An insurance company that denies or delays paying a legitimate claim without a reasonable basis has not merely made a business error. In Georgia, it has potentially committed a statutory violation that exposes it to financial penalties on top of the original claim amount. Understanding this leverage, exactly how it works, and when delay crosses the line from slow to unlawful is essential for anyone whose insurer is not paying what they owe.
What Makes a Denial “Bad Faith”
Under O.C.G.A. § 33-4-6, bad faith in Georgia insurance law means a “frivolous and unfounded refusal to pay a claim.” This is a higher bar than merely “unreasonable.” A denial that rests on a genuinely disputed interpretation of policy language, a contested factual question about the accident, or an honest uncertainty about whether the policy covers the specific situation is not bad faith, even if the insurer ultimately loses on the merits. Bad faith requires that the insurer had no reasonable ground for the denial.
Conduct that supports a bad faith finding includes denying a claim without conducting any meaningful investigation, misrepresenting policy terms or coverage to the claimant, delaying payment indefinitely after liability has become reasonably clear, making settlement offers that are grossly below the documented and uncontested damages, and failing to communicate with the claimant for extended periods without explanation.
Conduct that does not constitute bad faith includes denying a claim because liability is genuinely disputed and the evidence supports the insurer’s position, contesting the value of damages when reasonable disagreement exists, and taking time to investigate complex claims involving multiple parties, disputed medical causation, or contested coverage questions.
The line between aggressive claims handling and bad faith is drawn at reasonableness. An insurer that pushes hard within the bounds of legitimate dispute is doing its job. An insurer that ignores evidence, fabricates reasons, or stonewalls without justification has crossed the line.
The 60-Day Demand Requirement
Before you can sue an insurer for bad faith under O.C.G.A. § 33-4-6, you must make a written demand for payment and wait 60 days. The demand must be a specific, clear request for payment of the claim, not merely an expression of dissatisfaction or a regulatory complaint. If the insurer fails to pay within those 60 days and the refusal is ultimately found to be in bad faith, the penalty provisions apply.
The 60-day clock starts from the date of the properly submitted demand. You cannot file a bad faith lawsuit the same day you make the demand. This waiting period is a statutory prerequisite, and failing to observe it can result in the bad faith claim being dismissed on procedural grounds.
What Georgia’s Bad Faith Statute Provides
If a court finds that an insurer refused to pay a covered claim in bad faith, O.C.G.A. § 33-4-6 provides three remedies.
The original claim amount. The insurer pays what they owed in the first place.
A penalty of up to 50% of the insurer’s liability for the loss, or $5,000, whichever is greater. The penalty is calculated on the insurer’s actual liability, not the amount originally claimed. If you claimed $100,000 but the insurer’s actual liability is determined to be $80,000, the 50% penalty applies to $80,000 ($40,000 penalty), not to the $100,000 you requested. This distinction between “liability for the loss” and “claim amount” matters and can produce different dollar outcomes.
Reasonable attorney’s fees. The jury determines attorney fees based on the time spent, complexity of the case, and the skill required. In practice, the attorney fee award can be substantial, particularly in cases that required extensive litigation to overcome an unreasonable denial.
The combination of the original claim plus a 50% penalty plus attorney’s fees creates meaningful financial consequences for bad faith denials and provides leverage that motivates insurers to avoid crossing the line.
Third-Party Bad Faith: O.C.G.A. § 33-4-7
A separate bad faith framework governs the at-fault driver’s insurer’s duty to their own insured. Under O.C.G.A. § 33-4-7, when an insurer is defending its insured against a third-party claim and liability has become reasonably clear, the insurer has an affirmative duty to settle within policy limits rather than expose its insured to an excess judgment.
If the insurer unreasonably refuses to settle within policy limits when it should have, and the insured ends up with a judgment exceeding the policy, the insurer may be liable for the entire excess judgment, not just the policy limit. This framework creates the leverage behind policy limits demands, sometimes called Holt demands after Georgia case law developments.
For how policy limits demands work and how they create bad faith exposure, see Insurance Policy Limits in Georgia Car Accidents.
SB 68’s Impact on Bad Faith Fee Recovery
SB 68, effective April 2025, made a change that directly affects bad faith litigation economics. The law amended O.C.G.A. § 13-6-11, which previously allowed recovery of attorney fees and litigation expenses in tort actions for bad faith conduct, stubborn litigiousness, or causing unnecessary trouble and expense. Under SB 68, this statute now applies only to contract actions, not tort actions. This removes one avenue of fee recovery that plaintiffs previously used in personal injury bad faith cases.
The first-party bad faith penalty under O.C.G.A. § 33-4-6 (the penalty plus reasonable attorney fees) remains intact and unaffected by SB 68. The practical consequence is that plaintiffs pursuing bad faith claims in personal injury cases must now rely primarily on Section 33-4-6 for fee recovery rather than stacking fee awards from multiple statutory bases. The SB 68 prohibition on double recovery of attorney fees under the new O.C.G.A. § 9-15-16 further limits the ability to combine fee awards from different provisions.
The Difference Between Slow and Unlawful
A slow insurer is not automatically a bad faith insurer. The distinction matters because the legal remedies are different.
Delays caused by complex investigations, competing expert opinions, multi-party coordination, or genuine coverage questions are generally not bad faith, even when they are frustrating. The insurer has a legitimate interest in investigating before paying, and investigation takes time.
The pattern matters more than any single act. Repeated failures to respond to communications, unexplained delays after liability has become clear, denial without any investigation, and conduct that appears designed to frustrate resolution rather than to genuinely evaluate the claim are the hallmarks of actionable bad faith.
Thorough documentation of every communication is essential to a bad faith claim: every letter sent, every call made (with date, time, and the name of the person spoken with), every response received or not received. This paper trail is the factual record on which a bad faith claim rests. The strongest bad faith cases are built on documentation showing systematic unreasonableness, not on a single missed phone call.
This guide covers insurance bad faith in Georgia car accident cases as of March 2026. Bad faith penalties are governed by O.C.G.A. § 33-4-6 (first-party) and O.C.G.A. § 33-4-7 (third-party). SB 68 (April 2025) modified attorney fee recovery by limiting O.C.G.A. § 13-6-11 to contract actions only. Laws change. This information is educational and does not constitute legal advice. If you need advice about your specific situation, consult a licensed Georgia attorney.
Last updated: March 2026
