Holt Demand Update: 2024 Change to Settlement Demands

Georgia’s Pre-Answer Settlement Statute is Amended: What This Means for Accident Victims

The Georgia legislature has made changes to O.C.G.A. § 9-11-67.1 which concerns the requirements for pre-suit settlement demands in motor vehicle personal injury cases. The changes, which went into effect July 1st,  apply to “any offers to settle a tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision made on or after the date this Act is approved by the Governor.”

Restrictions on Holt Demands

The amendment restrains the use of such pre-suit settlement demands to fashion bad faith failure-to-settle claims against insurers.

These pre-answer demands are known as “Holt demands” based on the 1992 Georgia Supreme Court decision in S. Gen. Ins. Co. v. Holt. That case held that an insurer that fails to settle a claim for its insured—and is found to have done so negligently, fraudulently, or in bad faith—may be liable for damages in excess of the insurance policy limits.

Frequently, Holt demands are seen in personal injury motor vehicle cases where injured plaintiffs look to overcome low liability limits under an auto insurance policy. Some plaintiffs’ attorneys may create complicated terms in their Holt demand with the thought that when an insurers rejects the demand, they can initiate a bad faith failure-to-settle claim against them.

What are the Significant Changes to the Statute?

Bilateral Contracts. The amended statute provides that “any offer to settle a tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision shall be an offer to enter into a bilateral contract.” This is a big change as Georgia courts have interpreted the old statute to mean that offers could be unilateral contracts that could require acceptance by performing an act, rather than a communication. As such, courts could find there was no settlement agreement when an insurer stated their intent to accept, but failed to perform all the acts required by an offer. Now, all offers are bilateral contracts; as a result, courts should be able to enforce settlement agreements where the parties express their mutual intent to be bound.

Settlement Offers by Attorneys. The statute makes clear that it applies to:

any offer to settle a tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision and prepared by or with the assistance of an attorney on behalf of a claimant or claimants … from the time a cause of action accrues until the filing of an answer by the named defendant, or if there are multiple named defendants, until the time that all named defendants have filed their initial answers or been found to be in default, whichever is applicable…”

As a result, from the second of the accident until all the answers are filed in the personal injury action, this statute controls all attorney settlement offers.

Permitted Material Terms. The amended law states the material terms permitted to be included in an offer to settle sent by an attorney. It’s a long list, and any other terms or required acts are “immaterial” for the purpose of establishing a negligent failure to settle claim, as long as the insurer compiles with the new safe harbor provision (more below). As a result, the only material terms that may be included in an offer to settle are the following:

  1. The date by which the offer must be accepted, and this must be at least 30 days from receipt; plus, the offer still must be sent by certified mail or statutory overnight delivery. The offer must:
  • Include the amount of monetary payment demanded;
  • Identify the parties to be released, the type of release offered, and the claims to be released; and
  • State the date by which payment is to be delivered, provided it’s not less than 40 days from receipt.
  1. A statement under oath as to whether all liability and casualty insurance has been disclosed that must be delivered within 40 days of receipt of the offer (This statement under oath can be waived by the offeror).

A Right to Clarification. Recipients have the right to seek clarification “regarding the terms, the terms of the release, liens, subrogation claims, standing to release claims, medical bills, medical records, and other relevant facts.” Nonetheless, any request for clarification has to be in writing and won’t be deemed a counteroffer unless it seeks to change the material terms set out in the statute. The statute also continues to provide that if a release isn’t provided with the offer, the provision of a proposed release doesn’t make it a counteroffer.

Insurer Safe Harbor. The amendment creates a safe harbor for insurers when any term or required act deviates from those listed above. Additional terms may be added to a demand, but the statute now explicitly says that failure to comply with an immaterial term doesn’t give rise to an alleged negligent failure to settle claim if a recipient, on or before the dates specified in the offer, complies with the following:

  • Provides a writing that purports to accept the material terms of the offer in their entirety;
  • Provides the required statement under oath regarding no additional insurance, if required by the offer; and
  • Makes payment, for the lesser of the amount demanded or the available limits of the applicable insurance policy.

In addition, this provision applies to any offer to settle a tort claim for personal injury, bodily injury, or death arising from a motor vehicle collision, not only those subject to the statute. So, if the first offer is made at a point in the process when the statute doesn’t control the demand (after all the answers in the lawsuit have been filed), the safe harbor can still be met. And this safe harbor provision applies to the first offer to settle only.

Contact Us

An offer from an insurance company to settle a claim after a motor vehicle accident really should be reviewed by an experienced personal injury attorney Atlanta residents trust.  Any person who is aiming to settle their personal injury case in Georgis should should see whether the statute applies, and determine the appropriate course of action. Please contact our lawyers at Tobin Injury Law for a free no-obligation consultation. We have worked with accident victims all across Georgia (and the southeast).

We offer free consultations to all prospective clients. Contact a highly rate Atlanta personal injury attorney with hundreds of amazing reviews at 24 hours a day, 7 days a week by calling 404-JUSTICE (404-587-8423) or by using our online contact form.