LoMastro v. American Family Insurance: A Case of Insurance Bad Faith

Insurance bad faith is when an insurance company refuses to cover damages from an incident that the policy apparently promised to cover. The LoMastro v. American Family case involved a car accident resulting in a fatality, and the insurance company refused the claim of the family of the deceased because of what appears on the surface to be the kind of technicality that one would expect to hear as the anticlimactic punch line of a shaggy dog story.

Details of the LoMastro Case

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In 2005, Matthew LoMastro was killed in a single-vehicle car accident. He was in a car that belonged to his friend Chad Leach when the car rolled over. Leach did not have insurance on the car, and Matthew’s parents filed a claim with their own insurance company, American Family Insurance, with the understanding that the claim would be covered by their uninsured motorist coverage. American Family Insurance denied the claim on the grounds that its uninsured motorist coverage does not cover single-vehicle accidents. According to Nevada law, in order for an accident to be covered by uninsured motorist coverage, the accident must be a collision involving two or more cars, at least one of which belongs to or is being driven by an uninsured driver.

Matthew LoMastro’s parents also sued Leach for negligence because the vehicle involved in Matthew’s single-vehicle accident belonged to Leach. Leach did not respond to the complaint filed against him, and the court made a default judgment against Chad Leach, the owner of the car that Matthew was driving at the time of his death. American Family then got involved, denying that Leach was liable for Matthew’s death.

Was it a Case of Insurance Bad Faith?

Even after the case went to the Nevada Supreme Court, it is still up for discussion whether American Family Insurance acted in bad faith by denying the LoMastro family’s initial claim.  The Nevada Supreme Court did rule that American Family overstepped its boundaries in its intervention in the action against Leach. It had the right to contest the amount of damages but not to take a position on which party was liable.

In Nevada, a policy holder can claim that the insurance company acted in bad faith if the policy holder can prove that the insurance company denied the claim “without proper cause.” Likewise, the policy holder can claim bad faith if the insurance company refuses to pay for a type of damages that are explicitly listed in the insurance policy as being covered under the policy.  Since Nevada law excludes single-vehicle accidents involving an uninsured motorist from coverage under uninsured motorist insurance, it is not obvious that denying the LoMastro family’s initial claim constitutes bad faith.

Contact Brock Ohlson About Insurance Bad Faith

Insurance policies go into a lot of detail about what is and is not covered.  If your insurance refused to cover damages that it clearly states that it covers, you may have grounds for a lawsuit.  Contact Brock Ohlson, Nevada’s Personal Injury Lawyer, for a consultation.

Originally posted 2018-02-20 00:00:14.