Jury Hits GEICO for $22 Million for Bad Faith Insurance Tactics

Jury Hits GEICO for $22 Million for Bad Faith Insurance Tactics

An Orange County jury returned a verdict against GEICO Insurance Company on April 10, 2018 that found #GEICO liable for engaging in unfair settlement practices (“insurance bad faith”). The 11-1 decision awarded Plaintiff Omar Dauod $22,962,494.66. The verdict included $13,000,000.00 in punitive damages after the jury found GEICO treated Mr. Dauod with malice, fraud, and oppression.

Mr. Dauod, a GEICO policy holder, proved GEICO delayed paying his claim until a retired Orange County judge whom GEICO selected to serve as an “under insured motorist coverage arbitrator” ordered GEICO to pay Dauod’s claim. Steven R. Young, a Costa Mesa lawyer who represented Mr. Dauod at trial, proved to the seven woman / five man jury that the delay caused Mr. Dauod to lose his real estate development business.

Young said, “Delay is GEICO’s business model. GEICO transfers all claims of $75,000, or more, to ‘Home Office,’ meaning GEICO’s legal department in Washington, D.C. Putting lawyers, rather than claims professionals, in charge guarantees delay in claims payments.” The delay is strategic for it allows #WarrenBuffet to pursue the “pleasant activity” of investing GEICO’s “float.” In annual letters to #BerkshireHathaway’s shareholders, Mr. Buffet explains:

“[GEICO] receives premiums up front and pays claims later. This collect now pay later model leaves [GEICO] holding large sums of money that [GEICO] gets to invest for [GEICO’s] benefit . . . The value of our float is one reason – a huge reason – why we believe Berkshire’s intrinsic business value substantially exceeds its book value.”

Buffet describes the benefit of creating float as,

“When an [underwriting profit] is earned, we enjoy the use of free money – and better yet, get paid for holding it. That’s like your [stet] taking out a loan and having the bank pay you interest.”

GEICO has said it will appeal the verdict rather than pay Mr. Dauod for the injuries the jury found he suffered.

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The Law Offices of Steven R. Young
Steve Young
600 Anton #650
Costa Mesa, California 92626
(949) 338-4459
(714) 673-6500

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