INDUSTRY NEWS

Source: CoverageReporter.com, Case file pdf

The case, Harvey v. GEICO, arose from a deadly car crash in 2006 in which Harvey, GEICO’s insured, was found liable. GEICO issued a policy to Harvey that provided $100,000 in liability coverage and advised Harvey that the claim against him could exceed his policy limits and that he had the right to hire his own attorney. However, when the attorney representing the deceased’s estate contacted the GEICO claims handler assigned to Harvey’s claim to request a statement from Harvey, the claims handler refused the request and did not advise Harvey of the request for two weeks. Following several additional failures by the GEICO claims handler to communicate with Harvey and the deceased’s estate, the deceased’s estate filed a wrongful death suit against Harvey, which resulted in a jury verdict awarding $8.47 million in damages to the estate.

Subsequent to the verdict in the wrongful death action, Harvey filed a “bad faith” action against GEICO seeking coverage for the excess verdict. The “bad faith” trial focused on the communication lapses by the claims handler and the failure of GEICO to attempt to settle the claim knowing that the underlying action involved a “case of catastrophic damages.” The jury ultimately found that GEICO acted in bad faith and awarded judgment in favor of Harvey.