Insurer’s reasonable grounds to contest coverage overcome misstatements to an insured that did not deny liability


By: Lee Whatling

Last month, the Eleventh Circuit issued an unpublished, per curiam opinion reaffirming its interpretation of Georgia’s bad faith law that authorizes summary judgment “if there is any reasonable ground for the insurer to contest the claim” even when faced with a misstatement from the insurer as to the timeframe within which the insured could bring suit. In Passmore v. Travelers Casualty & Surety Company, No. 21-12423, 2022 U.S. App. LEXIS 2604 (11th Cir. Jan. 27, 2022), a homeowner filed a claim with Travelers seeking coverage for damage to her home from Hurricane Irma in September 2017. When Passmore informed Travelers that she had not completed repairs from a previous storm-related claim, Travelers paid her only $5,541.71 in actual cash damages to her property despite a later estimate she received for $43,200.

When Passmore disputed the claim over a year later, Travelers informed her in a letter that “research [was] ongoing” into her claim “under a full reservation of rights” and quoted exclusions in the policy as well as the duties of a policyholder. Notably, Travelers quoted a provision warning that “[n]o action shall be brought [against Travelers] UNLESS THERE HAS BEEN COMPLIANCE WITH THE POLICY PROVISIONS AND THE ACTION IS STARTED WITHIN ONE YEAR AFTER THE OCCURRENCE CAUSING LOSS OR DAMAGE.” Passmore subsequently sued Travelers for breach of contract and bad faith under O.C.G.A. § 33-4-6, arguing as “one indication of … bad faith … [that Travelers] attempted to claim that the policy has a time limit on suits,” which, she claimed, was “intentionally trying to mislead and defraud [her] by telling [her] that it was too late to bring legal action.”

The District Court for the Southern District of Georgia granted Travelers summary judgment on the bad-faith issue. The Eleventh Circuit affirmed, finding that “the letter that misstated the timeframe to sue Travelers” did not constitute “an absolute denial of liability … [or] a refusal … to make a bona fide effort to effect a settlement of the claim” that would warrant an award of bad-faith penalties. Instead, Travelers’ reasonable grounds to contest the claim based on “material questions” as to coverage for the home repairs warranted judgment as a matter of law even in light of the misstatement.

At first glance Passmore is not ground breaking as relying on well-established principles for rejecting bad-faith claims against insurers in Georgia. Nevertheless, the case does demonstrate that even misleading statements in correspondence to an insured will not permit a bad-faith claim to proceed past summary judgment when the misstatement is not an “absolute denial of liability” or a refusal in and of itself to effect a settlement of the claim and the insurer has reasonable grounds for contesting the claim.

For additional information or questions, please contact Lee Whatling at or your FMG attorney.