 70 miles per hour.  This week, Allstate fired its attorney and claimed that only the attorney was at fault for failing to comply with the court's order.  If you believe that, we have some swamp land in Florida we'd like to sell you.

Sadly, Michigan has no effective "bad faith" rules governing insurer management of claims for uncollectible or modestly collectible insureds, and therefore Michigan insureds and victims have no recourse to punish obstructive behavior or delalying tactics.

Thompson O’Neil, P.C.
309 East Front Street
Traverse City, Michigan 49684
Toll Free: 1-800-678-1307
Fax: 231-929-7262