The US Court of Appeals for the Eleventh Circuit has affirmed a ruling in favor of GEICO Casualty Insurance Company, holding that the insurer did not act in bad faith when handling a serious multi-injury car accident claim in Florida.
The decision provides important guidance for insurers managing complex claims involving policy limits and potential excess judgments.
The case began with a 2009 crash in Miami-Dade County. Katherine Martinez was a passenger in an SUV that was struck first by a pickup driven by Rene Gonzalez Carranza, then by a truck driven by Diana Guevara. Several passengers, including Martinez, suffered severe injuries, with Martinez and another passenger airlifted to the hospital.
Guevara, the second driver, was insured by GEICO. Her policy provided bodily injury coverage up to $10,000 per person and $20,000 total per accident. However, the truck she was driving was not listed on her insurance policy, prompting GEICO to investigate the coverage issue and identify all victims.
Thirty-two days after receiving notice of the claim, and before the coverage issue was fully resolved, GEICO informed the crash victims that it had tendered the full $20,000 policy limit at a global settlement conference, proposing the sum be split between Martinez and another passenger.
Martinez rejected GEICO’s offer and instead sued Guevara in state court for the full amount of her damages. After nearly nine years of litigation, Martinez and Guevara reached a stipulated final judgment for $2 million. Guevara then assigned her claims against GEICO to Martinez.
Martinez sued GEICO in federal court, alleging that the insurer acted in bad faith by delaying its investigation and settlement, which she claimed led to the excess judgment. The district court granted summary judgment for GEICO, finding no evidence of bad faith. The Eleventh Circuit affirmed, holding that GEICO’s investigation and settlement efforts were reasonable under Florida law and did not constitute bad faith.
The court noted that GEICO sent a “reservation of rights” letter, warning that the truck might not be covered, and a “bodily injury excess” letter, which explained the policy’s coverage limits and the possibility of excess damages. The court emphasized that negligence or delay alone is not sufficient to establish bad faith; there must be evidence that the insurer acted wilfully or without reasonable cause to the detriment of the insured. In this case, the court concluded that no reasonable jury could find that GEICO acted in bad faith.
