Bad faith is found if disputed issue of fact concerns a collateral issue and the insurer failed to investigate.When a disputed question of fact regards a collateral issue, however, the insurer does not have a reasonable ground for contesting liability for damages from a covered claim.
Georgia Farm Bureau Mut. Ins. Co. v. Murphy
In Georgia Farm Bureau Mut. Ins. Co. v. Murphy, the insured was driving while intoxicated, lost control of her car and hit a tree. Although a front tire was flat, she drove another 11 miles. Her right rear assembly fell off, but she continued driving another 20 miles until her car caught fire. The insured sought coverage for a total loss to her vehicle. The insurer denied, arguing that the damages stemmed from the fire rather than the impact with the tree. The insured’s expert examined the car and testified that the frame was so warped by the impact with the tree that the car was totaled before it ever caught fire. The jury found in favor of the insured on coverage and awarded bad-faith damages.