Hibbs

An automobile insurance policy allows the insurer the option to pay for damages to an insured vehicle or to repair it. We conclude that the insurer satisfies its contractual obligation when it elects to repair, although the insured refuses to authorize the repairs.

The insurer may be liable in bad faith, however, when it pays for repairs not authorized by the insured, and then recovers from the tortfeasor in subrogation because the subrogation action may be prejudicial to the insured’s direct action against the tortfeasor.

We reverse the trial court’s grant of summary judgment or adjudication in favor of the insurer.

FACTS

Harry R. and Jessica Hibbs owned a 1995 Toyota Previa van, insured by Allstate Insurance Company (Allstate). The van had been damaged in a previous accident and was repaired satisfactorily by Body Tech, an Allstate-approved repair shop. Thereafter, the Hibbs had offered the van for sale.

On April 13, 2004, the van was parked legally in front of the Hibbs’s home when it was struck by a sedan driven by Jerome Brooks. Damage to the van’s front end was substantial. The van was towed to Body Tech. Thomas Koch is the owner and manager of the Body Tech…