Mansell, Engel & Cole

Jury doesn’t buy Geico’s story, awards huge recovery to claimant

The jurors begged to differ.

In fact, a Southern California jury recently delivered a verdict in a bad-faith insurance matter that flatly belies the assertion of national insurer Geico that it acted reasonably in its handling of a policyholder’s claim following a serious car accident.

Had Geico acted promptly and pursuant to the terms of its contract with the insured, the company would have paid out $400,000 to compensate the victim injured through a third party’s negligence. The driver who caused the accident had limited coverage, and the injured driver turned to Geico for compensation under his underinsured policy with the company.

The accident and resulting injuries occurred in 2009. The claimant finally received the money years later when Geico paid out the $400,000 in December 2013 after a pro-claimant ruling issued by an arbitrator.

By that time, though, the insured had filed litigation against Geico, alleging bad-faith stalling tactics that directly caused him and his family great harm. Reportedly, the claimant suffered many hundreds of thousands of dollars in losses, and additionally lost his business and two homes.

The jury was clearly unimpressed by Geico’s arguments that its conduct concerning the claim was proper and timely. To the contrary, it found the insurer’s payment to the claimant after years had passed to be unreasonable.

And it sought to punish that. Following a month-long trial, jurors awarded nearly $10 million in compensatory damages to the policyholder. On top of that, it addressed Geico’s bad faith by slapping the company with an additional $13 million in punitive damages.

The difference between the original damage claim and the jury’s ultimate $23 million award is truly staggering. The latter turned out to be about 58 times higher than the $400,000 that Geico delayed paying.

The insurer states that it will appeal the verdict.

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