Bad Faith Insurance Denial Claims in Georgia

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In Georgia, an insurer that drags out, lowballs, or unreasonably refuses a claim it should pay does not merely owe the original amount. It can owe a statutory penalty and the policyholder’s attorney fees on top. That added exposure is the engine behind Georgia’s bad-faith framework, and it is built on a strict procedural trigger: a written demand and a 60-day clock. Whether an insurer’s conduct crosses from a legitimate coverage dispute into bad faith is a question Georgia courts have defined narrowly, and the difference is worth tens of thousands of dollars.

What Counts as Bad Faith in Georgia

Bad faith is not a disagreement over value. An insurer is entitled to investigate, to dispute coverage on genuine policy grounds, and to question the extent of damages. Georgia courts describe actionable bad faith as a refusal to pay that is frivolous and unfounded, made without reasonable or probable cause. An insurer that conducts a real investigation and reaches a defensible conclusion has reasonable grounds even if it turns out to be wrong. What strips away that protection is denying without investigating, ignoring evidence that supports the claim, relying on an exclusion that does not match the facts, or misrepresenting the policy terms.

The Two Statutes and Their Penalties

Georgia’s bad-faith remedy lives in two related sections, and the penalty differs by claim type.

Statute Applies to Penalty above the loss
OCGA 33-4-6 First-party claims generally (property, health, life, UM/UIM) Up to 50 percent of the liability for the loss, or $5,000, whichever is greater, plus attorney fees
OCGA 33-4-7 Motor vehicle liability claims; affirmative duty to adjust fairly and promptly Up to 50 percent of the liability for the loss, or $5,000, whichever is greater, plus attorney fees
OCGA 33-7-11 (UM bad faith) Uninsured motorist claims Up to 25 percent of the recovery, or $25,000, whichever is greater, plus attorney fees

Under OCGA 33-4-6, a covered loss that an insurer refuses to pay within 60 days of a proper demand, where the refusal is in bad faith, exposes the insurer to the penalty and reasonable attorney fees in addition to the loss itself. OCGA 33-4-7 imposes an affirmative duty on motor vehicle liability insurers to investigate, evaluate, and attempt in good faith to settle, with a parallel penalty structure.

The Mechanics That Trigger the Claim

The framework turns on procedure as much as conduct. Three things define the trigger:

  • A covered loss under the policy.
  • A written demand for payment that identifies the amount owed and the policy basis.
  • A 60-day window in which the insurer fails to pay, followed by a judicial finding that the refusal was in bad faith.

If the insurer pays within the 60 days, no bad-faith penalty attaches even if payment was overdue. The statute functions as a last clear chance for the insurer to correct course before the penalty exposure opens.

The clock is mechanical, and a simple timeline shows how it runs. If a proper written demand is delivered on March 1, the 60-day window under OCGA 33-4-6 closes around April 30; an insurer that pays the covered loss on April 20 avoids the statutory penalty, while one that still refuses without reasonable cause after the window has run has exposed itself to the penalty calculation on top of the loss. The dates are illustrative of how the period is counted, not a representation about any particular claim. Because the penalty floor is the greater of a percentage or a fixed dollar amount, the same arithmetic applies whether the underlying loss is small or large.

First-Party Versus Third-Party Bad Faith

The bad-faith statutes protect the policyholder against the policyholder’s own insurer. A claimant pursuing the at-fault driver’s liability insurer is a third party and is not owed the same statutory duty under OCGA 33-4-6, because no contract exists between them. The distinction between first-party and third-party claims, and which insurance pays in what order, is the subject of its own discussion. Third-party exposure to an insurer can arise in a different posture, through a failure to settle within policy limits that exposes its own insured to an excess judgment, an issue separate from the first-party penalty addressed here.

Moving the Penalty Base and Limiting Fee Proof

Georgia’s 2025 tort reform, Senate Bill 68, did not amend the bad-faith statutes, but two of its changes bear on how a bad-faith case is valued and argued. First, the new medical-specials rule in OCGA 51-12-1.1, effective for claims arising on or after April 21, 2025, limits recoverable medical damages to the reasonable value of necessary care and makes both billed charges and amounts actually paid admissible. Because the penalty under OCGA 33-4-6 and 33-4-7 is measured against the insurer’s liability for the loss, a recoverable medical figure anchored nearer to amounts paid can move the base on which a 50 percent penalty is calculated, and it sharpens the reasonableness analysis when an insurer evaluates what a claim is genuinely worth. Second, SB 68’s attorney-fee provisions bar double recovery of fees and keep the contingency-fee agreement out of evidence as proof of fee reasonableness, which is relevant whenever a bad-faith claim seeks the attorney fees the statutes authorize.

What Defeats a Bad-Faith Claim

Insurers defend these claims by showing reasonable grounds existed at the time of the decision. A genuine dispute over whether the policy covers the loss, a real factual question about how the incident happened, or a documented investigation that supports the conclusion can each negate bad faith. The penalty is reserved for conduct that was unreasonable on the facts the insurer actually had, not for honest mistakes or close calls resolved against the insured.

Frequently Asked Questions

What is the penalty for bad faith under Georgia law?
Under OCGA 33-4-6 and 33-4-7, an insurer found to have acted in bad faith may owe up to 50 percent of its liability for the loss, or $5,000, whichever is greater, plus reasonable attorney fees, in addition to the loss. For uninsured motorist claims under OCGA 33-7-11, the penalty is up to 25 percent of the recovery or $25,000, whichever is greater, plus fees.

Is a phone call enough to start the 60-day clock?
The statutes require a written demand identifying the amount and policy basis for payment. A demand that meets those requirements starts the 60-day period after which a bad-faith claim can be pursued if the insurer has not paid.

Can a claimant sue the other driver’s insurer for bad faith?
Generally no. The first-party bad-faith statutes protect a policyholder against the policyholder’s own insurer. A third party is not owed that statutory duty, though excess-exposure failure-to-settle principles can apply against an insurer toward its own insured.

Does disagreeing about value amount to bad faith?
No. A legitimate dispute over the value of a claim, supported by a reasonable investigation, is not bad faith. Bad faith requires a refusal that is frivolous and unfounded, made without reasonable cause.

  • First-party bad faith penalty and 60-day demand, OCGA 33-4-6
  • Motor vehicle insurer duty to adjust fairly and promptly, OCGA 33-4-7
  • Uninsured motorist bad faith penalty (25 percent or $25,000), OCGA 33-7-11
  • Personal injury limitations period reference, OCGA 9-3-33
  • Senate Bill 68 (2025): OCGA 51-12-1.1 reasonable-value medical specials and attorney-fee provisions (effective for claims arising on or after April 21, 2025)

Disclaimer

This article provides general information about bad-faith insurance claims under Georgia law. It is not legal advice, does not create an attorney-client relationship, and may not reflect the most recent changes in the law. Whether an insurer’s conduct constitutes bad faith depends on the specific facts and the information the insurer had. A person dealing with a denied or delayed claim in Georgia should consult a licensed Georgia attorney about their particular situation.

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