(Article from Insurance Law Alert, July/August 2019)
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The Court of Appeals of Georgia ruled that an insurer’s failure to pay a policy limits settlement demand was not bad faith, notwithstanding a subsequent jury award in excess of policy limits. Taylor v. Gov’t Employees Ins. Co., 2019 WL 2559482 (Ct. App. Ga. June 21, 2019).
Following a car accident involving Taylor and Edwards, Taylor received $25,000 from Edward’s automobile insurer. Taylor also sent a demand letter to GEICO, her uninsured motorist carrier, seeking $25,000 (the full amount of benefits under the policy) based on medical expenses and lost wages. After investigating the claim, GEICO offered Taylor $750, which she rejected. Thereafter, Taylor sued Edwards and a jury awarded her more than $120,000 in damages. After the jury verdict, GEICO paid Taylor the $25,000 policy limit. Taylor sued GEICO, alleging that the insurer’s failure to pay her $25,000 within 60 days of her demand letter constituted bad faith under Georgia statutory law. A Georgia trial court granted GEICO’s summary judgment motion and the appellate court affirmed.
The appellate court ruled that the bad faith claim failed as a matter of law because Taylor could not establish that GEICO’s refusal to pay was frivolous or unfounded. The court emphasized that an experienced claim examiner conducted a thorough investigation and analysis of the claim. The court further noted that Taylor failed to identify any steps or measures that GEICO should have taken, aside from alleging that the insurer should have agreed to a policy limits settlement. In addition, the court rejected the assertion that the $120,000 jury award established (or even created a triable issue of fact regarding) GEICO’s bad faith refusal to settle for policy limits.