When another driver damages your car, that driver’s insurer must handle your claim fairly. Georgia law gives you a direct remedy if it does not. If liability is clear and the insurer lowballs you in bad faith, it can owe a penalty and your attorney fees. This law covers property damage claims only. You must send a formal demand and wait 60 days.
What the Law Says
O.C.G.A. § 33-4-7, Bad faith in adjusting motor vehicle property damage claims, states in part:
(a) In the event of a loss because of injury to or destruction of property covered by a motor vehicle liability insurance policy, the insurer issuing such policy has an affirmative duty to adjust that loss fairly and promptly, to make a reasonable effort to investigate and evaluate the claim, and, where liability is reasonably clear, to make a good faith effort to settle with the claimant potentially entitled to recover against the insured under such policy. Any insurer who breaches this duty may be liable to pay the claimant, in addition to the loss, not more than 50 percent of the liability of the insured for the loss or $5,000.00, whichever is greater, and all reasonable attorney’s fees for the prosecution of the action.
(b) An insurer breaches the duty of subsection (a) of this Code section when, after investigation of the claim, liability has become reasonably clear and the insurer in bad faith offers less than the amount reasonably owed under all the circumstances of which the insurer is aware.
(c) A claimant shall be entitled to recover under subsection (a) of this Code section if the claimant or the claimant’s attorney has delivered to the insurer a demand letter, by statutory overnight delivery or certified mail, return receipt requested, offering to settle for an amount certain; the insurer has refused or declined to do so within 60 days of receipt of such demand, thereby compelling the claimant to institute or continue suit to recover; and the claimant ultimately recovers an amount equal to or in excess of the claimant’s demand.
(d) At the expiration of the 60 days set forth in subsection (c) of this Code section, the claimant may serve the insurer issuing such policy by service of the complaint in accordance with law. The insurer shall be an unnamed party, not disclosed to the jury, until there has been a verdict resulting in recovery equal to or in excess of the claimant’s demand. If that occurs, the trial shall be recommenced in order for the trier of fact to receive evidence to make a determination as to whether bad faith existed in the handling or adjustment of the attempted settlement of the claim or action in question.
You can read the full statute on the Georgia General Assembly’s official code site.
In Plain English
Normally you have no contract with the other driver’s insurer. Lawyers call you a “third-party claimant.” In most states, a third-party claimant cannot sue the insurer for bad faith at all. Georgia is different, but only in a narrow way. Section 33-4-7 covers damage to property, such as your car. It does not cover your bodily injury claim.
The statute gives the insurer three duties. It must adjust your loss fairly and promptly. It must make a reasonable effort to investigate. And when fault is reasonably clear, it must make a good faith effort to settle. The insurer breaks these duties when fault is clear and it offers less than it reasonably owes, in bad faith.
To use this law, you must follow the steps in subsection (c). First, send a demand letter by certified mail or statutory overnight delivery. The letter must offer to settle for a specific dollar amount. Second, the insurer must refuse or fail to pay within 60 days. Third, you must go to court and win at least the amount you demanded. If you recover less than your demand, you get no penalty.
The penalty is up to 50 percent of the loss or $5,000, whichever is greater. You also recover your reasonable attorney fees. On a $6,000 car claim, the penalty is $5,000. On a $20,000 claim, it is up to $10,000.
The court process is unusual. You sue the at-fault driver. After the 60 days pass, you also serve the insurer. But the jury does not learn that the insurer is a party. If the jury awards you at least your demand, the trial restarts. In this second phase, the jury decides whether the insurer acted in bad faith and sets the penalty.
Subsection (g) adds a paperwork step. Within 20 days of filing, you must mail a copy of your demand and complaint to the Insurance Commissioner. If you forget, you can fix it by sending them later.
Paying late does not save the insurer. Under subsection (e), the claim is not wiped out if the insurer pays after the 60 days run.
Example
On February 2, 2026, a delivery van runs a stop sign in Athens and hits Luis’s parked truck. The van driver admits fault, and the police report agrees. Luis’s truck needs $9,200 in repairs. The van’s insurer offers $4,000 and refuses to budge.
Luis’s lawyer sends a certified demand for $9,200 on February 20. The insurer does not pay by April 21. Luis sues the van driver and serves the insurer. A jury awards Luis $9,200 for the truck. The trial then restarts on bad faith. The jury finds the insurer acted in bad faith. It awards Luis the larger of $4,600 or $5,000, so $5,000, plus his attorney fees.
Key Points to Remember
- Section 33-4-7 lets you pursue the other driver’s insurer for bad faith on a property damage claim.
- It does not apply to bodily injury claims.
- You must send a demand for a specific amount by certified mail or statutory overnight delivery.
- The insurer gets 60 days to pay before you can pursue the penalty.
- You must win at least the amount you demanded.
- The penalty is up to 50 percent of the loss or $5,000, whichever is greater, plus attorney fees.
- Mail a copy of your demand and complaint to the Insurance Commissioner within 20 days of filing.
Related Georgia Laws
- First-Party Insurance Bad Faith Claims
- Georgia’s Time-Limited Demand Law
- Georgia Uninsured Motorist Coverage Law
- Georgia Minimum Auto Insurance Requirements
- Attorney Fees for Bad Faith Under 13-6-11
- Auto Accidents in Georgia
Official Sources
- Official Code of Georgia Annotated – Georgia General Assembly – search for section 33-4-7
- Georgia Office of Insurance and Safety Fire Commissioner – Auto Insurance
This page is general legal information, not legal advice. Laws change and every case is different. Talk to a licensed Georgia attorney about your situation.