The Southern Insurance v Holt court case Holds Georgia Insurance Carriers Liable For Bad Faith if they reject settling claims at the policy limit once a time limit demand is issued.
Simply stated, insurance carriers are required to process claims in good faith when a reasonable attempt is made to settle a claim within the policy’s liability limits.
For example, you run a red light and cause property damage bodily injury to another driver. Your policy has $100K worth of coverage, your insurance carrier receives a time limit demand from the injured party’s attorney for $80K in damages; your insurance company refuses to pay and the claim goes to court.
The jury awards the injured party $150K in damages; Your insurance company pays $100k because that’s your policy limit. They had the opportunity to settle at $80K but they didn’t hence making you personally liable for the difference, you’re on the hook for $50K!
In Georgia, your carrier is subject to bad faith and breach of contract lawsuits if they:
- Improperly rejecting insurance coverage under your policy when a proper claim is submitted against it
- Rejecting payment even though the insurance company has not conducted a full investigation
- Fails to settle when liability is clear (“go ahead and sue me” attitude)
- Fails to respond to a policy limits demand within the allotted time set out in the demand
Normally, Holt demands are made when damages are large (around the policy’s liability limits), if the carrier’s laziness causes damages to increase due to legal fees, they may be responsible for bad faith claims.
Plaintiff’s attorney usually make an offer of settlement and set a time limit for acceptance (usually 10 days), leveraging that the court find that the insurer acted in bad faith by refusing to settle within the time limit under Holt? Defense attorneys contend that Plaintiff’s attorneys have been making and abusing Holt demands to a certain extend, House Bill 336, just passed the legislation imposing a 30 day limit for such demands.
