Crone, J.
Case Summary
Monika Schmidt was injured in an accident while riding with a friend, who was insured by Allstate Property and Casualty Insurance Company. Schmidt sued her friend and the underinsured driver of the other vehicle for negligence. Schmidt, who qualified as an insured under her friend’s policy, demanded the underinsured motorist coverage limits from Allstate. Schmidt later amended her complaint to include a claim alleging that Allstate owed her a duty of good faith and fair dealing as its insured and that it breached that duty in handling her underinsured motorist claim. Allstate filed a motion for summary judgment on the bad-faith claim. The trial court granted Allstate’s motion, concluding that an insurer does not owe a duty of good faith and fair dealing to an insured who is not the policyholder. On appeal, Schmidt argues that the trial court erred in granting summary judgment on that basis. We agree and therefore reverse and remand for further proceedings
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Schmidt contends that the trial court erred in granting summary judgment on the basis that Allstate does not owe her a duty of good faith and fair dealing as its insured…
At the outset, we observe that no published Indiana Supreme Court or Court of Appeals case has squarely held that an insurer does not owe a duty of good faith and fair dealing to an insured, named or unnamed, who is not the policyholder. [Footnote omitted.] To the extent that the cases mentioned in the trial court’s order may suggest that no such duty exists, we believe that such a proposition is untenable and unjust.
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Here, in urging us to conclude that Allstate owes her a duty of good faith and fair dealing under the three-part Webb analysis, Schmidt first notes that the relationship between her and Allstate “is that of insured and insurer” and that she had “duties and obligations under the cont[r]act of insurance.” Appellant’s Br. at 48. More specifically, Schmidt observes that she “was in a relationship with Allstate that was both fiduciary in nature[,] requiring her to give statements, make honest representations, submit to medical examination[,] and provide private health information at the request [of] Allstate, and adversarial in the context of her first-party [underinsured motorist] claim.” Id. Aside from the fact that Schmidt did not sign the insurance contract and pay premiums on the policy, we see little difference between the nature of her contractual relationship with Allstate as an additional insured and the nature of Fisher’s so-called “special relationship” with Allstate as a policyholder.
Schmidt further asserts that,
as the court stated in Erie, easily foreseeable is the harm that proximately results to an insured, who has a valid claim and is in need of insurance proceeds after a loss, if good faith is not exercised in determining whether to honor that claim.… Schmidt had a contractual right to underinsured coverage, however, Schmidt could do little to enforce that right.
Id. at 48-49. We agree with this assertion.
Finally, with respect to public policy concerns, Schmidt contends that “it is in society’s best interest that there be fair play between insurer and insured. Indiana Courts have long recognized this need, and the legislature has recognized it as well by implementing the unfair claims practices act.” Id. at 49 (citation omitted). Indeed, our legislature has seen fit to treat all insureds equally when it comes to protecting them against unscrupulous behavior by insurers. Indiana Code Section 27-4-1-4.5 enumerates unfair claim settlement practices for which an aggrieved person may file a complaint with the insurance commissioner; the statute does not differentiate between policyholders and additional insureds. See Ind. Code § 27-4-1-4.5 (listing over fifteen unfair practices such as “[f]ailing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed” and “[n]ot attempting in good faith to effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear”). [Footnote omitted.]
Moreover, our legislature has required that motorists maintain minimum amounts of liability insurance under threat of criminal and administrative penalties, Ind. Code §§ 9-25-4-1 and 9-25-8-2, and has also required that insurers make uninsured and underinsured motorist coverage available to motor vehicle owners “for the protection of persons insured under the policy provisions who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury[.]” Ind. Code § 27-7-5-2. This statute does not differentiate between policyholders and additional insureds. In light of this government-mandated and -regulated insurance market, with an emphasis on providing coverage for innocent insureds who are injured by uninsured or underinsured motorists, we can think of no principled reason for not requiring insurers to deal in good faith with all insureds. As Schmidt persuasively observes,
The policyholder purchases insurance for peace of mind. Surely policyholders entering into the insurance contract expect that their family and friends (who are also being provided coverage by the policyholder [as either permissive drivers or permissive passengers]) will be treated fairly by their insurance company. Otherwise, their relationships and friendships may be ruined and the financial lives of their loved ones devastated because the insurance company does not want to treat such [additional] insureds fairly.
Appellant’s Br. at 32. Assuming that a policyholder enjoys a “special” or “first-among-equals” status with respect to all other insureds covered by a policy, there can be little doubt that dealing with those other insureds in good faith only benefits the policyholder, even when (or especially when) her interests are adverse to those of additional insureds, as in this case. [Footnote omitted.]
In sum, a balancing of the three Webb factors weighs decisively in favor of concluding that an insurer owes a duty of good faith and fair dealing to an insured who is not the policyholder. We therefore reverse the trial court’s entry of summary judgment for Allstate and remand for further proceedings on Schmidt’s bad-faith claim, including her motion for sanctions and contempt. As mentioned above, the trial court has already determined that a genuine issue of material fact exists regarding whether Allstate acted in bad faith.
Reversed and remanded.
Bradford, C.J., and Pyle, J., concur.