GEICO’s Actions after Florida Wreck Defeat Claims of Bad Faith

GEICO pursued an investigation with the requisite “diligence and thoroughness” required under Florida law to overcome charges of bad faith.

Photo by Stefan Richter on Unsplash

Case: Martinez v. GEICO Casualty Insurance Company, №24–10641 (11th Cir. 09/23/25)

What Happened: A passenger was severely injured in a three-vehicle car collision while riding in her friend’s SUV. The driver of the truck that struck the SUV was insured by GEICO, and her auto insurance policy provided bodily injury coverage up to $10,000 per person but no more than $20,000 total per accident.

Upon receiving notice of the claim, GEICO flagged a potential coverage issue as the driver’s truck was not listed as a covered vehicle on her insurance policy. GEICO investigated the coverage issue and, upon identifying the victims of the crash, requested medical information from them to guide its assessment of their injuries.

32 days after receiving notice of the claim, GEICO informed the crash victims that it had tendered the full $20,000 coverage limit to resolve all claims at a global settlement conference.

The passenger rejected GEICO’s tender offer and elected to sue the driver in state court for the full amount of her damages. After nine years, the driver and passenger reached a final judgment for $2 million. The driver then assigned her outstanding claims against GEICO to the passenger, who in turn, sued GEICO in federal court to recover the excess judgment, alleging bad faith.

The District Court entered summary judgment in GEICO’s favor, finding that GEICO did not act in bad faith.

The passenger appealed to the 11th U.S. Circuit Court of Appeals, which covers Florida, Georgia, and Alabama, arguing that the “totality” of the evidence would allow a reasonable jury to infer that GEICO acted in bad faith by delaying its investigation of the driver’s claim and its tender of the policy limit to her.

Rule of Law: Florida law imposes a fiduciary obligation on an insurer to protect its insured from a judgment that exceeds the limits of the insured’s policy. Under this duty, insureds generally have obligations to advise the insured of settlement opportunities, to advise as to the probable outcome of the litigation, to warn of the possibility of an excess judgment, and to advise the insured of steps he might take to avoid an excess judgment.

To prevail on a bad-faith claim, a plaintiff must prove:

(1) Bad faith conduct by the insurer.

(2) The bad faith conduct caused an excess judgment to be entered against the insured.

What the 11th Circuit Said: The court agreed with the lower court that bad faith could not be inferred on the basis of GEICO’s purported delays in investigating and settling the claim.

Regarding the investigation, the 11th Circuit found that GEICO’s delay in obtaining the police report was not bad faith because there was no evidence to show that GEICO “willfully” impeded the field representative’s ability to retrieve the report over the two weeks at issue.

Instead, “by promptly querying the police report, GEICO proceeded with ‘the same degree of care and diligence’ as it would ‘in the management of his own business,’” as required under Boston Old Colony Ins. Co. v. Gutierrez, 386 So. 2d 783 (Fla. 1980).

Additionally, the 11th Circuit rejected the passenger’s argument that GEICO did not contact the SUV victims soon enough, explaining that “given an insurer’s dual mandate to act with both ordinary ‘care and diligence,’ … an insurer is allowed ‘to make a reasonable evaluation of the case’ before making a settlement offer.”

The court highlighted that within the first few weeks of the investigation, GEICO took several steps to assess coverage, including instructing its claim adjuster to procure the bill of sale for the truck, speaking to the driver’s partner about when she purchased the truck, and querying the truck’s registration on a vehicle database. After that, GEICO took the additional step of requesting proof of purchase from the driver’s attorney.

Ultimately, within 30 days of receiving the claim, GEICO elected to set aside the aggregate coverage limits for settlement negotiations, and the passenger did not meet her summary judgment burden of showing that a genuine issue remained for trial on the issue of delaying the investigation.

Likewise, the court rejected the passenger’s argument that bad faith could be inferred from its purported delay in initiating settlement negotiations. The court explained that when an insurer faces both an affirmative duty to offer settlement and a coverage issue, it must be allowed “some opportunity” to resolve the coverage dispute promptly.

The 11th Circuit pointed out that GEICO faced seven potential claims arising from the accident, with six victims ultimately participating in the global settlement conference.

“Accordingly, GEICO’s decision to withhold tendering the policy limits until the global settlement conference provide[d] no indication that it acted in bad faith,” the court wrote. “The undisputed record demonstrate[d] that GEICO’s decision to delay tendering [the passenger’s] individual coverage limit unitl the global settlement conference was both reasonable and consistent with its duty to the insured.”

Verdict: The 11th Circuit affirmed the District Court’s grant of summary judgment to GEICO.

Takeaway: An insurer that exercises control over the handling of a claim with due regard for the interests of the insured will show good faith under standards of Florida law.