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Georgia Bad Faith Insurance Law and Car Accidents

When you are injured due to another person’s negligence in a car accident in Georgia, bad faith laws apply to the at-fault driver’s insurance coverage. An insurer in Georgia has the duty to act in good faith to their insured when negotiating a settlement with an injured party. If an insurance company fails to settle a bodily injury claim arising out of a car accident within the available policy limits coverage, and the injured party ultimately obtains a judgment or verdict that exceeds the insurance policy limits, then the car insurance company can be held liable for “bad faith” and be obligated to pay the injured party the full amount of the verdict, even if it is more than the policy limits coverage.

The concept is not as complicated as it seems. The idea is that drivers obtain automobile insurance in order to protect themselves from having to personally pay for injuries or damages that they cause when driving carelessly. A driver pays premiums to an automobile insurance company in exchange for that protection. A policy can cover up to a certain amount of damages or injuries; this amount of coverage is known as the policy limits or the maximum amount an insurance company will pay for damages arising out of car accident. In Georgia, the minimum amount of insurance coverage required for a bodily injury policy is $25,000.00 per person, $50,000.00 per accident. What that means is that the maximum amount that the insurer will pay if its insured driver injures another person is $25,000.00; and, if there are more injured parties, then the maximum amount of coverage for the injured people combined is $50,000.00.

Let’s use the $25,000.00/$50,000.00 policy limits as an example of how a bad faith claim would arise. Let’s say the defendant driver is insured by State Farm. The defendant runs a red light and t-bones another driver, who will be the claimant for personal injuries; there is no dispute that the defendant driver is at fault for the accident. The claimant is severely injured and incurs medical expenses of $75,000.00 due to the accident. The claimant demands that State Farm pay the full $25,000.00 policy limits in accordance with Georgia law, but State Farm refuses to do so. The claimant sues the defendant driver in court and obtains a verdict of $150,000.00 against the defendant driver. Thus, the at-fault driver is personally liable for the full $150,000.00 and was exposed to such liability because State Farm failed to initially pay the $25,000.00 to the injured plaintiff.

If State Farm had agreed to pay the $25,000.00 as a settlement, then the defendant driver would not have been exposed to such personal liability. Thus, the defendant driver could have a claim against State Farm for “bad faith.” In theory, the defendant driver could sue State Farm for bad faith and recover sufficient funds to satisfy the plaintiff’s judgment.

If State Farm satisfied the $25,000.00 demand from the start, then the claimant would not have obtained enough money to cover his/her medical expenses. However, the claimant could have sought payment from other available insurance policies, such as his/her own underinsured motorist policy. A qualified personal injury attorney would be able to assist a claimant for personal injuries with finding available insurance coverage or with setting up a bad faith claim in order to maximize recovery.

As you can see, insurance law in Georgia can be quite complicated. If you have any questions about bad faith insurance in the context of an automobile accident in Georgia, call us at (404) 593-2620 to speak to an attorney.