1039 words 5 pages
In the case presented, Donna Driver admitted liability in a car accident with Vic Victim. Her liability coverage through Gekko is $100,000. Vic’s medical bills alone are close to $100,000 and he may be granted more than that because of missed work and pain and suffering.
Donna requested her insurance company to settle the case with Vic’s offer of $100,000. Gekko declines and at trial Vic wins $200,000. Donna had to file bankruptcy because of this loss and is now suing Gekko for not negotiating in good faith.
You have asked me to research how the cases of Shaeffer, Whiting v. Grange Mutual Casualty Company, 1981 Ohio App. LEXIS 14351 (Ohio Ct. App. 1981) and Schneider v. Eady, 2008-Ohio-6747 (Ohio Ct. App. 2008) will affect our case with
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However, All-State owes no duties to third parties. Their obligations to act in good faith and avoid unfair settlement practices extend only to their insured. The insurance company has no obligations to act in a certain way in its interactions with the injured person. The insurance company only owes duties to the insured party.
The court also concluded that the third party is not considered beneficiaries in regards to the insurer’s policy. Victims of negligent drivers are not third party beneficiaries of contracts between a tortfeasor and their insurance companies. As such, there is no cause of action for bad faith failure to negotiate for third parties. “Only a party to contract or an intended third-party beneficiary of a contract may bring an action on a contract in Ohio.” Id at page 8. The appeals court concluded that since Ms. Schneider was not an intended third-party beneficiary in Ms. Eady’s policy, then Ms. Schneider cannot recover a claim from the insurance company for not negotiating in good faith.

Both of these case show that the insurance carriers do not owe a duty of good faith to third-party claimants, the insurance companies owe a duty of good faith and fair dealing to their insured to resolve the dispute within the policy limits. They show that the insurance companies had a fiduciary duty to the insured but an adversary relationship with the victim. The court restated the common law rule that the insurance