Many people don’t realize that large corporations especially huge retailers like Wal-Mart, don’t have the same type of insurance policies as smaller companies or individuals. Normally, an insurance company is obligated to pay starting dollar one on a claim and is obligated to pay for the cost of defense, including attorney’s fees and costs at the commencement of any legal action alleging damages against the insured.
Because large retail stores have such a vast enterprise with locations across the nation and activity such as trucking delivery across state lines, their exposure for personal injury claims is too great to simply “take out a policy.” In these cases, the large retailers of the world, including grocery chains, box stores and the like have a base amount for which they are “self-insured” and “excess coverage” policies for claims which exceed this base amount.
For example, they may be self insured for up to $1 Million or $10 Million but, if the claim goes over, the insurance company has to step in and make up the difference. The self-insured portion comes from a set aside in the corporate budget each year to pay claims “out of pocket.”
Tracy Morgan v. Wal-Mart: An Example of How Even Corporate America Falls Prey to Alleged Bad Faith Tactics from Insurance Companies
In the early morning hours of June 7, 2014, the comedian/actor, Tracy Morgan, and several other entertainers and entourage were traveling in a limo in New Jersey. A driver operating a delivery truck for Wal-Mart that had apparently been on shift for over 14 hours at the time of the incident, crashed into the limousine and killed one person and seriously injured several others including Mr. Morgan.
Numerous lawsuits were filed against Wal-Mart for negligence and the case began turning into a public relations nightmare for the company as it appeared they were “dragging their feet” even though liability seemed clear, a death had occurred, and a high profile figure had suffered significant injuries including brain damage.
It has recently been revealed in a lawsuit filed in Benton, Arkansas that Wal-Mart is alleging they wanted to come to a swift and reasonable settlement with all plaintiffs in the case but, were being held up by their excess insurance carriers. According to a Wal-Mart spokesman, Randy Hargrove, the company, “took full responsibility for the tragic accident and did what was right to insure the well-being of those who were affected … funded the settlement agreements in full but some of the insurance carriers failed to pay their portion of the settlement amount,”
Bad faith lawsuits have now been filed by Wal-Mart against numerous insurance companies including Liberty Insurance Underwriters Inc., The Ohio Casualty Insurance Co.; QBE Insurance Corp., St. Paul Fire & Marine Insurance Co., The Travelers Companies Inc. and XL Insurance America Inc. alleging that they were provided with all the necessary information to pay out the excess portions of the claims but, denied and/or delayed in doing so. Hargrove stated, “Really, this lawsuit is about the defendant insurance companies not living up to the requirements of their own policies.”
This just goes to show that even the largest corporations in America have to fight with insurance carriers to pay legitimate claims!
Author Bio: Steven Sweat, is the founder of Steven M. Sweat, APC, a personal injury law firm handling serious accident claims including those involving large retail chains. He is a regular contributor to this and other blogs related to tort law and insurance issues.