Insurance companies are often portrayed as the bad guys when claims are denied. They may be accused of acting in bad faith, and it is common for policyholders to file lawsuits in New York courts against companies that deny their claims. However, insurance law varies from state to state, and one state supreme court is facing a challenge of its bad faith laws.
The action resulted from a fatal car accident for which Geico, the insurance company of the driver deemed responsible for the accident, paid $100,000 to the estate of the victim within two weeks of the accident. The estate returned the check to Geico because the family had filed a wrongful death lawsuit against the insured driver. The jury in that lawsuit found the insured liable and awarded $8.47 million to the estate of the victim.
Because of this verdict, the insured filed a lawsuit against Geico, claiming the company acted in bad faith. The man said that the attorney representing the victim's estate requested information from Geico about the insured's assets and whether the man was driving for business purposes when the accident occurred. Geico apparently did not cooperate with the attorney.
While a jury sided with the insured, an appeals court reversed the decision, finding that although mistakes had been made, there was no bad faith on the part of the insurance company. The case has now gone to the state's supreme court, and many in the insurance industry feel that if the judges rule against Geico, insurance law regarding bad faith might be negatively affected. Nevertheless, when New York insurers face lawsuits, they can turn to an experienced attorney to represent their interests, whether in state or federal court.
Source: insurancebusinessmag.com, "Insurers join in to support GEICO in court case", Lyle Adriano, Aug. 9, 2017