Is It “Bad Faith” For An Insurance Company To Include A Proposed Release With A Settlement Offer?
Is It “Bad Faith” For An Insurance Company To Include A Proposed Release With A Settlement Offer? Oct 7, 2021 Florida law requires all insurance companies to act in good faith when approving, denying, or settling claims. An insurer that fails in this duty may face a bad faith lawsuit from an aggrieved policyholder or third-party victim. In defending against such claims, however, the person alleging bad faith still has to present evidence in support of their case. Put another way, an insurance company is not guilty of bad faith based merely on the say-so of the plaintiff. Federal Court Rules GEICO Not Responsible for $14.9 Million Stipulated Judgment in Motorcycle Accident A recent decision from the U.S. 11th Circuit Court of Appeals, Pelaez v. Government Employees Insurance Company, provides a useful example. This case arose from a 2012 motor vehicle accident in Florida. An 18-year-old man was driving his mother’s car to his high school prom when he collided with a motorcycle. The mother insured the car with GEICO. The son reported the accident to GEICO but did not mention any injuries, even though the motorcycle driver had been airlifted to a hospital. The next business day, GEICO assigned a claims adjuster to investigate the accident. Within two days, the adjuster reached a preliminary conclusion that the motorcycle driver had been speeding just before the collision. About a week after that, the motorcyclist’s personal injury attorney contacted GEICO but did not make any settlement demands. The day after that–by this point, 11 days after the accident–GEICO decided to offer a $50,000 settlement, which was the limit of the mother’s policy. GEICO sent the motorcyclist’s attorney a $50,000 check and a proposed release form, which is standard practice in insurance settlements. The release essentially absolved the mother and son of any further liability for the accident. GEICO did not present this as a “take it or leave it” offer. Instead, it invited the motorcyclist’s attorney to review and suggest any changes to the release form. About a week later, the motorcyclist’s attorney rejected the offer, on the grounds the proposed release was too broad. Indeed, the attorney accused GEICO of acting improperly by demanding any release at all. GEICO informed its policyholders of the rejection. Five months later, the motorcyclist filed a personal injury lawsuit against the mother and son in Florida state court. GEICO initially defended them against the lawsuit. But the mother and son eventually agreed to a “stipulated judgment” of $14.9 million with the motorcyclist. GEICO did not consent to this judgment. Both sides then filed a bad faith lawsuit against GEICO in federal court. The 11th Circuit eventually affirmed a lower court’s dismissal of the case. Under these facts, the appellate court said no rational jury could find that GEICO acted in bad faith. The mere fact that GEICO’s settlement offer came with a release form that the motorcyclist’s attorney considered “overbroad” was insufficient to support a bad faith claim. Indeed, the 11th Circuit said the actions of the motorcyclist’s attorney demonstrated “he had higher goals to pursue” and that factored in the “totality of the circumstances” supporting dismissal. Speak with a Central Florida Bad Faith Insurance Lawyer Today It is not unusual for a plaintiff’s attorney in a personal injury case to jump up and cry “bad faith” when they are unhappy with a settlement offer. But merely claiming bad faith is not proof. And insurance companies have every right to defend against such spurious claims. If you are involved in this type of dispute and need legal advice from a skilled Tampa bad faith insurance attorney, contact HD Law Partners today to schedule a consultation. Source: media.ca11.uscourts.gov/opinions/pub/files/202012053.pdf Posted in Uncategorized | No Comments » Connect with us Archives May 2026 April 2026 March 2026 February 2026 January 2026 December 2025 November 2025 October 2025 September 2025 July 2025 June 2025 January 2025 January 2024 December 2023 November 2023 October 2023 September 2023 August 2023 July 2023 June 2023 May 2023 April 2023 March 2023 February 2023 January 2023 December 2022 November 2022 October 2022 September 2022 August 2022 July 2022 May 2022 April 2022 March 2022 November 2021 October 2021 September 2021 August 2021 July 2021 May 2021 April 2021 March 2021 February 2021 January 2021 December 2020 November 2020 October 2020 August 2020 July 2020 June 2020 May 2020 April 2020 March 2020 February 2020 January 2020 December 2019 November 2019 October 2019 September 2019 August 2019 July 2019 June 2019 May 2019 April 2019 March 2019 February 2019 January 2019 December 2018 November 2018 October 2018 September 2018 August 2018 July 2018 June 2018 May 2018 April 2018 March 2018 February 2018 January 2018 December 2017 November 2017 October 2017 September 2017 August 2017 July 2017 June 2017 May 2017 April 2017 March 2017 February 2017 January 2017 December 2016 November 2016 October 2016 November 13 Categories Alimony Appellate Arbitration Auto Accidents Auto Insurance Business Corporate Business Insurance Law Child Custody Child Support Criminal Law Divorce Family Law FEMA Insurance Payments Florida’s Mandatory 2‑Hour Legal Professionalism CLE: Foreclosure Defense Fort Myers Hurricane Insurance Attorney General Guardianship HD Law Partners Service HOA/Property Management Homeowners Association Homeowners Insurance Hurricane Claims Hurricane Insurance Insurance Bad Faith Insurance Claims Insurance Defense Insurance Litigation Landlord Tenant Law Enforcement Liability Loan Modifications Mold Water Damage Parental Rights Paternity Personal Injury Premises Liability Law Prenuptial Agreements Private Security Property Distribution Property Owner Law Sarasota Insurance Litigation Attorney Slip Fall Tampa Business and Corporate Attorneys tampa family attorney Tampa Insurance Attorneys Timeshare Timesharing Uncategorized HD Law Partners is proud to be your trusted full-service law firm Quick Links Property & Casualty Business & Corporate Litigation Family Law Contact Us Careers Get In Touch 2002 North Lois Avenue Suite 510 Tampa, FL 33607 813-253-5333 Contact Us