The Appeal
GEICO appealed to the Eleventh Circuit, and certified three questions to the Georgia Supreme Court, including whether an insurer is relieved of liability from a bad faith suit when it had no notice of the underlying lawsuit against its insured.
However, the Georgia Supreme Court responded to this question with a “qualified ‘no.’ The court noted that GEICO “should have foreseen” that Winslett would breach her contractual obligation, in light of GEICO’s failure to inform her of this obligation, as well as facts that came out at trial, that suggested Winslett led an unstable lifestyle and was unlikely to have a copy of the policy because she was not listed on it.
Conclusion
Accordingly, GEICO was subject to liability for the total judgment in the underlying lawsuit against Winslett even though it exceeded the policy limits. The court’s ruling establishes that an insurer’s lack of notice of a lawsuit brought against it does not preclude a future claim against it for bad faith failure to settle the underlying claim.
