An Indiana appeals court has revived a $3 million bad-faith hit against Erie Insurance, ruling its policy limits cannot cap damages for its own breach.
In a decision dated May 14, 2026, the Court of Appeals of Indiana upheld a jury’s finding that Erie acted in bad faith when it denied an uninsured-motorist claim, reinstated $3 million in breach-of-contract damages a trial judge had cut, and sent the case back for the trial court to reconsider whether the full award is excessive. The jury had originally returned $8,125,407.61.
The dispute traces to August 2016, when Christine and Roy Cosme bought an Erie auto policy through Churilla Insurance and listed their son Broyce on it. In February 2017, a Hobart Police officer pulled over a car carrying Broyce and his friends. The group was arrested for marijuana possession. The officer mistakenly identified 19-year-old Broyce as the driver, and the Indiana Bureau of Motor Vehicles suspended his license for failing to show proof of insurance. The officer told Broyce he would fix the mistake. He didn’t…