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What Is The Time for Responding to a Defense Tender?

The only insurance specifically mentioned is first party property coverage.  Under that coverage, insurers must acknowledge the claim in 15 business days.  Ga. Comp. R. and Regs. 120-2-52.03(1).

For first party property coverage, insurers must approve or deny the claim within 15 days after receipt of properly executed proof of loss.  Ga. Comp. R. and Regs. 120-2-52.03(3).

Does Reserving Rights Create a Conflict of Interest?

An insured does not have a right to independent counsel based strictly on a reservation of rights; an actual conflict must exist.  Tuzman v. Leventhal, 329 S.E.2d 610, 613 (Ga. App. 1985).

Does a Reservation of Rights Create Additional Duties?

None found.

What Must Be Done If A Conflict of Interest Exists?

The insured has the unilateral right to select independent counsel when an actual conflict of interest exists between the insurer and insured relating to the defense of a suit against the insured. Am. Fam. Life Assur. Co. v. U.S. Fire Co., 885 F.2d 826, 831 (11th Cir. 1989) (Georgia law).

Who Is Responsible for Fees of Independent Counsel?

A liability insurer may be liable for attorney’s fees incurred by insured in hiring co-counsel to monitor and aid in defense of action against insured, where insurer created a conflict of interest in denying coverage.  Am. Family Life Assur. Co v. U.S. Fire Co., 885 F.2d 826, 832 (11th Cir. 1989) (Georgia law).

What Are Independent Counsel’s Obligations?

No cases found.

What Settlement Duties Exist?

No cases found.

What Actions May Result in a Claim for Bad Faith?

An insured may have a cause of action in tort for an insurer’s negligent failure to settle a claim that is independent of the insurer’s contractual duty to provide coverage.  Southern General Ins. Co. v. Holt, 416 S.E.2d 274, 276 (1992).

To prevail on a claim for an insurer’s bad faith, the insured must prove that: (1) the claim is covered under the policy, (2) a demand for payment was made against the insurer within sixty days prior to filing suit, and (3) the insurer’s failure to pay was motivated by bad faith. Ga. Code  §33–4–6; BayRock Mortg. Corp. v. Chicago Title Ins. Co., 648 S.E.2d 433 (Ga. App. 2007).

Are Attorney’s Fees Recoverable in Insurer-Insured Dispute?

An insured may recover up to 25% of its losses, penalty plus attorney’s fees for an insurer’s bad faith refusal to pay a claim. First Financial Ins. Co. v. American Sandblasting Co., 477 S.E.2d 390, 392 (Ga. App. 1996).

By statute, in the event of a loss which is covered by a policy of insurance and the refusal of the insurer to pay the same within 60 days after a demand has been made by the holder of the policy and a finding has been made that such refusal was in bad faith, the insurer shall be liable to pay such holder, in addition to the loss, not more than 50 percent of the liability of the insurer for the loss or $5,000.00, whichever is greater, and all reasonable attorney’s fees for the prosecution of the action against the insurer. Ga. Code § 33-4-6(a). 

Are Punitive Damages Recoverable in Insurer-Insured Dispute?

See above.

Alternative Coverage Options

An insurer must act immediately to reserve its rights to file a declaratory judgment action by sending out a reservation of rights letter to the insured stating the claim is being investigated and/or defended under a reservation of rights.  Richmond v. Ga. Farm Bureau Mut. Ins. Co.,  231 S.E.2d 245, 247 (Ga. App. 1976).

Relevant Statutes

Declaratory Judgment– Ga. Code § 9-4-2.

“In cases of actual controversy, the respective superior courts of this state shall have the power, upon petition or other appropriate pleading, to declare rights, status, and other legal relations of any interested party petitioning for such declaration, whether or not further relief is or could be prayed; and the declaration shall have the force and effect of a final judgment or decree and be reviewable as such.” 

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