Georgia’s High Court Says Geico Must Pay $2.7M for Failure to Settle

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The high court found that Georgia has adopted the principle that if insurance companies fail or refuse to make a reasonable and good-faith settlement offer and cause a judgment against its policyholder, the insured party may seek to recover the difference between the policy limit and the underlying judgment.

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The court said that “Given that Winslett was covered under the policy at that time, Geico’s duty to settle arose as soon as Geico received Guthrie’s time-limited, policy-limits settlement demand.” In the court’s opinion, it cites a series of failures to notify in Guthrie’s complaint but she won a default judgment against Winslett anyways, for injuries and damages suffered in the collision. At the time of the collision, Winslett was driving her friend’s car, which was insured by Geico.

After the judgment was entered, Winslett’s bankruptcy trustee filed a lawsuit against Geico, alleging that it acted in bad faith by not settling Guthrie’s claim. The case went to trial, and a jury found that Geico was liable for 70% of the default judgment because it failed to accept Guthrie’s settlement demand in the underlying case. According to the opinion, the judgment against Geico totaled approximately $2.7 million.