An eye-popping settlement in Georgia serves as a cautionary tale for insurers who refuse to provide a straight answer when responding to a demand for policy limits and as a lesson for insureds dealing with recalcitrant insurers: Don’t just take “no” for an answer.

A widow insured under a State Farm policy with $25,000 limits has recovered $2.35 million for her insurance claim for her husband’s wrongful death. A driver crossed the center line and smashed into 80-year old John Timmons’s pickup truck, causing him to suffer a broken neck, cracked ribs, and severe cuts. A little more than nine weeks later, he succumbed to his injuries. While Timmons lay in the hospital, his wife, Eulene Timmons, and children sought the advice of counsel. At the time, the Timmonses were insured under a $25,000 State Farm policy.

Due to the grievous nature of her husband’s injuries and pain and suffering, Mrs. Timmons’s attorney demanded that State Farm tender its $25,000 policy limits. A representative responded by stating that State Farm would need to see additional notarized affidavits before it could confirm or deny coverage. In so doing, State Farm made what would turn out to be a very costly mistake.

Under Georgia law, if an insurer responds to an insured’s demand for policy limits by making a counteroffer, the counteroffer will constitute a rejection, subjecting the insurer to a claim for bad-faith conduct and potential liability in excess of policy limits. After Mr. Timmons passed away, his widow filed suit against State Farm in Georgia state court, where the court ruled that State Farm’s demand for additional notarized affidavits amounted to a counteroffer and rejection of the Timmonses’ demand. As a result, State Farm was on the hook for potential damages well-above the $25,000 for policy limits.

Fearing the worst, one day before jury selection was scheduled to begin, State Farm settled Mrs. Timmons’s claim for $2.35 million. According to their attorney, the Timmonses allegedly suffered damages of $750,000 for Mr. Timmons’s medical bills and $6,000 in funeral costs and for the extreme pain and suffering that Mr. Timmons experienced before he died. In all likelihood, State Farm considered the sympathetic nature of the Timmonses’ claims and the likelihood that the jury might award them exorbitant amounts of damages, and arrived at the $2.35 million settlement figure to protect itself from an even larger potential jury verdict.