Georgia has a very specific law called “Holt demands” concerning time-limited demands made against a liability insurance policy. In Southern General Ins. Co. v. Holt, 262 Ga. 267, 416 S.E.2d 274 (1992), the Georgia Supreme Court held that where the insurer has full knowledge of the insured’s liability and damages exceeding policy limits, the insurer can be subject to bad faith damages if its failure to settle within policy limits subjects the insured to a judgment in excess of those limits. In deciding whether to settle a claim within policy limits, the insurer must give equal consideration to the interests of the insured.
The Holt demand was later codified in a statute addressing only motor vehicle claims, at O.C.G.A. Section 9-11-67.1. To constitute a valid demand to an insurer under the statute, a claimant must adhere to the following: (1) the demand must be in writing; (2) the time period for accepting the demand must be clearly stated, but cannot be less than thirty days; (3) the specific amount of monetary payment requested must be included; (4) the demand must specifically outline the party the claimant is willing to release; (5) the demand must specify the type of release, if any, the claimant is willing to provide; (6) the demand must specify the claims to be released; and (7) the demand must be sent by certified mail or overnight delivery, return receipt requested.
The motor vehicle claims statute permits insurers to request further information from the claimant to evaluate the demand, and such requests are not deemed a counteroffer or rejection risking potential bad faith exposure. Further, insurers still have defenses to a bad faith claim for refusing a settlement demand where (1) the insured’s liability was not clear; and/or (2) there was no confirmation that the damages would be in excess of the policy’s limits.
Georgia courts have recently shown their willingness to hold claimants to the statute’s specific requirements before an insurer may be sued for bad faith. In September 2016, DeKalb County State Court Judge Michael Jacobs dismissed a claim based on a purported Holt demand letter in the automobile context because it “was not a clear demand, let alone a time-limited demand” that could expose the insurer to bad faith for failure to timely respond. Hughes v. First Acceptance Insurance Company of Georgia, Inc., No. 14A52088 (DeKalb State Ct., Sept. 20, 2016). The court specifically found that there was no evidence the insurer knew or reasonably should have known the complex claims against the insured could have been settled within the policy limits. In October 2016, the claimants appealed this decision to the Georgia Court of Appeals, and the record for review was issued November 21, 2016. At the end of November 2016, the appeal remained pending.
Faced with a settlement demand in Georgia, an insurer acts reasonably when it does not place its interests above that of its insured. The following checklist is also helpful in responding to “Holt demands” in Georgia, and may help the insurer in any defense of a claim or lawsuit for refusal to settle a claim:
- Review the demand letter and document your review, itemizing the statutory requirements either met or not met.
- Either respond timely to the letter or seek an extension of time to respond.
- Request the information that you don’t already have but is necessary to assist in evaluating the demand, including liability assessment reports from defense counsel, accident, police, or other causation reports and information, expert analysis, school records, medical records, medical bills, medical liens, subrogation claims by health insurers, workers’ compensation, Medicare/Medicaid payments, and other relevant facts and/or testimony.
Consult with coverage counsel to ensure you have properly responded and met applicable requirements.