Georgia liability insurer bad faith and settlement demands in motor vehicle claims

Insurer duty and breach under O.C.G.A. 33-4-7(a) and (b)

Section 33-4-7(a) places an affirmative duty on "the insurer issuing such policy" when a loss arises because of injury to or destruction of property covered by a motor vehicle liability insurance policy. The insurer has a duty to adjust that loss fairly and promptly. The insurer also makes a reasonable effort to investigate and evaluate the claim. Where liability is reasonably clear, the insurer makes "a good faith effort to settle with the claimant potentially entitled to recover against the insured under such policy." When a truck crash damages property that such a policy covers, these obligations rest with the insurer that issued the policy. Where liability is reasonably clear and a claimant is potentially entitled to recover against a truck driver insured under such a policy, subsection (a) calls for a good faith effort to settle with that claimant.^[1]

Section 33-4-7(a) also sets the consequence of a breach. Any insurer who breaches the duty may be liable to pay the claimant, in addition to the loss, not more than 50 percent of the liability of the insured for the loss or $5,000.00, whichever is greater. The breaching insurer may also be liable for "all reasonable attorney's fees for the prosecution of the action." Section 33-4-7(f) governs how the trier of fact and the trial court fix those fees. In a truck accident property claim under Section 33-4-7(a), the added amount and the fees may be owed only where the insurer breaches the subsection (a) duty. In Georgia liability insurer bad faith and settlement demands under Section 33-4-7, those sums are in addition to the loss itself.^[1]

Section 33-4-7(b) states when an insurer breaches the subsection (a) duty. A breach occurs when, after investigation of the claim, "liability has become reasonably clear and the insurer in bad faith offers less than the amount reasonably owed under all the circumstances of which the insurer is aware." In a truck crash property claim, the subsection (b) test looks to what the insurer offers after investigation, measured against the circumstances known to the insurer. Court decisions decide how the reasonably clear and bad faith standards of Section 33-4-7 apply to particular facts, and this entry does not cover those decisions.^[1]

Demand letter, 60-day period and service on the insurer

Section 33-4-7(c) states the conditions on which a claimant is entitled to recover under subsection (a). The claimant or the claimant's attorney has delivered to the insurer a demand letter "by statutory overnight delivery or certified mail, return receipt requested, offering to settle for an amount certain." The insurer has refused or declined to settle within 60 days of receipt of that demand, so that the claimant has to institute or continue suit to recover. The claimant ultimately recovers an amount equal to or in excess of the claimant's demand. For a truck crash property loss that such a policy covers, subsection (c) provides that a claimant "shall be entitled to recover under subsection (a)" if these conditions are met. When a truck driver's insurer receives such a demand letter by certified mail or statutory overnight delivery, the 60 days run from its receipt of that demand.^[1]

Section 33-4-7(d) addresses service on the insurer. At the expiration of the 60 days set forth in subsection (c), the claimant may serve the insurer issuing such policy by service of the complaint in accordance with law. Those 60 days run from the insurer's receipt of the demand under subsection (c). When the underlying property loss follows a truck accident, the timing for service under subsection (d) still depends on the expiration of that period. In a truck crash property claim under Section 33-4-7, the party served under subsection (d) is the insurer issuing such policy.^[1]

Section 33-4-7(e) provides that the action for bad faith shall not be abated by payment after the 60 day period. Under subsection (e), in a truck accident property claim, a payment that arrives once 60 days have passed since the insurer's receipt of the demand leaves the bad faith action in place.^[1]

Unnamed insurer, separate judgment, attorney's fees and notice to the Commissioner

Under Section 33-4-7(d), the insurer "shall be an unnamed party, not disclosed to the jury, until there has been a verdict resulting in recovery equal to or in excess of the claimant's demand." If such a verdict occurs, the trial is recommenced so that the trier of fact can receive evidence and determine whether bad faith existed in the handling or adjustment of the attempted settlement of the claim or action in question. In a truck crash property case under Section 33-4-7, the jury receives no disclosure of the insurer before such a verdict. A truck accident property case reaches the recommenced phase only after that verdict. Section 33-4-7(e) adds that "the testimony or opinion of an expert witness" shall not be the sole basis for a summary judgment or directed verdict on the issue of bad faith.^[1]

Section 33-4-7(f) provides that the trier of fact determines the amount of recovery, including reasonable attorney's fees, if any, and that the amount is included in a separate judgment against the insurer rendered in the action. The attorney's fees are fixed on the basis of "competent expert evidence" as to the reasonable value of the services, based on the time spent and the legal and factual issues involved, in accordance with prevailing fees in the locality where the action is pending. If the trial court finds the jury verdict fixing attorney's fees to be greatly excessive or inadequate, it has discretion to review and amend the portion of the verdict fixing those fees without the necessity of disapproving the entire verdict. The fee limitations in Section 33-4-7 are not controlling as to fees the plaintiff and his or her attorney may agree upon for the attorney's services. In a truck crash property case, that review reaches only the portion of the verdict fixing attorney's fees. In Georgia liability insurer bad faith and settlement demands under Section 33-4-7, subsection (f) places any recovery the trier of fact determines in a judgment against the insurer apart from the judgment on the loss.^[1]

