RCR lawsuit against Earnhardt insurer begins

LEXINGTON, N.C. -- Court proceedings in the lawsuit filed by Richard Childress Racing against the United of Omaha Life Insurance Company began Monday.

The case arises out of life insurance covering the death of Dale Earnhardt at Daytona on Feb. 18, 2001, and involves the three-year contract Earnhardt and Richard Childress signed in 2000 to cover the years 2001-03.

Dale Earnhardt Credit: David Taylor/Getty Images

Richard Childress Racing agreed to insure Earnhardt for $7.2 million, to be payable to Teresa Earnhardt if he died during the first year of the contract. A $3.5 million life insurance policy was already in effect with National Life of Vermont, and RCR purchased an additional $3.7 million policy through agents of United of Omaha -- a subsidiary of Mutual of Omaha -- prior to Earnhardt's death.

The insurance policy application with United of Omaha was completed and signed in January 2001 by all parties involved: RCR, Dale Earnhardt and United of Omaha. Two premium payments were made by RCR to agents of United of Omaha.

However, The Charlotte Observer reported that Earnhardt never took the physical needed for the policy to take effect. RCR said in its suit that the insurance company's doctors called to schedule the physical in early February -- when Earnhardt was already in Daytona Beach, Fla., preparing for the NASCAR season.

Earnhardt's assistant was told the physical could wait until after the Daytona 500, Childress' suit stated. That never happened. Earnhardt died by crashing into the wall on the last lap of the Daytona 500.

Within 24 hours of Earnhardt's death, United of Omaha declined payment on the $3.7 million policy and stated it had closed the case file. Shortly after that, National Life of Vermont sent a check for $3.5 million to RCR, which was delivered to Teresa Earnhardt.

The lawsuit against United of Omaha is for violation of North Carolina laws dealing with bad faith and unfair and deceptive trade practices by insurance companies. Under those laws, insurance companies must conduct a reasonable investigation of all claims based upon all available information.

RCR contends that United of Omaha did not conduct such an investigation and illegally refused to pay under the policy, thus violating the law and regulations applicable to insurance companies in North Carolina. He is pursing this case on behalf of Dale Earnhardt, Dale's memory, and Teresa Earnhardt.

The case will be heard by Superior Court Judge Kimberly G. Taylor.