Eleventh Circuit upholds auto insurers win in Florida bad faith case

In Florida, a liability insurer has an affirmative duty to initiate settlement negotiations before receiving a settlement demand, but only in cases where liability is clear, the policy limits are insufficient, and there is a likelihood of an excess judgment against the insured. In a recent case addressing the scope of this duty, the Eleventh Circuit held that the insurer did not act in bad faith, despite waiting three weeks after receiving notice of the accident to tender the policy limits to settle a wrongful death claim. Geico v. Ellis, Case No. 21-12159 [15.02.22].

In Ellis, the insured struck and killed a cyclist on September 7 2014. The insured fled the scene of the accident. Within days of the accident, the insured hired a criminal defense attorney. Following his arrest and release, the insured got a new phone number and moved out of his house. The insured’s criminal defence attorney advised the insured not speak with anyone regarding the accident. 

The insured’s auto liability policy had limits for bodily injury of US$10,000 per person. On 16 September 2014, nine days after the accident, claimant’s counsel sent a letter of representation to the insurer. The insurer claimed it did not receive the letter of representation. On 9 October 2014, about one month after the accident, claimant’s counsel sent a new letter of representation. The insurer immediately assigned an adjuster to investigate the claim. The adjuster attempted to contact the insured several times, but could not reach him. The insurer hired an investigator to locate the insured. 

On 21 October 2014, the investigator requested the accident report from the police. Police advised the adjuster that the report was not yet available. On 22 October 2014, the insurer mailed a reservation of rights letter to the insured, advising him that the delay in reporting the loss may prejudice the insurer’s investigation. On 29 October 2014, over seven weeks after the accident, the insurer obtained the accident report. On the same date, the insurer hand delivered a check for the policy limits to claimant’s counsel. 

Claimant’s counsel rejected the tender. He advised the insurer that the tender was untimely and filed suit against the insured. Following trial, claimant was awarded a judgment against the insured for US$479,280. The insured then sued the insurer to collect the excess judgment. The insured alleged that the insurer handled the claim in bad faith. Specifically, the insured argued that liability was clear and the insurer should have completed its coverage investigation within days after receiving notice of the claim. The federal district court for the Southern District of Florida granted the insurer’s summary judgment motion, finding that no reasonable jury could conclude that the insurer handled the claim in bad faith.

In a unanimous decision, the Eleventh Circuit affirmed the district court’s order. The court reaffirmed that the standard in Florida for determining whether an insurer has acted in bad faith in handling a claim is the “totality of the circumstances”. The court’s opinion also acknowledged the well-settled principle in Florida that "[t]he focus of the bad faith case is on the actions of the insurer, not those of the claimant”; however, as discussed below, the court also considered the insured’s actions.

The court held that under the “totality of the circumstances”, the insurer did not handle the claim in bad faith. First, the court noted that upon receiving notice of the accident, the insurer immediately began its investigation. Continuing, the court found that until the insurer received the accident report seven weeks after the accident, the insurer could not determine whether liability was clear. The court also found that the insurer could not promptly confirm coverage due to the insured’s lack of communication:

While GEICO’s actions, not Ellis’s, are the focus of the bad faith case, Ellis’s lack of communication with GEICO can be considered when determining the totality of the circumstances.

The court held that the insurer should have a reasonable amount of time to conduct its investigation before initiating settlement negotiations:

An insurer – acting with diligence and due regard for its insured – is allowed a reasonable time to investigate a claim; no obligation exists to tender policy limits in advance of a settlement offer without time for investigation.

Ultimately, the court concluded that even if the insurer could have confirmed coverage more quickly, “under the totality of the circumstances, a reasonable jury could not say [Geico] was not acting diligently and with the same haste and precision as if they were in the insured’s shoes.”


Following Eres v. Progressive Am. Ins. Co., 998 F.3d 1273 (11th Cir. 2021)the Ellis decision is the second favorable decision in the past 12 months where the Eleventh Circuit affirmed summary judgment for the insurer in a Florida bad faith case. Significantly in Ellis, the Court focused on the insured’s actions, including the insured’s failure to communicate with the insurer, despite the longstanding principle in Florida that only the insurer’s conduct is relevant in a bad faith case. More importantly, Ellis suggests that moving forward, Florida’s federal courts are more likely to find that an insurer is not required to immediately tender policy limits in advance of a settlement demand until the insurer has a reasonable time to complete its coverage and liability investigations.