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There is no checklist or other steps that will fully insulate an insurer from liability for a bad faith claim. However, certain things can be done when a demand is presented to put the insurer in the best position possible to address such a claim down the road. (Credit: Andrey_Popov/Shutterstock.com) There is no checklist or other steps that will fully insulate an insurer from liability for a bad faith claim. However, certain things can be done when a demand is presented to put the insurer in the best position possible to address such a claim down the road. (Credit: Andrey_Popov/Shutterstock.com)

A bad faith claim in many states is typically preceded by a time-limited demand to settle the claim within the available policy limit. Navigating this type of policy-limit demand can be difficult, and, in recent years, insurance companies have seen a rise in time-limited demands amounting to “bad faith set-ups.” Bad faith set-ups attempt to trip up insurers’ responses to time-limited demands to create possible extra-contractual liability.

While each state has its own laws and judicial precedent governing the requirements for these types of demands and the rules for a response, this article examines Georgia law and steps that can be taken in Georgia to assist in handling these demands. Insurers should consult with the law in the jurisdiction of their particular claim to determine how to appropriately respond.

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