Vest v. Travelers Insurance Company

Thomas Vest was killed by an underinsured motorist. An underinsured motorist is a motorist whose liability insurance is insufficient to cover the victim’s damages. Thomas had a $200,000 underinsured motorist policy through Travelers Insurance Company (Travelers) (defendant). Underinsured motorist policies cover the shortfall between the insured’s damages and the maximum payout from the underinsured motorist’s insurance policy. After receiving a settlement offer from the underinsured motorist, Jana Vest (plaintiff), Thomas Vest’s wife, demanded that Travelers authorize the settlement and pay out the full $200,000 coverage limit on Thomas’s policy to cover the shortfall. Travelers refused. Jana sued Travelers, arguing that Travelers denied coverage in bad faith. Travelers moved for summary judgment, arguing that Jana’s bad-faith claim was premature because Jana could not provide the required determination of either her damages or Travelers’s liability before settling her claim with the underinsured motorist. During the pendency of Jana’s bad-faith lawsuit, Travelers approved a settlement between Jana and the underinsured motorist and paid out the full $200,000 on Thomas’s policy. The trial court subsequently granted Travelers summary judgment, holding that Travelers’s initial denial of coverage was not in bad faith because Travelers was not liable to pay out under Thomas’s policy until after Jana settled with the underinsured motorist. Jana appealed. The appellate court affirmed, holding that (1) although Jana was entitled to recover under Traveler’s underinsured motorist policy before settling with the underinsured motorist, (2) Travelers was still entitled to summary judgment on the bad-faith claim because it did not ripen until after Jana settled with the underinsured motorist. Jana appealed to the Florida Supreme Court.