What is a policy-limits demand and why does it pressure a Georgia insurer?

· 2 min read

A policy-limits demand is an offer to fully settle an injury claim in exchange for the at-fault driver’s available coverage, usually within a stated deadline. It pressures a Georgia liability insurer because rejecting a reasonable one can expose the insurer to liability for a judgment that exceeds the policy limits.

How the demand works

In a claim where injuries appear to exceed the insurance available, a claimant may offer to release the at-fault driver in return for the policy limits, often giving the insurer a defined time to accept. The demand effectively presents the insurer with a choice: pay the limit now and close out the insured’s exposure, or decline and risk a trial where the verdict could be far higher.

This kind of time-limited offer ties directly into the insurer’s duty to settle. Under Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992), an insurer must give its policyholder’s interests equal consideration when deciding whether to accept a within-limits settlement. A policy-limits demand forces that decision to the front and creates a clear record of the opportunity the insurer was given.

Why insurers feel the pressure

The leverage comes from the consequences of getting the decision wrong:

  • If liability is clear and damages plainly exceed the limit, refusing the demand can be deemed unreasonable.
  • An unreasonable refusal can make the insurer responsible for the entire verdict, not just the policy limit.
  • The insured, exposed to the excess, may have a claim against the insurer, which can sometimes be assigned to the injured party.

Because the downside of mishandling a reasonable demand can dwarf the policy limit, a well-supported policy-limits demand puts genuine financial pressure on the insurer to accept.

The bottom line

A policy-limits demand asks the at-fault driver’s insurer to settle fully for the available coverage, usually by a deadline, and it pressures the insurer because the Holt duty to settle makes an unreasonable refusal potentially far costlier than the limit itself. The demand crystallizes the insurer’s choice and the risk that comes with declining a fair chance to protect its insured.

This article is for general educational and informational purposes only and is not legal advice. It does not create an attorney-client relationship, and Georgia law may change. For advice about a specific situation, consult a licensed Georgia personal injury attorney.

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