Insurance bad faith happens when an insurance company unreasonably delays, denies or underpays a valid claim, or fails to settle a claim it should have settled. In Georgia, the remedy depends on the type of claim: specific statutes cover your own policy, uninsured motorist claims and vehicle property damage claims, and case law covers an insurer’s failure to settle within policy limits. Most of these remedies require a written demand and a waiting period before you can sue.
A slow or low claim is frustrating, but not every denial is bad faith. Georgia law generally allows an insurer to dispute a claim when it has a reasonable basis to do so. Knowing which rules apply, and following the steps they require, is what gives a bad faith claim its strength.
Key Takeaways
- For a covered loss under your own policy, O.C.G.A. § 33-4-6 allows a penalty of up to 50% of the insurer’s liability or $5,000, whichever is greater, plus attorney’s fees, if the insurer refuses in bad faith to pay within 60 days of a proper demand.
- Uninsured motorist claims have their own bad faith penalty under O.C.G.A. § 33-7-11(j), which Georgia courts treat as the exclusive remedy for UM claims.
- An injured person can use O.C.G.A. § 33-4-7 against the at-fault driver’s insurer for vehicle property damage claims, but not for injury claims.
- An insurer that unreasonably fails to accept a valid offer to settle within policy limits may be liable to its own insured for a larger judgment.
- A written demand, careful records and attention to deadlines are the foundation of any bad faith claim.
What Is Insurance Bad Faith?
Every insurance policy is a contract, and Georgia law expects insurers to handle claims fairly and in good faith. Bad faith generally means an insurer refused to pay or settle without a reasonable basis, or handled a claim in a way that ignored the policyholder’s interests.
Bad faith is not the same as a disagreement. If an insurer has a reasonable, good-faith reason to question coverage, fault or the value of a claim, a court may find that it did not act in bad faith, even if the insurer turns out to be wrong. That is why documentation of what the insurer knew, and when, matters so much.
Common Types of Bad Faith Conduct
- Unreasonable denial: Rejecting a claim without a legitimate basis or despite clear coverage.
- Unjustified delay: Failing to investigate or resolve a claim within a reasonable time.
- Lowball offers: Offering far less than what the evidence shows the claim is worth when liability is reasonably clear. Learn more about insurance lowball tactics.
- Misrepresentation: Giving misleading information about policy terms or coverage.
- Failure to defend: Refusing to defend a policyholder in a lawsuit the policy covers.
- Failure to settle: Refusing a reasonable offer to settle within policy limits and exposing the policyholder to a larger judgment.
Georgia’s Bad Faith Laws
Claims Under Your Own Policy (O.C.G.A. § 33-4-6)
If your own insurer refuses to pay a covered loss, O.C.G.A. § 33-4-6 allows you to recover, in addition to the loss, up to 50% of the insurer’s liability or $5,000, whichever is greater, plus reasonable attorney’s fees, if the refusal was in bad faith. The insurer must first receive a written demand and have 60 days to pay. The demand must be specific and clear, so it should be prepared carefully.
Uninsured Motorist Claims (O.C.G.A. § 33-7-11(j))
If your UM insurer refuses in bad faith to pay a covered loss within 60 days of a demand, it can be liable for up to 25% of the recovery or $25,000, whichever is greater, plus reasonable attorney’s fees. The Supreme Court of Georgia has held that this is the exclusive bad faith penalty for UM claims. Our guide to Georgia UM coverage explains more.
Vehicle Property Damage Claims (O.C.G.A. § 33-4-7)
When another driver damages your vehicle, that driver’s auto insurer has a duty to adjust the property damage claim fairly and promptly. If liability is reasonably clear and the insurer, in bad faith, offers less than the amount reasonably owed after a 60-day written demand, you may be able to recover a penalty of up to 50% of the insurer’s liability or $5,000, whichever is greater, plus attorney’s fees. This statute covers property damage only, not bodily injury.
Failure to Settle Within Policy Limits
Under Georgia case law, an insurer must give its insured’s interests the same faithful consideration it gives its own. In Southern General Insurance Co. v. Holt (1992), the Supreme Court of Georgia held that an insurer can be liable to its insured when it negligently or in bad faith fails to settle an injured person’s claim, which can include a judgment above policy limits. In First Acceptance Insurance Co. of Georgia v. Hughes (2019), the Court said this duty arises when the injured person makes a valid offer to settle within the limits. This claim belongs to the insured driver, not directly to the injured person.
In motor vehicle injury claims, pre-suit settlement offers are governed by O.C.G.A. § 9-11-67.1, which was amended in 2024. The statute sets required terms, including at least 30 days to accept, and gives insurers a safe harbor if they meet its requirements. Small drafting mistakes can undo a demand, so these letters should be prepared carefully.
Unfair Claims Practices Complaints
Georgia’s Unfair Claims Settlement Practices Act (O.C.G.A. § 33-6-34) lists practices such as failing to attempt in good faith to settle claims when liability is reasonably clear. It does not create a private right to sue, but you can file a consumer complaint with the Georgia Office of the Commissioner of Insurance and Safety Fire.
How to Protect Your Rights
- Document everything. Keep every letter, email, claim number, photo and note from phone calls, including the date and the adjuster’s name.
- Ask for explanations in writing. If your claim is denied, delayed or underpaid, ask the insurer to explain its reasons in writing and identify the policy language it relies on.
- Respond to reasonable requests. Provide requested records and cooperate with the investigation so the insurer cannot blame delays on you.
- Send a proper written demand. Most Georgia bad faith statutes require a specific written demand and a 60-day waiting period before a penalty can be sought.
- Watch your deadlines. Your policy may have its own time limits for filing suit, and your underlying injury claim is usually subject to Georgia’s two-year deadline.
- Get legal advice early. A lawyer can review whether the insurer’s conduct crosses the line into bad faith and make sure any demand meets Georgia’s requirements.
Frequently Asked Questions
Can I Sue the Other Driver’s Insurance Company for Bad Faith?
Usually not for an injury claim. In Georgia, an injured person generally cannot sue the at-fault driver’s insurer directly for bad faith on the injury claim, although a vehicle property damage claim can support a penalty under O.C.G.A. § 33-4-7. A failure-to-settle claim belongs to the at-fault driver and is sometimes assigned as part of a resolution.
What Can I Recover in a Georgia Bad Faith Claim?
It depends on the claim. The statutes allow the covered loss plus a capped penalty and attorney’s fees, with different penalty amounts for your own policy, UM claims and vehicle property damage. In a failure-to-settle case, the insurer may be responsible for a judgment above its policy limits.
Is a Low Settlement Offer Always Bad Faith?
No. An insurer can make a low offer or dispute a claim if it has a reasonable basis to do so. Bad faith generally requires showing the insurer had no reasonable basis, often after a proper demand. Understanding what your claim may be worth helps you judge an offer.
Do I Need to Send a Demand Letter Before Filing a Bad Faith Claim?
For most Georgia bad faith statutes, yes. A written demand followed by a 60-day waiting period is generally required, and the demand must be specific enough to put the insurer on notice. Pre-suit settlement offers in car crash injury claims must also meet the technical requirements of O.C.G.A. § 9-11-67.1.
If you believe an insurance company is unfairly delaying, denying or underpaying your claim, The Gunn Law Group can review your situation in a free, no-obligation consultation. There is no attorney fee unless we recover for you, and hablamos español. Call 888-BIG-GUNN (888-244-4866).
