In 1992, the Georgia Supreme Court held an auto insurance company may be liable if it is “guilty of negligence, fraud, or bad faith” in failing to settle a potential claim against a policyholder. The case involved a woman who was responsible for a car accident. The victim’s attorney presented the driver’s insurance company with an offer to settle her personal injury claims. The offer had a ten-day limit. The insurance company failed to respond. The Supreme Court said the company could be held liable for acting in bad faith, not just for refusing to respond before the deadline, but because it knew its policyholder was responsible for the accident, and the claim was therefore valid.
Owners Insurance Company v. Parsons
Another insurance company attempted to invoke this 1992 case in more recent litigation. Here, the subject is a 2013 automobile accident. Driver A accused Driver B of causing the accident. Driver A then sent Driver B’s insurance company a “time-limited settlement offer” seeking the policy limit of $50,000. The time limit was 30 days.