Bad Faith Injury Insurance Law in Georgia

Can I Get More Than the Insurance Company Policy Limits?

This past Wednesday, we mediated a bad faith case against a major insurer to a successful conclusion for the client. I am frequently asked by younger attorney’s about their “great bad faith case.” When I say asked, it is usually in the form of a brag about how meritorious it is. It likely isn’t.

When lawyers talk about a bad faith case against an insurance company, they are referring to the argument that the insurer has failed to properly adjuster (payout on) an insurance claim. Georgia does not allow people who are injured to sue the insurance company for the wrongdoer. (a third party insurance claim) Georgia does allow the wrongdoer to claim against their own insurance in the event that the insurance company screws up and puts their own interests in front of their client’s or just plain fails to respond appropriately. (a first-party insurance claim)

When the insurance company negligently fails to adjust the claim properly, people colloquially refer to it as “bad faith.” This is a misnomer. Bad Faith is almost “evil” action; ignoring valid claims completely with an eye towards saving money. Acting without “good faith.” These cases are relatively rare. What is more common is an adjuster who carelessly ignores an obviously meritorious claim and risks the insured wrongdoer’s financial well being in the process.

In such a situation, there is a two trial process that can result in the injured party recovering in excess of the insurance policy limits. Let’s use an example.

Carl has a broken leg with $100,000 in medical bills. Carl’s leg was broken in a car accident with a driver who only has the $25,000 minimum limits available. Carl sends a demand (a request that the insurance company pays out the limits of the available policy) and the insurance company does not comply. If Carl then goes on and tries his case to a $300,000 verdict, he has succeeded in phase 1. He has a verdict against the wrongdoer. Phase two is harder. Carl’s lawyer will now need to explain to the wrongdoer that he can file for bankruptcy or cooperate in going after the wrongdoer’s insurance company for failing to pay the $25,000 limits when it was clearly owed.

In phase 2, the suit is brought directly against the insurance company and the issue becomes the actions or inactions of the insurance company in adjusting their claims.

Here are a few examples of negligent claims handling:

1. Plaintiff’s wife dies in a crash where the defendant is charged with vehicular manslaughter because when he blew a tire, he did not get out of the middle lane of a five-lane highway in the middle of the day. Insurance adjuster sends an unsolicited letter to the widower denying responsibility. Widower sends his own demand letter asking for the $30,000 in limits and there is no response within the 16 day period. There is no response at all until a month past the deadline when counsel is hired and sends a letter of representation to the adjuster at which time the policy limits are offered.

During the course of litigation, it is discovered that the defendant has been dishonest about a number of key issues. The case was successfully mediated to a resolution more than ten times the amount of available insurance.

2. In a clear liability collision, a driver is rendered a c5 quadriplegic. The insurance company has the at-fault driver covered under a $25,000 policy. Our firm represents him for free in trying to get the property damage paid and the $25,000 paid. The adjuster is rude, combative and takes months to even get the truck paid for. In the end, we advise that we are withdrawing and that the client will be sending their own demand for the injury money. The adjuster calls the client and tells him that there are still issues to work out. The deadline comes and goes and the day after, the adjuster mails out a letter still discussing open issues and never sends the check. As we sit here today, the check still has never been sent. The adjuster surreptitiously recorded all of the phone calls with our firm and with the client. Those calls paint in a stark light, the ridiculous behavior by the adjuster. As of this writing, we are proceeding to trial in phase 1 to get a verdict for our client.