Insurance companies must satisfy certain duties when investigating and settling claims. These duties are created by statute. When an insurer violates any of them, it has been acting in “bad faith,” and the victim can receive compensation.
For example, an insured can bring a claim when its insurer makes a frivolous or unfounded refusal to pay a claim to its insured. Under O.C.G.A. § 33-4-6, the insured can seek the amount of the loss, reasonable attorneys’ fees, and a penalty.
- Example: Kim was involved in an accident and seeks benefits under her medical payments policy. Her insurer denies the claim for no reason, so Kim can sue her insurer for bad faith.
A different statute, O.C.G.A. § 33-7-11(j), provides a similar remedy involving uninsured motorist claims. A policyholder typically needs to prove there was no reasonable reason to delay or deny payment on a claim.
- Example: Michael was struck by a negligent driver who was uninsured. He makes a claim with his uninsured motorist insurer, who unjustifiably delays payment and refuses to investigate. Michael can sue his insurer for bad faith.
A policyholder can also bring a bad faith claim when an injured third party is seeking compensation for a car or truck accident. Georgia law is very clear that an insurer must put its insured’s interests ahead of its own. To that end, the insurer must settle a valid liability claim within the policy limits if it receives a settlement offer. If the insurer refuses to, then the policyholder can sue its insurer for being financially exposed. The policyholder can also receive compensation in excess of its own policy limit.
- Example: Lyn backed into Sonya at the grocery store. Sonya’s attorney makes a request for $25,000 in personal injury benefits for the accident, which is within the limits for Lyn’s policy. The insurer refuses for no good reason, exposing Lyn to liability in court. Lyn can sue her insurer.