Bad faith And Factual Position
An insurer’s defense “going far enough to show reasonable and probable cause for making it” vindicates the good faith of the insurer and precludes a finding of bad faith. The facts must, however, be “in genuine conflict” for the insurance company to be released from bad faith as a matter of law. Indeed, when faced with conflicting facts, the court’s duty is to “carefully scrutinize” those facts to preclude the insurance company from relying on “fanciful allegations of factual conflict to delay or avoid legitimate claims payment.”
Cincinnati Ins. Co. v. Kastner
In Cincinnati Ins. Co. v. Kastner, the insureds filed suit to recover benefits under their homeowner’s policy following a burglary. The insurer’s refusal to pay was based, in part, on the fact that there had been no forced entry and that the insureds’ accounts of the missing items and of the location of the keys to the deadbolt doors were somewhat inconsistent. However, the inconsistencies in the insured’s stories were minor, and there was ample evidence tending to point to a burglary (access from the townhouse next door was relatively easy, the insureds’ neighbor had seen a stranger in the
courtyard of the townhouse on the afternoon of the burglary, the townhouse was for sale and various people, including the movers, had recently been allowed access to the house).
There was no evidence that the insureds had facilitated or staged the burglary nor evidence that the insureds were in possession of the items they claimed had been stolen. Thus, the insurer’s rationale for its denial supported a claim for bad faith in the trial court, and the Court of Appeals affirmed the award of bad-faith damages.
Where the insurance company’s investigation reasonably indicates that the insured’s loss may have lead to no monetary damages whatsoever, there is no bad faith as a matter of law.
Lawyers Title Ins. Corp. v. Griffin
Lawyers Title Ins. Corp. v. Griffin involved a title insurance policy. The insured made a claim for a loss of an easement insured under the policy and the insurer denied coverage, arguing that the easement had no monetary value. Although the insurance company’s factual position was rejected by the trier of fact, the court ruled that there was sufficient evidence of the insurer’s factual position (though ultimately rejected) to defeat bad faith as a matter of law. A factual dispute, however, “must be reasonable under the circumstances presented in the case.”
No bad faith where insurer has a reasonable ground to contest the claim, even though the insurer may have been wrong. Penalties for bad faith are not authorized under O.C.G.A. § 33-4-6 if the insurance company has a sufficiently reasonable ground to contest the claim.
Guideone Life Ins. v. Ward
In Guideone Life Ins. v. Ward, a widow sued to collect benefits under her husband’s life insurance policy. The husband had failed to pay his premium on its due date and died outside the grace period. Other evidence revealed, however, that the husband had overpaid his premium during the life of the policy. Thus, there was a fact issue as to whether the overpayments kept the policy in force beyond the grace period to include the time of death. Although the Court of Appeals remanded for determination of the coverage issue, the court ruled that the husband’s failure to pay the premium constituted a reasonable ground to contest coverage, precluding bad faith as a matter of law.