I recently received my license to practice law in Georgia and a common question I am asked is whether the insured’s claim is being handled in “good faith” by the insurance carrier and whether an action for unfair claims handling is appropriate.
An action for unfair claims handling in Georgia requires:
- the claim is covered under the policy;
- a timely demand letter pursuant to O.C.G.A. § 33-4-6; and
- the insurance carrier failed to act in good faith during the adjustment of the claim.
If an insured intends to pursue a claim for unfair claims handling submitting a timely demand letter pursuant to O.C.G.A. § 33-4-6 is the insured’s first hurdle.
O.C.G.A. § 33-4-6 provides:
In the event of a loss which is covered by a policy of insurance and the refusal of the insurer to pay same within 60 days after a demand has been made by the holder of the policy and a finding has been made that such refusal was in bad faith, the insurer shall be liable to pay such holder, in addition to the loss, not more than 50% of the liability of insurer for the loss or $5,000.00, whichever is greater, and all reasonable attorney’s fees for the prosecution of the action against the insurer. The action for bad faith shall not be abated by payment after the 60 day period nor shall the testimony or opinion of an expert witness be the sole basis for a summary judgment or directed verdict on the issue of bad faith.
The timing of the demand letter is crucial. Unfortunately for most policyholders, by the time they realize the carrier is not acting in good faith, the clock is ticking and the insured has limited time to submit this required demand. Most policies in Georgia require the insured to file suit within one or two years of the date of loss. O.C.G.A. § 33-4-6 then requires the insured to send the demand 60 days before filing suit. For insureds with a one-year policy they must submit the demand letter only 10 months after the date of loss. This is a very difficult deadline to meet, especially for insureds that might not even realize a remedy for the carrier’s delay and misrepresentations even exists.
The substance of the demand letter is also important for insureds. While no magic language is required, the demand letter must at least notify the carrier of the insured’s intent to file a claim for unfair claims handling. To be safe, the demand letter should reference O.C.G.A. § 33-4-6.
If you are or represent a Georgia policyholder and are dealing with an insurance carrier not acting in good faith, read the policy to know when the demand letter must be filed so you don’t lose your ability to pursue a claim for unfair claims handling.