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.
The Law Offices of Steven R. Young
600 Anton #650
Costa Mesa, California 92626