There are many different reasons for obtaining insurance. People obtain insurance for their vehicles, homes, boats, businesses, health, and more. Within every insurance contract, there is an obligation to act in good faith. There are several ways in which an insurance company can act in bad faith, such as:
- failing to settle when liability is obvious
- denying payment before completing a thorough investigation
- improperly denying coverage for a proper claim
- failing to properly disclose all available policy limits
- failing to respond to a policy limits demand in the given time frame
Insurance bad faith applies to all types of insurance policies, such as health insurance, vehicle insurance, homeowner’s insurance and other types of insurance.
Pursuant to Georgia Code §33-4-6, if an insurance company refuses to pay for a loss that is covered by an insurance policy within 60 days after a demand for payment has been made, and it is found that the refusal to pay was in bad faith, then the insurance company shall be liable for paying the insured, in addition to the loss, no more than 50% of the liability of the insurance company for the loss, or $5,000.00, whichever is greater, plus all reasonable attorneys’ fees for the prosecution of the action against the insurance company.
Direct Actions For Bad Faith
Pursuant to Georgia Code §33-4-7 if an insured suffers a loss because of injury to or destruction of property covered by a motor vehicle liability insurance policy, the insurance company has the following affirmative duties:
- 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
If an insurance company fails to comply with these duties, the insurance company may be responsible for paying the claimant, in addition to the loss, no more than 50% of the liability of the insured for the loss, or $5,000.00, whichever is greater, plus all reasonable attorneys’ fees for the prosecution of the action against the insurance company.