The Missouri Court of Appeals has ordered Geico Insurance to pay $5.2 million for contracting an STD in an insured personal vehicle. The woman filed a claim after being informed she had an STD. In the claim, she said she contracted this while in her partner’s car. Lawyers argued that Geico was liable because her partner had liability insurance. 

How was the insurance award determined?

Geico then rejected the woman’s offer. So, from there, it went to arbitration. But the arbitrator ordered Geico to pay the $5.2 million. So the insurance company requested a new hearing. The company made several arguments, with the main one being the company was basically denied its day in court. 

The Appeals Court denied all of the grounds for a new trial, according to the Kansas City Star. So, how did the courts determine Geico is liable? When the woman filed the claim, she stated that the person she was with was negligent because he didn’t tell her he had Human papillomavirus. She stated he “contributed to cause to be infected by HPV by not taking proper precautions and neglecting to inform and/or disclose his diagnosis. 

For that reason, the insurance company’s “policy provided coverage for her injuries and losses.” Geico rejected that claim. To resolve the claim, she requested a $1 million settlement. Geico refused her settlement offer according to the Missouri Court of Appeals. From there, the case went to arbitration.

What did the insurance arbitrator determine?

The arbitrator found that the activity that took place in the car “directly caused, or directly contributed to cause” the woman to contract the disease. This, in spite of her partner knowing he was HPV positive. With that, the arbitrator determined that a $5.2 million arbitration award would compensate her.

Geico appealed the award, alleging the court didn’t provide “a meaningful opportunity to defend its interests.” On Tuesday, a three-judge panel confirmed the arbitrator’s $5.2 million settlement. “At the time of Geico’s intervention, liability and damages had been determined by an arbitrator and confirmed by the trial court. GEICO had no right to relitigate those issues,” the opinion stated.

It went on to say that Geico should have entered a defense if it thought the award was too high. “GEICO did not take advantage of this opportunity, and instead denied coverage and refused to defend Insured.” 

How does Geico determine damages?

Geico has no set formula to calculate damages. Awards are based on the nature and severity of the insured’s injuries. Those give a guide to the overall value of the claim. But if a claim is denied Geico will define the reason for the denial. Sometimes, that can be as simple as providing all of the necessary information. 

However, it is more common for insurance companies to decrease or eliminate coverage. And taking it to court is rare because of the costs involved. That $5.2 million award probably factors in some of those costs.

As of now, Geico maintains the policy doesn’t cover the claim. It is appealing the decision in federal court.