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Fourth District Court of Appeal holds that insurer did not exercise bad faith in failing to settle claim because the insurer's actions at most amounted to negligence rather than bad faith

On January 4, 2017, in Geico General Insurance Company v. Harvey (No. 4D15-4724), the Fourth District Court of Appeal reversed the trial court's denial of defendant's directed verdict motion in a third party insurance bad faith action, holding that the evidence did not establish that the insurer had acted in bad faith or that the insurer's actions caused the excess verdict. The insurance company had tendered the $100,000 policy limits to the decedent's estate 9 days after the fatal accident, but never complied with the additional request from the decedent's estate for a financial affidavit from the insured, resulting in the rejection of the tendered policy limits by the decedent's estate and an eventual jury award of $8.47 million. In the subsequent bad faith trial, GEICO's insured testified that he had known about the estate's request for a financial statement for at least 13 days before the estate filed suit but failed to provide the statement before the suit was filed.

The 4th DCA quoted at length from the Florida Supreme Court's opinion in Boston Old Colony Insurance v. Gutierrez, 386 So. 2d 783, 785 (Fla. 1980) for the proposition that an insurer is obligated to (1) “advise the insured of settlement opportunities”; (2) “advise as to the probable outcome of the litigation”; (3) “warn of the possibility of an excess judgment”; (4) “advise the insured of any steps he might take to avoid same”; (5) “investigate the facts”; (6) “give fair consideration to a settlement offer that is not unreasonable under the facts”; and (7) “settle, if possible, where a reasonably prudent person, faced with the prospect of paying the total recovery, would do so.” The 4th DCA additionally noted that negligence alone was insufficient to establish a bad faith award, and that an insurer must be found to have put its own interests before the insured.

The 4th DCA concluded that the evidence established at most that the insurer had acted negligently in delaying informing the insured about the demand for a financial statement and in not notifying the decedent's estate that the insured was in fact available to give a financial statement. On the basis of the evidence, the Court concluded that the insured had himself contributed to the bad faith judgment by not providing the financial statement, and that in such a situation the insurer cannot be found liable for bad faith.

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