Resort to a judicial forum is not per se bad faith or unfair dealing on the part of the insurer regardless of the outcome of the suit. That principle was affirmed by the Oklahoma Supreme Court, answering a certified question in GEICO v. Quine, 2011 OK 88. The exact question answered was:
Does an insurer’s refusal to unconditionally tender partial payment of UIM benefits amount to a breach of the obligation to act in good faith and deal fairly when (1) the insured’s economic/special damages have been fully recovered through tortfeasor’s liability insurance; (2) the insurer promptly investigates and places a value on the claim; (3) there is a legitimate dispute regarding insured’s noneconomic/general damages; and (4) benefits due have not been firmly established?
The insured had received compensation from the tortfeasor’s insurer in excess of her economic/special damages. GEICO determined the insured was entitled to some amount of UIM benefits under the GEICO policy for the noneconomic/general damage element of her claim. The Court noted that the distinction between these two damage elements is important. The parties could not agree on an appropriate value for the insured’s general damage claim; thus, a legitimate dispute arose. GEICO’s refusal to issue an advance payment on the insured’s UIM claim presented a scenario far different than one involving a request for partial payment needed to satisfy unpaid medical expenses, lost wages, or other economic/special damages–cases where the impact of the loss is direct, immediate, and measurable with reasonable certainty. The only portion of the claim remaining after payment from the tortfeasor were those indeterminate sums attributable to “general damages.”
If GEICO had refused to pay medical bills, lost wages, or other items, the result could have been different.