Bad Faith and Claims by a Third Party for Property Damage to Automobile A statute modeled after O.C.G.A. § 33-4-6 provides a remedy for third parties with claims for property damage under a tortfeasor’s automobile liability policy. O.C.G.A. § 33-4-7(a) provides: In the event of a loss because of injury…
The Georgia Court of Appeals summarized the common-law duty of good faith in dicta more than 60 years ago, noting that a liability insurer may be held liable for damages to its insured for failing to adjust or compromise a claim covered by its policy of insurance, where the insurer…
The Equal Consideration Rule The “Equal Consideration Rule” provides the standard by which an insurance company’s decision to not settle a claim against its insured is measured. The standard was pronounced five years after Smoot I, when the Georgia Court of Appeals in United States Fidelity & Guar. Co. v.…
Bad faith is found if disputed issue of fact concerns a collateral issue and the insurer failed to investigate.When a disputed question of fact regards a collateral issue, however, the insurer does not have a reasonable ground for contesting liability for damages from a covered claim. Georgia Farm Bureau Mut.…
ASSIGNMENTS, CONSENT JUDGMENTS AND DOWSE SETTLEMENTS Many lawsuits involving an insurer’s bad-faith failure to settle are brought by the claimant and not by the insured. Others are brought by both the claimant and the insured. Because a third-party claimant that lacks privity with the insurance company generally has no cause…
Bad Faith And The Jury Bad faith is for the jury where there is a dispute as to whether the insurer’s offer of payment was unreasonably low. Where an insured has suffered a loss, efforts by the insurance company to settle the claim that are not bona fide can be…
No Bad Faith For A Partial Payment It is not considered bad faith for a partial payment when amount of the claim is reasonably questioned. In Shaffer v. State Farm Mut. Auto. Ins. Co., the insured was injured in an automobile accident. The insured’s automobile policy provided for payment of…
DAMAGES Although an insurer’s failure to defend a covered claim is a breach of the insurance contract, a claim for bad faith refusal to settle within policy limits sounds in tort, not contract. Like any tort, damages are an essential element to a claim for bad faith. Since the Smoot…
The Time-Limited Holt Demand The most common failure to settle within policy limits involves the insurer’s rejection of a time-limited offer. A notable 1992 decision provides the moniker for the so-called “Holt demand,” in which an attorney for a claimant sends a letter to the insurer demanding a settlement at…
Bad faith And Factual Position An insurer’s defense “going far enough to show reasonable and probable cause for making it” vindicates the good faith of the insurer and precludes a finding of bad faith. The facts must, however, be “in genuine conflict” for the insurance company to be released from…