2.3 Georgia Property Claims Handling

Prompt Handling and the Unfair Claims Settlement Practices Act

Georgia's Unfair Claims Settlement Practices Act, codified at OCGA 33-6-34, defines what insurers and adjusters may not do when handling property claims. The duty is to investigate, communicate, and settle in good faith and with reasonable promptness. Prohibited acts include:

• Misrepresenting pertinent facts or policy provisions to a claimant.
• Failing to acknowledge and act reasonably promptly on communications about a claim.
• Failing to adopt and implement reasonable standards for prompt investigation.
• Not attempting in good faith to make a fair and equitable settlement once liability is reasonably clear.
• Compelling litigation by offering substantially less than what is ultimately recovered.
• Failing to provide a reasonable written explanation for a denial or a compromise offer.

Exam Tip: The Act targets a general business practice — a knowing pattern of these acts. A single mistake is usually handled administratively; a pattern triggers market-conduct enforcement, fines, and possible license action by the OCI.

First-Party Bad Faith — OCGA 33-4-6

Georgia's signature property-claims statute is OCGA 33-4-6. If an insurer in bad faith refuses to pay a first-party property loss, the insured can recover, in addition to the loss:

• A penalty of up to 50% of the liability (or $5,000, whichever is greater), and
• Reasonable attorney's fees.

The procedural trigger is critical: the insured must make a written demand and wait 60 days before suing; bad faith is then a jury question turning on whether the insurer had any reasonable basis to contest the claim. A genuine coverage dispute is NOT bad faith. This penalty structure is heavily tested.

Public Adjusters

A public adjuster represents the insured (not the insurer) for a fee. Georgia regulates them through the OCI:

• Must hold a public adjuster license (pre-licensing/exam, background check, and a surety bond).
• Must use a written contract disclosing the fee before working; fees are capped and commonly run around 10% of the recovery.
• May not solicit a claimant during the statutory no-solicitation/cooling-off window following a Governor-declared disaster (a consumer-protection rule against storm-chasing).
• May not engage in the unauthorized practice of law, misrepresent coverage, or split fees with unlicensed persons.

Appraisal and Dispute Resolution

Most Georgia property policies contain an appraisal clause to resolve a disagreement over the amount of loss (not coverage):

1. Either party makes a written demand for appraisal.
2. Each party selects a competent, impartial appraiser within a set time.
3. The two appraisers choose an umpire (a court appoints one if they cannot agree).
4. An agreement by any two of the three sets the amount of loss and is binding.

Appraisal decides value, not whether the loss is covered — coverage disputes still go to the OCI complaint process, mediation, or court. Other options include OCI consumer complaints and policy-based arbitration.

Exam Tip: Appraisal binds the amount of loss only. If the insurer denies that the peril is covered at all, appraisal does not apply — that is a coverage question for the courts.

Worked Example and Common Traps

A homeowner files a $40,000 windstorm claim. The insurer agrees the loss is covered but offers $22,000. The insured invokes appraisal: each side names an appraiser, the appraisers select an umpire, and two of the three agree on $35,000 — that figure binds the amount. Now suppose the insurer instead refuses to pay anything for 90 days with no reasonable basis after a proper written demand. Under OCGA 33-4-6 the insured may add a penalty of up to 50% of the liability (or $5,000, whichever is greater) plus attorney's fees: on a $35,000 loss that is up to $17,500 in penalty.

Frequently tested traps:

• Appraisal vs. coverage: appraisal resolves the dollar amount, never whether the peril is covered. A flat denial of coverage is a court/OCI matter.
• Bad-faith mechanics (33-4-6): a written demand plus a 60-day wait is required before suit, and a genuine coverage dispute is NOT bad faith.
• Penalty is paid to the insured, not the state, and is up to 50% (or $5,000) — not treble damages.
• Pattern requirement: the Unfair Claims Settlement Practices Act (OCGA 33-6-34) targets a knowing general business practice; a single slip is corrective, a pattern is enforcement.
• Public adjuster solicitation: banned during the post-disaster cooling-off window; the adjuster represents the insured, not the insurer, and works under a written, fee-disclosed contract.

Producers should also remember that an adjuster who advises a claimant on legal rights beyond the policy risks the unauthorized practice of law, and that fee-splitting with unlicensed "runners" is prohibited. These conduct rules, combined with the 33-4-6 penalty and the appraisal mechanism, are the highest-frequency claims topics on the Georgia property exam.