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Georgia Law Requires Atlanta Insurers to Act in Good Faith

Potential new clients who call looking to hire an attorney after a car wreck often explain that they were involved in a serious car wreck and that, in addition to their physical injuries, the at-fault driver’s insurance company will not fully compensate them for the damage to their vehicle. The scenario is pretty common. The potential client was involved in a wreck, does not hire an attorney, and tries to negotiate a settlement with the insurance adjuster for one of the major insurance companies in Georgia such as State Farm, Allstate, USAA, Progressive or GEICO. Usually, the insurance company insists that they will pay for what they (the insurance company) consider to be a reasonable amount for the needed repairs. However, the insurance company, has a duty to also pay for the diminished value of the vehicle–something they often will not do willingly.

Fortunately, there is a Georgia law on the books that forces the insurance company to act fairly and adjust the claim in good faith within 60 days of a proper demand being made upon them. Under § 33-4-7 of the Georgia Code, if a loss to personal property is covered by an automobile policy, the insurer issuing the policy must “adjust the loss fairly and promptly, [and] make a reasonable effort to settle with the claimant potentially entitled to recover against [its] insured.”

If the insurance company does not satisfy this statutory duty, it is liable to the injured party for the value of the loss, up to an additional 50% of he liability of the insured for the loss or $5,000 (whichever is greater), plus attorneys’ fees.

The full text of O.C.G.A § 33-4-7 is as follows:

33-4-7. Affirmative duty to fairly and promptly adjust in incidents covered by motor vehicle liability policies; actions for bad faith; notice to Commissioner of Insurance and consumers’ insurance advocate

(a) In the event of a loss because of injury to or destruction of property covered by a motor vehicle liability insurance policy, the insurer issuing such policy has an affirmative duty to adjust that loss fairly and promptly, to make a reasonable effort to investigate and evaluate the claim, and, where liability is reasonably clear, to make a good faith effort to settle with the claimant potentially entitled to recover against the insured under such policy. Any insurer who breaches this 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, and all reasonable attorney’s fees for the prosecution of the action.

(b) An insurer breaches the duty of subsection (a) of this Code section 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.

(c) A claimant shall be entitled to recover under subsection (a) of this Code section if 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 do so within 60 days of receipt of such demand, thereby compelling the claimant to institute or continue suit to recover; and the claimant ultimately recovers an amount equal to or in excess of the claimant’s demand.

(d) At the expiration of the 60 days set forth in subsection (c) of this Code section, the claimant may serve the insurer issuing such policy by service of the complaint in accordance with law. 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 that occurs, the trial shall be recommenced in order for the trier of fact to receive evidence to make a determination as to whether bad faith existed in the handling or adjustment of the attempted settlement of the claim or action in question.

(e) 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.

(f) The amount of recovery, including reasonable attorney’s fees, if any, shall be determined by the trier of fact and included in a separate judgment against the insurer rendered in the action; provided, however, the attorney’s fees shall be fixed on the basis of competent expert evidence as to the reasonable value of the services based on the time spent and legal and factual issues involved in accordance with prevailing fees in the locality where the action is pending; provided, further, the trial court shall have the discretion, if it finds the jury verdict fixing attorney’s fees to be greatly excessive or inadequate, to review and amend the portion of the verdict fixing attorney’s fees without the necessity of disapproving the entire verdict. The limitations contained in this Code section in reference to the amount of attorney’s fees are not controlling as to the fees which may be agreed upon by the plaintiff and his or her attorney for the services of the attorney.

(g) In any action brought pursuant to subsection (b) of this Code section, and within 20 days of bringing such action, the plaintiff shall, in addition to service of process in accordance with Code Section 9-11-4, mail to the Commissioner of Insurance and the consumers’ insurance advocate a copy of the demand and complaint by first-class mail. Failure to comply with this subsection may be cured by delivering same.

As an experienced Georgia injury lawyer, Robert J. Fleming has had great successes helping seriously injured clients value their automobile accident cases. He has been handling wrongful death cases, dental malpractice, bus accidents, car accident cases and premises injury cases for individuals and families who have been harmed, injured or died as a result of the carelessness or negligence of another for more than 20 years. He practices in and around the Atlanta, Georgia area including handling lawsuits in Fulton, DeKalb, Clayton, Gwinnett, Cobb and other counties and nearby cities including Alpharetta, Austell, Avondale Estates, Chamblee, College Park, Conyers, Duluth, Decatur, Doraville, Hapeville, Johns Creek, Jonesboro, Lawrenceville, Norcross, Peachtree City, Riverdale, Roswell, Sandy Springs, Stone Mountain, and Smyrna. If you have been seriously injured in a car accident and would like discuss your case, contact Robert J. Fleming directly on (404) 525-5150 or contact us online.

If you or a family member has been seriously injured and would like help in valuing your case, please contact us for a confidential and thorough case evaluation.