A Georgia policyholder in Columbus makes a written demand on her insurer for a covered loss, and the insurer refuses to pay the claim in bad faith. What penalty exposure does the insurer face under Georgia's bad-faith statute?

Why A is correct

Under O.C.G.A. § 33-4-6(a), an insurer that in bad faith refuses to pay a covered loss within 60 days after demand becomes liable for the loss plus a penalty of not more than 50 percent of the liability or $5,000, whichever is greater, plus reasonable attorney fees. The 60-day clock starts with the demand, so a prompt, good-faith payment forecloses the penalty entirely. The plaintiff must also mail the Commissioner a copy of the demand and complaint within 20 days of bringing the action.

Why the other options are wrong

• B) A premium refund is never the remedy for bad-faith refusal; the penalty formula is 50 percent of the liability or $5,000, whichever is greater, after 60 days.
• C) The 25 percent figure is not Georgia's; Georgia uses 50 percent of the liability or $5,000, whichever is greater.
• D) The trigger is 60 days from demand, and the penalty is not a flat $10,000; it is 50 percent of the liability or $5,000, whichever is greater.

Memory hook

Bad faith pays double duty: the loss plus half or five grand — whichever is bigger.