New Georgia Law Changes the Rules for Settlement Demands in Auto Accident Cases

Georgia has a longstanding policy of encouraging early settlement of automobile accident cases. Both drivers and insurance companies generally benefit from pre-trial settlements. Injured people can get compensation more quickly and avoid the unpredictability of a judge or jury deciding the case. Insurance companies save on costs and counsel fees otherwise spent on investigations and trials.

For all of this to work well, plaintiffs and insurers must negotiate in good faith. To promote that process, Georgia enacted a statute laying out rules for pre-suit settlement demands and for insurance company’s responses to them. The law’s purpose was to reduce litigation of claims and to avoid contests over insurers’ alleged bad faith in settlement. However, the law had some gray areas that allowed claim negotiations to falter. For example, plaintiffs could make conditional demands that, if not fully addressed by insurers, could be deemed bad faith rejections.

In response, the state revised the statute to clarify and streamline early settlement procedures. The new law, which took affect July 1, 2021, establishes the following requirements for settlement proposals:

• Material terms limited — An offer must include only these five material terms: (1) the amount sought, (2) the identities of the defendants, (3) the claims to be released, (4) the type of releases to be given and (5) the time period for accepting the offer, which must be at least 30 days. Any additional terms may be considered immaterial by the insurer.
• Proposed releases not treated as rejections — Under the prior version of the law, some courts held that an insurer’s response proposing a form of release that varied from the demand amounted to a rejection. The new law states that unless the demand includes a draft of a release, the insurer’s providing of a proposed release shall not be deemed a counteroffer.
• Procedure applies after suit filed — The old version of the statute only applied to demands made when a case was not yet filed in court. The new law allows this statutory procedure to be used after a court case is started but before the defendant’s filing of an answer.

Other new provisions require plaintiffs’ settlement demands to include all information relevant to the claim — i.e. medical bills and property damage estimates — so that the other parties and insurers can consider the data in response.

Though these changes are mostly for the benefit of insurers, the revised statute provides clearer ground rules for the settlement process, which can result in faster and more satisfactory settlements in auto accident cases. Nevertheless, not every case will settle easily, and litigation may necessary.

At the Law Office Law Office of S. Mark Mitchell, LLC in Newman, Georgia, I am experienced and skilled in handling all aspects of auto accident cases. If you have a claim for bodily injury and/or property damage from an auto accident, feel free to contact me online or give me a call at 470-344-8550 for an initial consultation.