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When there is a car accident with injuries and the value of the injuries exceeds the policy limits of the driver who caused it, the next step is to pursue the underinsured motorist insurance. Over the years UM insurance companies have realized that the bad faith laws that apply to the liability policy don’t apply to them and therefore only offer a fraction of the jury value of the case. Why don’t they? A 2019 Georgia Court of Appeals decision shows us why.
In Taylor v. GEICO, the plaintiff had a crash with medical bills totaling around $16,000 and lost wages of $2,700. The demanded the $25,000 from the defendant and received their policy limits in exchange for a limited liability release so they can go after their own Underinsured Motorist insurance. They sent the demand for the $25,000 and GEICO only offered $750. The case was adjuster by Elizabeth Saucillo, who I have worked with in the past and although her evaluations can be on the lower end, she is a very nice and hardworking lady. In this case, the court took great pains to discuss the steps she took to evaluate the risk and how she arrived at her conclusions of value.
The Plaintiffs filed suit and went to trial and obtained a $120,000 verdict, which is unusual, given the facts. The Plaintiff then sued GEICO demanding the 25% penalty and attorney’s fees. GEICO moved the court for summary judgment arguing that the UM bad faith statute only allows the award where the insurance company acts in bad faith.
“Penalties for bad faith are not authorized where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact. Ordinarily, the question of bad faith is one for the jury. However, when there is no evidence of the unfounded reason for the nonpayment, or if the issue of liability is close, the court should disallow imposition of bad faith penalties. Rather, bad faith is shown by evidence that under the terms of the policy upon which the demand is made and under the facts surrounding the response to that demand, the insurer had no good cause for resisting and delaying payment. In addition, a defense going far enough to show reasonable and probable cause for making it would vindicate the good faith of the company as effectually as would a complete defense to the action.”
The trial court that threw the case out made a point of establishing that at the time of the demand for the UM limits, medical care had ended 6 months prior and at trial there was a doctor’s testimony linking disc damage to the crash, information GEICO did not have at the time they made the lousy offer. Would it have changed the Court of Appeals opinion? I doubt it. The reality is a $120,000 verdict on $15,000 in medicals smacks of a dumb verdict and the Court of Appeals would be hard-pressed to say that the trial court erred in finding that there was no bad faith in failing to offer the policy limits.