🏛️Suing Insurance Companies in Georgia for Bad Faith: A High-Level Guide

1. What Is “Bad Faith” in Insurance?

In Georgia, "bad faith" in insurance refers to an insurer’s unreasonable or frivolous refusal to pay a legitimate claim or failure to investigate it thoroughly. In first-party policies (your own policies - auto, homeowners, etc.), insurers must act promptly and fairly under Georgia Code § 33‑4‑6. In liability cases (when someone sues you), they're also obligated to settle reasonable claims within policy limits under § 33‑4‑7.

Bad faith can include:

• Ignoring or unduly delaying claims

• Misrepresenting policy terms

• Refusing to settle when liability is clear

• Poor or biased investigation

  
  

2. The Legal Framework

🔹 First‑Party Claims (§ 33‑4‑6)

Insurers must pay covered losses within 60 days of a valid demand. If they delay or deny the claim unreasonably, the policyholder can sue for:

• The full amount of the loss;

• Up to 50% of the insurer’s liability or $5,000, whichever is greater;

• Reasonable attorney’s fees

A valid demand must:

• Be in writing and specify the dollar amount

• Notify that bad faith is being asserted

• Allow a 60-day waiting period before filing suit

  
  

🔹 Liability Claims (§ 33‑4‑7)

If an insurer fails to settle a claim when liability is reasonably clear, and the insured is sued as a result, the insurer can be held liable for:

• The excess judgment amount;

• Up to 50% of the liability or $5,000;

• Attorney's fees.

These statutes require a finding of "bad faith"—meaning the insurer lacked a reasonable basis for denial or delay.

3. Proving Bad Faith

To win a bad faith case, you must show:

1. Coverage – Your loss is covered under the policy.

2. Demand – You made a proper demand and waited 60 days without resolution.

3. Unreasonable denial – The insurer acted without reasonable grounds or failed to investigate properly.

Courts often reject bad faith claims if the insurer had a bona fide dispute over coverage or liability. But if an insurer ignored clear evidence, misrepresented policy terms, or delayed without justification, bad faith liability might be established.

Bad faith also allows punitive damages in tort-based third-party liability cases, especially for excessive or reckless conduct.

4. What You Can Recover

In a successful claim you can recover:

• Your covered loss amount;

• Penalties up to 50% of the loss (or $5,000 minimum);

• Attorney’s fees;

• Sometimes punitive damages in particularly egregious cases.

You generally have 6 years to file, though insurance policies may impose shorter deadlines—review your policy’s “suit against us” clause carefully.

5. Step‑by‑Step Process

1. File your claim and follow up in writing.

2. If denied or delayed, issue a formal demand letter, stating amount, coverage basis, and referencing bad faith.

3. Wait the mandatory 60 days.

4. If no resolution, file suit in the appropriate court.

5. During litigation, gather evidence like communications, internal memos, expert advice, and policy documents.

6. At trial, prove the denial or delay was *unreasonable, unfounded, or rushed without investigation.

   
   

6. Practical Tips

• Document everything: Keep claim forms, letters, emails, and notes of phone calls.

• Have experts assess the value of your claim.

• Work with an experienced bad faith lawyer—requirements around demand letters and proving reasonableness are technical.

• Consider filing complaints with Georgia’s Office of Insurance and Safety Fire Commissioner—it doesn't provide compensation but can support your case.

  
  

7. Legislative Context

On April 21, 2025, Georgia passed SB 68 & 69 introduced major changes to the amount of penalties that can be awarded under O.C.G.A. 9-15-14 (no longer allowing Plaintiffs to obtain duplicate fee awards under separate statutes. Fortunately, this new law does not impact first-party bad faith claims under § 33-4-6. However, evolving case law and policy changes may influence insurers’ behavior and judge/jury sentiment going forward.

8. Final Thoughts

Suing for bad faith is more than just getting paid—it holds insurers accountable for unfair practices, mixed motives, or indifference to your rights. To succeed, you must follow proper procedures, clearly document bad faith actions, and work with attorneys who understand the nuances of Georgia insurance law.

In summary: Georgia law empowers policyholders to sue insurers for bad faith under § 33‑4‑6 and § 33‑4‑7. Government reforms haven’t eroded these protections, but bringing a successful claim demands solid evidence, strict compliance with procedural rules, and legal expertise. If you believe your insurer has acted in bad faith, act promptly—preserve your rights and consult with Darcy Hodges, an experienced insurance attorney.