Can an insurance company rely on a law that was in place at the time of the accident or a law that was enacted after the accident

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After several mistrials and appeals, the Eleventh Circuit found Geico did not have to provide coverage to its’ insured while he drove a rental car without permission because he didn’t have Enterprise Rent-a-Car’s permission to drive.  Their holding reversed a $5 million bad faith judgment entered by the U.S. District Court for the Southern District of Florida.

Initially, the first trial in the Southern District found the driver of a rental car who caused an accident that killed the plaintiff did not have implied consent of the rental company to drive the car, and therefore did not have coverage under his GEICO auto policy.  In the second trial in the Southern District of Florida, a different district judge allowed the plaintiff to argue the current implied consent law as if it had been in effect at the time GEICO made its decision (which was not law at the time of the decision). The district court also allowed testimony that the court had, prior to trial, determined coverage in the plaintiff’s favor, but did not allow explanation that the decision only came after Florida changed the law. The jury returned a verdict of $5 million against GEICO.

GEICO appealed to the Eleventh Circuit.  The Eleventh Circuit reversed the district court’s decision, finding that GEICO’s legal conclusion under then-existing Florida law was correct and was relevant to the reasonableness of GEICO’s no-coverage determination. The court also held that the district court was wrong in refusing to admit evidence of the district court’s prior rulings in GEICO’s favor. Even though the Court found in Geico’s favor with many issues, they also agreed with the plaintiff that an insurer cannot rely on court decisions issued after the insurer’s determination that no coverage. The appellate court found that the exclusion of the evidence significantly influenced the decision of the case because its lack of evidence prejudiced GEICO. The court found that it would have been relevant to a jury that Florida law on implied consent was not solidified at the time of GEICO’s decision and that several Florida and federal courts sided with GEICO at that time. The Plaintiff then appealed the decision back up to the 11th Circuit.  The Court denied the appeal to order a seventh trial in a GEICO coverage dispute, rejecting an argument by the estate of a car crash victim that the insurer wasn’t prejudiced by the exclusion of decisions reached after it denied coverage.

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