Madison County Jury Awards $925,000 in Insurance Bad Faith Claim

A Madison County resident was involved in a chain-reaction rear-end crash on September 10, 2010. The plaintiff sustained soft-tissue injuries and an aggravation of pre-existing degenerative conditions, incurring approximately $23,000 in medical bills and $5,000 in lost wages. The at-fault driver was insured by GEICO with a $25,000 policy. GEICO determined the tortfeasor was at fault within weeks of the incident. By April 2011, GEICO offered the unrepresented plaintiff $5,000 to settle the claim, which the plaintiff rejected before retaining legal counsel.

After the plaintiff retained counsel in 2012, a demand letter was submitted to GEICO. Despite setting a reserve equal to the $25,000 policy limits, GEICO continued to offer only $5,000. The plaintiff filed a personal injury lawsuit, and GEICO subsequently paid the full $25,000 policy limits in February 2013, approximately 334 days after reserving the full amount. With the underlying claim resolved, the plaintiff then filed a separate third-party bad faith lawsuit against GEICO, alleging the insurer delayed settlement and made low settlement offers despite knowing the policy limits were owed.

The plaintiff advanced three bad faith claims at trial: GEICO failed to adopt reasonable standards for claims investigation, failed to act in good faith to effectuate a fair settlement, and compelled the plaintiff to institute litigation. The plaintiff focused on the insurer's internal documentation, which allegedly showed the $25,000 limits were owed a year before payment. GEICO denied bad faith, arguing its handling was fair and reasonable, citing the minor impact of the crash and perceived delays in the plaintiff's medical treatment. The jury found for the plaintiff on all three bad faith counts, awarding $175,000 for emotional distress and $750,000 in punitive damages, totaling a $925,000 verdict.