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$1 million punitive damages award upheld against insurer

On Behalf of | Jul 16, 2019 | Insurance Law

A California court of appeals has upheld a judgment against a major insurance company for dealing with one of its insureds in bad faith. In August 2008, a 24-year-old man was in a serious car accident on a California highway. He was traveling at around 45 or 50 miles per hour when he crashed head-on with a vehicle that had crossed into his lane traveling approximately the same speed. The at-fault driver, who had crossed into the wrong lane, was killed in the crash.

The insurance carrier for the at-fault driver paid out the policy maximum, $50,000, and the 24-year-old man’s attorney sought further recovery from GEICO, which was his insurer. In December 2009, the attorney filed a claim under the man’s underinsured motorist coverage. The claim included medical records and other documentation, and it demanded $50,000, which represented the man’s $100,000 underinsured motorist policy limit minus the $50,000 that had already been paid by the at-fault insurer.

The man filed a lawsuit for bad faith against GEICO in May 2014. In July 2016, a jury handed down a verdict in favor of the man for $313,508 in compensatory damages. The jury also awarded the man $4 million in punitive damages against GEICO. The trial court reduced the punitive damages award to $1 million. GEICO appealed and, on appeal, the court upheld the $1 million punitive damages award.

Recovering for damages following car accidents in California often means negotiating or otherwise dealing with insurance companies. Insurers have duties to their insureds and are required to act in good faith. An attorney with experience practicing insurance law may be able to help people who are having problems with their insurers or whose claims have been rejected. An attorney might examine the facts of the case for causes of action, negotiate a settlement or argue for the client in court.