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Understanding Georgia’s Process for Settling Car Accident Claims

Most personal injury claims arising from car accidents in Georgia are resolved through a negotiated settlement between the victim and the negligent driver’s insurance company. But there are rules governing such settlements. Our experienced Atlanta car accident attorneys can advise you of your rights and responsibilities under the law and help ensure that you do not agree to a settlement offer that is not in your best interest.

New Rules to Protect Auto Insurance Companies from “Bad Faith” Claims

One of the key laws governing car accident settlements is OCGA 9-11-67.1, which the General Assembly most recently amended in 2021. This statute governs pre-lawsuit, time-limited settlement offers for personal injury, bodily injury, and wrongful death claims arising from a car accident. The most recent amendments apply to any car accident that occurs on or after July 1, 2021.

In Georgia, when an insurance company refuses to settle or pay a valid claim in bad faith, they can be sued for damages. For example, let’s say a drunk driver causes a car accident that seriously injures several people. The victims demand the drunk driver’s insurance company pay out the full limits of their policy. The insurer refuses. The victims then file a personal injury lawsuit and win an award of damages that far exceeds the limits of the insurance policy. The drunk driver and the victims could then take legal action against the insurer for refusing to settle in good faith, and the insurer could then be held liable for the excess damages awarded.

OCGA 9-11-67.1 exists primarily to protect insurance companies against potential bad faith claims. The statute sets out rules that claimants (car accident victims) need to follow when making a time-limited demand to settle their claim. These rules, in turn, are meant to give the insurance company an adequate opportunity to consider the settlement offer in good faith.

The statute assumes the claimant is represented by a qualified personal injury attorney acting on their behalf. When the claimant’s attorney makes a settlement offer, it must be in writing and contain the following five material terms:

  • the deadline for accepting the officer, which cannot be less than 30 days after the offer is received;
  • the amount of monetary payment demanded;
  • the party (or parties) that the claimant will release from further liability if such offer is accepted;
  • whether any release is full or limits in scope, and an itemization of what the claimant(s) will provide to each party released; and
  • the claims to be released.

The term “release” refers to a claimant waiving their right to sue a defendant for a particular incident. In the context of a car accident, a claimant can sign a release waiving their right to file a personal injury lawsuit against the negligent driver in exchange for a monetary settlement. A full release waives all potential claims arising from the accident. A limited release, in contrast, only releases some claims.

An accident victim must always be careful before agreeing to a full release. For instance, say the insurance company representing the negligent driver offers to settle for the limits of the policy. The claimant agrees and signs a full release. Because the policy limit is less than the total amount of the claimant’s medical bills, the claimant then seeks additional coverage under their own underinsured motorist policy. The claimant’s insurance company says no. Because the claimant signed a full release, they also released their own insurance company from any liability arising from the accident.

It is also important to note that under the 2021 revisions to OCGA 9-11-67.1, the five settlement terms described above are the only terms that can be included in an offer. Under previous versions of the law, a claimant could add or request additional terms. The General Assembly concluded this led to abuses of the settlement process, as claimants could intentionally make “unreasonable” demands in order to trigger a rejection by the insurance company and a potential bad faith lawsuit.

The 2021 amendments also specified that an insurer could seek “clarification” of the terms of a settlement offer without it being deemed a rejection of the offer. This includes clarification of the terms of any proposed release. And if the claimant’s offer did not contain a draft of any proposed release, the insurer may provide one without it being deemed a counteroffer or rejection. If the insurer accepts the offer, however, they must send the requested payment to the claimant (or their attorney) within the time period specified by the written offer. Under the current version of the law, this deadline cannot be less than 40 days after the receipt of the settlement offer.

Settlement Offers and Legal Fees

There is another Georgia statute, OCGA 9-11-68, that can impact your rights when filing a personal injury lawsuit following a car accident. This law addresses the ability of either side to demand compensation for their legal fees. Normally, the rule in Georgia is that each side pays their own legal fees and court costs. In the case of a personal injury claimant, most attorneys work on a contingency basis, so any fee is paid from the settlement or judgment obtained on the client’s behalf.

But OCGA 9-11-68 creates an exception to this rule. At any time more than 30 days after a personal injury lawsuit is served on the defendant–and up to 30 days before the trial is scheduled to begin–either party can make a written settlement offer to the other side. (If the other side is making a counter-offer, then the deadline is 20 days before trial.) If the recipient rejects the offer and the case proceeds to trial, the party that made the offer can recover their attorney fees under the following circumstances:

  • If the plaintiff offered to settle and the defendant said no, the plaintiff may seek their legal fees and court costs if the final judgment is more than 125 percent of the settlement offer.
  • If the defendant offered to settle and the plaintiff said no, the defendant may seek their fees and costs if the final judgment is less than 75 percent of the settlement offer.

Contact Stewart Miller Simmons Today

As you can see, even though the vast majority of Georgia car accident claims are settled before trial, there are still a number of complex rules that need to be understood and followed. Our Atlanta car accident attorneys can provide you with sound legal advice and representation in this area. Contact Stewart Miller Simmons Trial Attorneys today at (404) 529-3476 to schedule a free case evaluation.

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