In a recent case, the New Mexico Court of Appeals reversed a jury verdict that found an automobile insurance company liable for acting in bad faith. The case involved Progressive Casualty Insurance Company (Progressive), which alleged that a family's insurance had expired when one of the family members was involved in an accident.
In 2002, the family contacted Progressive to add a car to its existing policy. Progressive then provided conflicting information about the date in which the policy premium was due to be paid. A notice from the company indicated one date, but in a follow-up call the company's automated phone system provided another date. The family then paid the premium, but only after one of the family members was involved in an auto accident. One person was killed and another severely injured in the accident.
Progressive sued the family, alleging that its policy had lapsed by the date of the accident. The family countersued, believing that the company was acting in bad faith by refusing to provide coverage. A jury sided with the defendants, finding that the family was covered when the accident occurred and that Progressive had acted in bad faith. The jury then awarded the family $37,000 in compensatory damage, $11.7 million in punitive damages, and $1.4 million in attorney fees.