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GEICO’s $9.6 million-dollar lesson in “bad faith”

In August 2006, James Harvey was behind the wheel of his Hummer, approaching a flashing red light to turn onto a Florida highway.

Harvey didn’t stop at that red light. When he pulled onto the highway, his Hummer t-boned a motorcycle.

The motorcycle’s driver, John Potts, was killed.

Wrongful death lawsuit

The at-fault driver, James Harvey, had a GEICO auto insurance policy—but his policy only covered $100,000 in damages.

GEICO paid the Potts’ family the policy limits within days of the crash.

But when GEICO was asked for information on any additional insurance or assets Harvey might have, GEICO refused to provide the information.

Tracey Potts, the wife of the crash victim, filed a wrongful death lawsuit.

  • Plaintiff: Tracey Potts, and the Estate of John Potts
  • Defendants: James Harvey

In December 2010, the case was presented to a judge and jury. The jury deliberated for less than an hour before awarding $8.48 million to the Potts’ family.

GEICO lawyers appealed the verdict, but it was upheld. The Plaintiffs have still not been compensated.

Bad faith lawsuit against GEICO

Insurance_attribute_www.stockmonkeys.comAn auto insurance policy is just a contract with the insurance company.

You pay the insurance company, and in return, they agree to protect you and your property from loss or damage. This includes:

  • Fully, promptly investigating your claim;
  • Considering all of the circumstances supporting your claim; and,
  • Respond to all requests for information or communication in a timely matter.

When an insurance company is acting in “bad faith”, it is failing to meet at least one of these commitments. They are breaking the contract, and not protecting their policyholder. See: What is Bad Faith?

In this case, GEICO was legally obligated to protect Harvey.  

GEICO wasn’t protecting Harvey by refusing to turn over his basic insurance and asset information: they were putting him at risk.

If the insurance company adjusters had followed the law, GEICO would have paid out the $100,000 policy limits, and the case would have be over. Instead, the insurance company exposed Harvey to a multi-million dollar jury verdict.

“Bad faith is just insurance company malpractice” 

Fred Cunningham, Harvey’s lawyer in bad faith claim

Defendant Harvey had to file a lawsuit against his own insurance company.

  • Plaintiff: James Harvey
  • Defendant: GEICO Insurance Company

Last week, a Florida jury heard Harvey’s case against GEICO.

The jury found that GEICO acted in bad faith, and failed to protect their policyholder.

They awarded a $9.6 million verdict—the original $8.4 million jury verdict, with interest.

It’s good news for Harvey, who is now off hook for the original verdict. It’s good news for the Potts’ family, who may actually be compensated now.

It’s bad news for GEICO. The company is likely to appeal the jury verdict.

Image: stockmonkeys.com

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