Insurance Bad Faith in Georgia Car Accidents: First-Party, Third-Party, and the Holt Doctrine

Georgia has three separate bad faith routes after a car accident, and the right one depends on who is complaining about which insurer. A policyholder suing their own insurer uses O.C.G.A. § 33-4-6, or § 33-7-11(j) for uninsured motorist coverage. A third party with a property damage claim uses § 33-4-7. An insured whose insurer refused to settle within limits has a common-law claim, the one tied to Southern General v. Holt. An injured third party has no direct claim on that last route without an assignment.

Which route applies

Situation	Who sues	Source	Recovery
Own insurer refuses a covered claim	Policyholder	§ 33-4-6	Loss, plus up to 50 percent of it or $5,000, whichever is greater, plus attorney's fees
Own UM carrier refuses	Insured	§ 33-7-11(j)	Recovery, plus up to 25 percent or $25,000, whichever is greater, plus attorney's fees
Other driver's insurer on a property claim	Third-party claimant	§ 33-4-7	Loss, plus up to 50 percent or $5,000, whichever is greater, plus attorney's fees
Insurer refuses to settle within limits, excess judgment follows	Insured, or assignee	Common law	Damages from the failure to settle, such as the excess
Other driver's insurer on an injury claim	Injured third party	No direct route	See below

First-party claims under § 33-4-6

The statute applies when an insurer refuses to pay a covered loss “within 60 days after a demand” and a finding is made that the refusal was in bad faith. The Court of Appeals stated the elements in American Reliable v. Lancaster (2020): the claim is covered, a demand for payment was made “within 60 days prior to filing suit”, and the failure to pay was motivated by bad faith. It said “a proper demand for payment is essential to recovery”. Within 20 days of suit, the plaintiff must also mail the demand and complaint to the Commissioner of Insurance, under (b).

Two things limit this route.

A reasonable defense. In Auto-Owners v. Neisler, 334 Ga. App. 284 (2015), the court repeated that penalties “are not authorized where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact”. So an insurer that loses on coverage has not necessarily acted in bad faith.

Exclusivity. Clary v. Allstate, 340 Ga. App. 351 (2017), said the limited penalty and procedure were intended to be exclusive, and that recovery under general penalty provisions such as § 13-6-11 is not allowed for a bad faith failure to pay.

Uninsured motorist claims under § 33-7-11(j)

Section 33-7-11(j) was changed to add the “$25,000.00, whichever is greater” language, so a 25 percent figure alone no longer states the full penalty. The question of bad faith, the penalty, and fees are decided “in a separate action filed by the insured against the insurer after a judgment has been rendered against the uninsured motorist”. In McCall v. Allstate, 251 Ga. 869 (1984), the Supreme Court treated the specific UM procedure and limited penalty as exclusive of general provisions. How that fits with § 33-4-6 on the same UM claim should be reviewed with counsel for the policy at issue.

Property damage claims under § 33-4-7

This statute gives a third party a direct route, but only for “injury to or destruction of property covered by a motor vehicle liability insurance policy”. Mills v. Allstate, 288 Ga. App. 257 (2007), held it “applies only to an insurer’s bad faith in responding to claims for property damage”, so a personal injury claimant failed to state a claim under it.

The procedure is specific:

1. Deliver a demand letter by statutory overnight delivery or certified mail, return receipt requested, “offering to settle for an amount certain”, under (c).
2. If the insurer refuses within 60 days, the claimant may serve it with the complaint as an unnamed party, not disclosed to the jury, under (d).
3. The claimant must recover “an amount equal to or in excess of the claimant’s demand”.
4. The trial then restarts to decide bad faith.
5. Within 20 days of bringing the action, the plaintiff mails a copy of the demand and complaint to the Commissioner, under (g).

Under (b), an insurer breaches its duty when, after investigation, liability has become reasonably clear and it “in bad faith offers less than the amount reasonably owed”. Amica v. Sanders, 335 Ga. App. 245 (2015), reversed a ruling for claimants where an insurer used a formula for diminished value and there was no other evidence of bad faith.

Failure to settle: what Holt decided

Southern General v. Holt, 262 Ga. 267 (1992), did not create this theory. It applied an existing rule, citing McCall, that an insurer may be liable to its insured “where the insurer is guilty of negligence, fraud, or bad faith in failing to compromise the claim”. The insurer must give equal consideration to the insured’s interests.

Holt’s contribution concerns time-limited offers. Liability was clear, and the medical bills and lost wages exceeded the limits, and the insurer let a short deadline pass. The Court upheld the verdict on the assigned claim, and it set two limits:

• An insurer “does not act in bad faith solely because it fails to accept a settlement offer within the deadline”.
• Nothing in the decision lets a plaintiff’s attorney “set up” an insurer with “an unreasonably short time”.

The Court also reversed the punitive damages award to the insured.

What later decisions added

Decision	Point
Brightman, 276 Ga. 683 (2003)	Test is the ordinarily prudent insurer. An insurer facing a demand involving multiple insurers can create a safe harbor by meeting the part of the demand within its control
Fortner, 286 Ga. 189 (2009)	An insurer that adds its own conditions to a tender is not simply within that safe harbor
Baker v. Huff, 323 Ga. App. 357 (2013)	No liability where the time was unreasonably short given what the insurer was allowed to know
Trinity Outdoor, 285 Ga. 583 (2009)	On those facts, no claim without an excess judgment or a settlement the insurer agreed to
First Acceptance v. Hughes, 305 Ga. 489 (2019)	The duty to settle "arises only when the injured party presents a valid offer to settle within the insured's policy limits"
GEICO v. Whiteside, 311 Ga. 346 (2021)	An insured's failure to forward suit papers did not alone relieve the insurer; causation could go to a jury
Cannon v. Safeco, A25A1847 (2026)	At the pleading stage, an insurer's own conduct that cut off a limits offer before any demand may present a jury issue

Cannon was at an early stage, so it should not be read as deciding liability.

Who can bring the claim

The duty runs to the insured. Richards v. State Farm, 252 Ga. App. 45 (2001), found an injured claimant had no standing to sue the other driver’s insurer for failure to settle. The route is an assignment from the insured after the excess judgment, as happened in Holt. The Court of Appeals has said the right to punitive damages cannot be assigned.

Time-limited demands

A pre-suit offer in a motor vehicle case now has to account for O.C.G.A. § 9-11-67.1, revised in 2024. Its terms decide whether an offer was accepted and what an insurer’s safe course is, so pre-suit settlement demands and time-limited demands cover how to draft and respond to one.

The paper trail behind a bad faith claim

The record is the claim. Keep each demand with proof of delivery, what was enclosed, each response with its date, and what the insurer knew and when. The claim can turn on that timeline: on a given day, did the insurer have what it needed to decide? A policyholder facing a refusal should also calendar the underlying deadline, because a bad faith dispute does not stop it.

Sources

• Official Code of Georgia Annotated, November 2022 public release: §§ 9-11-67.1, 33-4-6, 33-4-7, 33-7-11
• Southern General v. Holt, 262 Ga. 267
• Cotton States v. Brightman, 276 Ga. 683
• Fortner v. Grange, 286 Ga. 189
• Baker v. Huff, 323 Ga. App. 357
• Trinity Outdoor v. Central Mutual, 285 Ga. 583
• First Acceptance v. Hughes, 305 Ga. 489
• GEICO v. Whiteside, 311 Ga. 346
• Cannon v. Safeco, A25A1847

This page was last reviewed in November 2026 for general information. Laws and court decisions can change after that date. It is not legal advice and does not create an attorney-client relationship.