What Is a Bad Faith Insurance Claim in Georgia?
Short answer: A bad faith claim is a claim that an insurance company unreasonably refused to pay or settle a claim it should have paid. Georgia statutes allow penalties and attorney’s fees in some situations, and a liability insurer that unreasonably fails to settle within its limits can owe a verdict above those limits.
Definition
Insurers must handle claims honestly and reasonably. “Bad faith” is the legal label for breaking that duty, such as refusing a covered loss with no reasonable basis.
How it works in Georgia
Each type of bad faith claim has its own rules:
- Your own insurer: a bad faith refusal to pay a covered loss within 60 days of your demand can add up to 50 percent of the insurer’s liability or $5,000, whichever is greater, plus reasonable attorney’s fees (O.C.G.A. § 33-4-6).
- UM claims: a bad faith refusal to pay within 60 days of a demand can add up to 25 percent of the recovery or $25,000, whichever is greater, plus attorney’s fees (O.C.G.A. § 33-7-11(j)).
- Vehicle damage claims against the other driver’s insurer: once liability is reasonably clear, a written demand for a specific amount sent by certified mail or statutory overnight delivery gives the insurer 60 days to settle, and penalties apply only if you later recover at least your demand (O.C.G.A. § 33-4-7).
- Failure to settle an injury claim: under Southern General Insurance Co. v. Holt (Ga. 1992), a liability insurer that unreasonably rejects a valid offer within its limits can be liable for the full judgment. The duty arises only when a valid offer is made (First Acceptance Insurance Co. of Georgia v. Hughes, Ga. 2019), and O.C.G.A. § 9-11-67.1 now sets rules for these offers in motor vehicle cases.
Example
Your car is totaled in a Norcross crash that was clearly the other driver’s fault, and the other driver’s insurer offers far less than it was worth. Your lawyer sends a certified demand. If the insurer refuses for 60 days and you later recover at least that amount in court, § 33-4-7 may allow a penalty and attorney’s fees.
Why it matters for your claim
- Bad faith exposure gives insurers a reason to evaluate claims fairly.
- Each rule has its own demand and timing requirements, and missing one can end the claim.
Read more: Bad faith insurance claims in Georgia: holding insurers accountable and Insurance lowball tactics.
Related terms
- Holt demand
- Time-limited demand
- Uninsured / underinsured motorist (UM) coverage
- Policy limits settlement
Frequently Asked Questions
Is a low offer automatically bad faith?
No. An insurer can disagree about value in good faith. Bad faith generally requires a refusal or offer with no reasonable basis, and each statute sets its own test.
Who can bring a bad faith claim?
You bring a § 33-4-6 or UM bad faith claim against your own insurer. A failure-to-settle claim belongs to the insured driver, though injured people often pursue it through an assignment.
Browse the full Georgia personal injury glossary
Questions about how this applies to your accident? Call 888-BIG-GUNN or request a free case review. There is no fee unless we recover for you.
This is general information about Georgia law, not legal advice for your situation.