Section 33-4-7(g) applies in any action brought pursuant to subsection (b). Within 20 days of bringing such an action, the plaintiff mails to the Commissioner a copy of the demand and complaint by first-class mail, in addition to service of process in accordance with Code Section 9-11-4. Under subsection (g), failure to comply may be cured by delivering the demand and complaint. The subsection (g) mailing applies to a truck accident property claim only when the action is brought under subsection (b). In a truck crash property action of that kind, the mailing to the Commissioner is in addition to service of process.^[1]

The history line on the official code page for Section 33-4-7 shows enactment by Ga. L. 2001, p. 784, Section 1. The same line lists amendments by Ga. L. 2015, p. 1088, Section 22 (SB 148) and by Ga. L. 2016, p. 864, Section 33 (HB 737). Its last entry is Ga. L. 2019, p. 337, Section 1-22 (SB 132).^[1]

Limits on civil actions for failure to settle under O.C.G.A. 9-11-67.1(i)

Section 9-11-67.1(a) provides that any offer to settle a "tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision" shall be an offer to enter into a bilateral contract. Subsection (a) reaches an offer made after a truck crash only when the claim is a tort claim of that kind arising from a motor vehicle collision. When a truck driver is injured or killed in a motor vehicle collision and a tort claim follows, an offer to settle that claim is an offer to enter into a bilateral contract under subsection (a). Subsection (j) still removes product liability claims, including failure to warn claims arising under product liability, from the reach of Section 9-11-67.1.^[2]

Section 9-11-67.1(i)(1) states that there shall be no civil action arising from an alleged failure by the recipient to settle such a claim where, on or before the dates specified in the offer, the recipient provides the offeror a writing "that purports to accept in their entirety the material terms of the offer, with the exception of the amount of payment" together with payment of the lesser of the amount demanded in the offer or the available bodily injury liability limits of the applicable insurance policy or policies issued by the recipient. Where the offer requires it as a material term, the recipient also provides a statement under oath regarding insurance coverage provided by the recipient. For a truck accident injury claim, the bar depends on that response arriving by the dates the offer specifies. For an offer on a truck crash injury claim, the payment in that response is measured against policies the recipient issued. Because of Section 9-11-67.1(j), none of subsection (i) governs an offer to settle a product liability claim.^[2]

Except as provided in paragraph (3), Section 9-11-67.1(i)(2) makes subsection (i) apply to any offer to settle such a collision claim, even where the offer expressly provides that any or all of the Code section does not apply to it, and subsection (i) is not to be construed to only apply to offers made pursuant to subsection (b). Under paragraph (2), an offer on a truck accident death claim that expressly disclaims the Code section remains subject to subsection (i), except as provided in paragraph (3). Under Section 9-11-67.1(i)(3), where the recipient does not comply with paragraph (1) of subsection (i) in response to an offer made in compliance with subsection (b), subsection (i) does not apply to any subsequent offer to settle such a claim. Section 9-11-67.1(j) keeps any offer on a product liability claim outside these rules, failure to warn included.^[2]

Section 9-11-67.1(c) provides that where such an offer contains any term outside the material terms provided in paragraph (1) of subsection (b), that term "shall be construed as an immaterial term that may be mutually agreed to, in writing, by both the offeror and the recipient." A recipient's variance from such an immaterial term does not subject the recipient to a civil action arising from an alleged failure to accept the offer if the recipient otherwise complies with subsection (i). In a truck crash injury offer, protection for a variance from an immaterial term applies only if the recipient otherwise complies with subsection (i). Under Section 9-11-67.1(j), which applies notwithstanding any contrary provision of the Code section, subsection (c) does not govern an offer to settle a product liability claim.^[2]

Product liability exclusion, applicability dates and amendment notes

Section 9-11-67.1(j) provides that, notwithstanding any other provision of the Code section to the contrary, "this Code section shall not apply to any offer to settle a product liability claim, including failure to warn arising under product liability." According to the notes on the official code page, the 2024 amendment, Ga. L. 2024, p. 178 (SB 83), rewrote Section 9-11-67.1 effective July 1, 2024. The editor's notes state that this Act makes the Code section applicable to "any offers to settle a tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision made on or after April 22, 2024" with the exception of a product liability claim, including failure to warn arising under product liability. The Code Commission notes add that the Act provided for applicability on or after April 22, 2024, although it did not become effective until July 1, 2024. For Georgia liability insurer bad faith and settlement demands on injury claims, that applicability note reaches offers made on or after April 22, 2024, other than product liability offers.^[2]

Under the editor's notes, the 2021 Act, Ga. L. 2021, p. 431 (HB 714), applies to causes of action accruing on or after July 1, 2021. Court decisions decide when a cause of action accrues for purposes of that note, and this entry does not cover those decisions. The notes also record that the Code section became effective July 1, 2013. The history line on the official page for Section 9-11-67.1 shows enactment by Ga. L. 2013, p. 860 (HB 336), with later entries for Ga. L. 2021, p. 431 (HB 714) and Ga. L. 2024, p. 178 (SB 83), effective July 1, 2024. For truck accidents, these effective dates come from the notes and history line on the official code page. For an offer on a truck crash claim, the 2024 note covers offers made on or after April 22, 2024, and it leaves out product liability claims. Section 9-11-67.1(j) carries that same product liability exclusion in the text of the Code section.^[2]

See also: Flanagan Law truck accident practice

See also

On related publications

• Georgia truck-crash law notes (truckaccidentlawyer.wiki)
• Liability and comparative fault in Georgia (caraccidentlawyers.wiki)