A local car insurer specializing in covering drivers with less-than-stellar histories finds itself on the unfamiliar end of a policy dispute after it paid $2.1 million in litigated claims to a Florida family, the result of an accident caused by its customer.
Having paid that claim, First Acceptance Corp. now wants a $1.1 million reimbursement in keeping with the provisions of a professional liability insurance policy. Green Hills-based First Acceptance first sued United Kingdom-based Catlin Insurance in Davidson County Chancery Court back in March, accusing the reinsurer of breaching its contract and bad faith dealing. The case was moved to District Court earlier this week.
The accident in question occurred in Florida on Aug. 12, 2007. The two-car incident involved Josh Minson, a driver insured by First Acceptance who was later faulted with causing the crash. The folks in the other car, three members of the Pittman family, made claims against Minson’s First Acceptance policy. After months of attempted settlements and refusals to mediate the parties settled for $2.1 million, an amount paid by First Acceptance.
According to the Catlin liability policy owned by First Acceptance, the local company is contractually due $1.1 million. But Catlin refuses to pay and First Acceptance officials say it is attempting to redefine the sequence of events after the accident so that it would be relieved of liability. One issue is the proper and applicable definition of “claim” and whether First Acceptance’s representatives used proper procedure to buttress the company’s claim that it’s now owed.
First Acceptance wants the court to order Catlin to pay the $1.1 million in keeping with the policy terms. And with the bad faith allegation, if proven true, a 25 percent penalty will be applied, an extra bonus of sorts allowed under Tennessee law.
First Acceptance is being represented by Luis Bustamante and Katherine Layman of Knoxville-based Woolf McClane Bright Allen & Carpenter. Bustamante was contacted early Friday but refused comment, citing firm policy.
First Acceptance could use the $1.1 million. The company lost $8.2 million in the first three months of 2012, due in large part of higher claims from its policyholders.