Insurer’s Failure to Swiftly Accept Settlement Offer Does Not Constitute Bad Faith
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Insurer’s Failure to Swiftly Accept Settlement Offer Does Not Constitute Bad Faith

An insured's estate sued an automobile liability insurer for negligence and bad faith failure to settle arising out of a multi-vehicle collision caused by the insured. This case addressed whether an insurer’s duty to settle arises only when the injured party presents a valid offer to settle within the insured’s policy limits or whether, even absent such an offer, a duty arises when the insurer knows or reasonably should know that settlement within the insured’s policy limits is possible. The court held an insurer’s duty to settle arises only when the injured party presents a valid offer to settle within the insured’s policy limits. The court applied the rules of contract construction to correspondence from two injured parties in the case in concluding the injured parties presented to the insurer a valid offer to settle within the insured’s policy limits but that the offer did not include any deadline for accepting the offer. Thus the court found as a matter of law the insurer did not act unreasonably in failing to accept the offer before it was withdrawn by the injured parties. 

First Acceptance Insurance Company of Georgia Inc v Hughes