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Claims Handling Practices - Georgia

Claims Adjusting Standards

Georgia has enacted an “Unfair Claims Settlement Practices Act.” O.C.G.A. § 33-6-30, et seq. An insurer violates the Act if it commits the acts listed below “flagrantly and in conscious disregard of [the Act]” or “with such frequency so as to indicate a general business practice to engage in such conduct.” O.C.G.A. § 33-6-33.

The prohibited practices are as follows (O.C.G.A 33-6-34):

  1. Knowingly misrepresenting to claimants and insureds relevant facts or policy provisions relating to coverages at issue.

  2. Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies.

  3. Failing to adopt and implement procedures for the prompt investigation and settlement of claims arising under its policies.

  4. Not attempting in good faith to effectuate prompt, fair, and equitable settlement of claims submitted in which liability has become reasonably clear.

  5. Compelling insureds or beneficiaries to institute suits to recover amounts due under its policies by offering substantially less than the amounts ultimately recovered in suits brought by them.

  6. Refusing to pay claims without conducting a reasonable investigation.

  7. When requested by the insured in writing, failing to affirm or deny coverage of claims within a reasonable time after having completed its investigation related to such claim or claims.

  8. When requested by the insured in writing, making claims payments to an insured or beneficiary without indicating the coverage under which each payment is being made.

  9. Unreasonably delaying the investigation or payment of claims by requiring both a formal proof of loss and subsequent verification that would result in duplication of information and verification appearing in the formal proof of loss form; provided, however, this paragraph shall not preclude an insurer from obtaining sworn statements if permitted under the policy.

  10. When requested by the insured in writing, failing in the case of claims denial or offers of compromise settlement to provide promptly a reasonable and accurate explanation of the basis for such actions. In the case of claims denials, such denials shall be in writing.

  11. Failing to provide forms necessary to file claims within 15 calendar days of a request with reasonable explanations regarding their use.

  12. Failing to adopt and implement reasonable standards to assure that the repairs of a repairer owned by the insurer are performed in a workmanlike manner.

  13. Indicating to a first-party claimant on a payment, draft check, or accompanying letter that said payment is final or a release of any claim unless the policy limit has been paid or there has been a compromise settlement agreed to by the first-party claimant and the insurer as to coverage and amount payable under the contract.

  14. Issuing checks or drafts in partial settlement of a loss or claim under a specific coverage which contain language which releases the insurer or its insured from its total liability.

But note that an insured does not have a private right of action under the Act. This is a matter reserved for the Insurance Commissioner. O.C.G.A. § 33-6-37; Javits v. State Farm Fire & Cas. Co., 2014 U.S. Dist. LEXIS 119085 (N.D. Ga. Aug. 26, 2014); Rodgers v. St. Paul Fire & Marine Ins. Co., 228 Ga. App. 499 (1997).

Hurricane/Tropical Storm Irma Claims Standards

The Georgia Insurance Commissioner issued the following directives regarding Hurricane/Tropical Storm Irma:

  1. Directive 17-EX-6 – this directive reminds all insurers that, regardless of the volume of claims generated by Hurricane Irma, they are obligated to continue to promptly identify, evaluate and resolve each claim pursuant to the Georgia Unfair Claims Settlement Practices Act. Insurers must still promptly acknowledge receipt of each claim and make appropriate assignments for its investigation.  Policyholders should continue to receive the timely service that they expect and should not experience delays in receiving benefits that they deserve based on the volume of claims filed with a particular insurer.

  2. Directive 17-EX-7 – this bulletin encourages insurers to provide relied to Georgia policyholders, including exercising leniency where premium payments may appear tardy due to the disruption of services as a result of Hurricane Irma. Likewise, insurers that have or will process lawful cancellation or nonrenewal notices during the time in which Georgia is in a State of Emergency are encouraged to ensure that policyholders impacted by legal adverse underwriting decisions have sufficient time to address their insurance needs.

  3. Directive 17-EX-8 – this directive requires all insurers covering property or property-related risks to provide certain claim information to the Insurance Commissioner for all claims generated during Hurricane Irma.

The Commissioner has issued press releases with guidance to insureds making claims from the storm.  https://www.oci.ga.gov/

Duty of Good Faith

The Georgia bad faith statute is that: (1) the claim is covered under the policy; (2) the insurer refused to pay within 60 days of a demand for payment prior to suit; and (3) the insurer’s failure to pay was motivated by bad faith. If the insured prevails, in addition to the loss it can recover up to 50% of the claim and attorney’s fees. 

The statute is the exclusive remedy for an insurer’s bad faith refusal to pay insurance proceeds.Great Southwest Exp. Co., Inc. v. Great American Ins. Co. of New York, 292 Ga.App. 757, 760 (2008).

The test is reasonableness. “Where the . . . insurer has reasonable grounds to contest the claim, no penalty should be permitted.” Lavoi Corp., Inc. v. National Fire Ins. of Hartford, 293 Ga.App. 142, 153 (2008); Mock v. Cent. Mut. Ins. Co., 158 F. Supp. 3d 1332, 1350 (S.D. Ga. 2016).

Bad faith is “any frivolous and unfounded refusal in law or in fact to pay according to the terms of the policy.” King v. Atlanta Cas. Ins. Co., 279 Ga. App. 554, 556 (2006).

Penalties for bad faith are not available where no coverage exists as a matter of law.  Anderson v. Georgia Farm Bureau Mut. Ins. Co., 255 Ga. App. 734, 737 (2002).

Independent and Public Adjusters

Independent and public adjusters are governed by O.C.G.A. § 33-23-43 (2014).

Communication, Investigation, and Payment Deadlines

See Ga. Comp. R. & Regs. 120-2-52-.03 (2017).

Acknowledge receipt of notification of first-party claim within 15 days.

Provide first-party claimant proof of loss forms with reasonable explanations regarding their use within 15 days from receipt of notification of claim.

Affirm or deny liability on all first-party property damage claims if completed proof of loss is required within 15 days of receiving completed proof of loss.

Affirm or deny liability on all first-party property damage claims if completed proof of loss is not required within 30 days from the day the claim was reported.

Notify claimant within 5 business days after receiving the competed proof of loss that more time is needed to determine whether a first-party property damage claim should be accepted or denied stating the reasons that more time is needed and an estimate of additional time needed to establish liability. The total time to accept or deny liability shall not exceed 60 days.

Tender payment on first-party property damage claim within 10 days after coverage is confirmed and full amount of claim is determined and undisputed.

Tender payment within 10 days where multiple coverages are involved and payments for individual coverages are undisputed and where payee is known, if payment would terminate insurer’s known liability under that individual coverage.

If appropriate, submit written request for arbitration to Commissioner of Insurance upon affirmation of liability on a claim or for individual coverages where the claim involves multiple coverages and the amount payable is disputed.

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