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Progressive’s Side of the Insurance Case That Blew Up on the Internet

This week, a man named Matt Fisher took to his Tumblr site to call out Progressive, which insured his sister, Katie, two years ago when she died in a car accident. The company recently sent its lawyer to court — not to assist her estate but to argue that the driver of the other car, who had a suspended license and little insurance, was the innocent party.

Or, as Mr. Fisher put it, “My Sister Paid Progressive Insurance to Defend Her Killer in Court.”

The outrage on social media came swiftly, and it was brutal. Progressive’s initial public comments parsing the definition of “defendant” only opened up the company to further vitriol.

After several requests, I finally got Progressive to come to the phone and explain in detail, out loud and on the record, why it chose to fight Ms. Fisher’s family in court.

In the end, the saga of Ms. Fisher and her family isn’t just about whether Progressive made a needless mess of its reputation this week. And it’s not simply about whether everyone should drop their Progressive policies in protest either, as scores of people have threatened to do. We also need to take a close look at our own coverage and determine whether we have a fundamental misunderstanding of how our various auto insurance policies actually work.

Before @fishermatt became a social media phenomenon, he was a devastated older brother. His sister was just 24 when she died in Baltimore with two degrees from Johns Hopkins University to her name and nothing but promise in front of her.

The insurance machinery began its work relatively quickly. Ms. Fisher had $100,000 in liability coverage per person in this accident, and three people (and the lawyers negotiating for them) wanted a piece of it: a passenger in her car, the driver of the car that hit her and a passenger in that car.

Progressive sized up its legal risks. Three individuals thought Ms. Fisher had run a red light — the police officer who filed the accident report (but who did not witness it), Ms. Fisher’s passenger and the driver of the other vehicle. On the other hand, one eyewitness said that it was the other driver who ran the light.

At that point, Progressive chose to pay the liability claims. “If we determine that we shouldn’t pay any third parties, our insured can get sued and be responsible for any amount over the limit,” said Marcia Marsteller, the business leader in Progressive’s legal department for claims. “If we make the wrong call and don’t pay them and perhaps we should have, there is an issue for her estate.”

Here’s where things get tricky. Liability insurance pays money to injured people even if the policyholder is at fault. But the dispute in court that so infuriated Ms. Fisher’s brother, Matt, also affected a different policy she had — underinsured motorist coverage — that operates under different rules.

That coverage is something you buy if you’re worried about somebody hurting you who doesn’t have much insurance. The driver who hit Ms. Fisher had only $25,000 in liability coverage, and her parents tried to coordinate claims from his company and their daughter’s to collect the $100,000 total that her underinsured motorist insurance covered.

The challenge with the coverage, however, is that it pays you money only if the other driver is at fault. Many states, recognizing the subtleties in assigning blame, will pay out partial claims based on the share of responsibility. But Maryland is among a small number of states where insurance policyholders may get nothing under the terms of their underinsured motorist policies if they’re even 1 percent at fault.

“You’re buying insurance that steps into the shoes of the guy who injured you,” said Tom Baker, a professor at the University of Pennsylvania Law School. “It’s kind of a nasty business, because they have to act like they’re the bad guy that hurt you.”

Indeed, that is exactly what ended up happening with the Fishers. Even as Progressive was paying money to the injured people under the terms of Ms. Fisher’s liability policy, her family was making a claim on her underinsured motorist policy that she wasn’t responsible at all.

“She was a very cautious kind of person,” said her mother, Joan Fisher. “She wasn’t a risk taker in any phase of her life. She was almost a nerd. I have never believed that she ran the red light.”

Twitter: @ronlieber

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