United States: Clarification Or Counteroffer? Choose Your Words Carefully

Last Updated: June 17 2019
Article by Trevor E. Brice

A recent opinion out of the Georgia Court of Appeals is forcing insurers to choose their words carefully when seeking clarification regarding time-limited settlement demands.  In Yim v. Carr, the Court of Appeals reversed a ruling that a defendant driver’s insurer had accepted the plaintiff’s time-limited demand for the policy’s limits, holding instead that the insurer’s request for clarification regarding the scope of the offer’s release was not an “unequivocal acceptance” of the offer, but rather a counteroffer.  The holding is likely to be appealed to the Supreme Court of Georgia, but in the meantime, it is causing some hand-wringing among insurance representatives and the defense bar.

Time-limited settlement demands in automobile injury cases are governed by O.C.G.A. § 9-11-67.1, which codifies the Supreme Court of Georgia’s holding in Southern General Co. v. Holt, 262 Ga. 267 (1992).  In Holt, the Court held that an insurer with knowledge of its insured’s liability and damages exceeding policy limits can be subject to bad faith damages if its failure to settle within policy limits subjects the insured to a judgment in excess of those limits.  This holding has led to the proliferation of time-limited settlement demands, or Holt demands, in which an injured party’s attorney sends a letter to the at-fault party’s insurer setting forth the insured’s clear liability and the existence of damage exposure in excess of the policy limits.  To constitute a valid Holt demand, the offer must contain certain material terms:

(1) The time period within which such offer must be accepted, which shall be not less than 30 days from receipt of the offer;

(2) Amount of monetary payment;

(3) The party or parties the claimant or claimants will release if such offer is accepted;

(4) The type of release, if any, the claimant or claimants will provide to each releasee; and

(5) The claims to be released.

O.C.G.A. § 9-11-67.1(a).  Once an insurer receives a valid Holt demand, it may accept the offer by stating in writing that it accepts the material terms outlined above “in their entirety.”  Id. at (b).  The insurer does “have the right to seek clarification regarding terms, liens, subrogation claims, standing to release claims, medical bills, medical records, and other relevant facts,” and the insurer’s “attempt to seek reasonable clarification shall not be deemed a counteroffer.”  Id. at (d).  If the insurer is deemed not to have accepted the offer in its entirety, however, it potentially exposes itself to a bad faith claim if the injured party ultimately obtains a judgment in excess of the policy limits.

At issue in Yim was whether the at-fault driver’s insurer, Liberty Mutual, rejected the plaintiff’s Holt demand by requesting clarification regarding the scope of the proposed release.  The plaintiff’s demand specifically stated that the driver and only the driver would be covered by the release, and that “any request for a release of other persons or entities that are or may be liable will constitute a rejection of this offer and a counter-offer to resolve claims against other potentially liable parties.”  Liberty Mutual responded to the demand by accepting the offer but seeking clarification as to whether the at-fault driver’s parents—who were the named insureds on the policy—would also be covered by the release:

First, we agree that as consideration for the payment of $100,000.00, Patricia Carr will execute a limited release and settlement agreement resulting from the April 14, 2016 date of loss.  We are in receipt of the limited liability release you enclosed with your demand. . . .  We have previously forwarded our policy declarations to you, which indicate the named insureds under the policy as John Yim and Bok Yim, with Jenny Yim being a listed driver under the policy.  Your proposed limited liability release does not list our named insureds John Yim or Bok Yim.  Under O.C.G.A. § 33-24.41.1 (b) (2), Georgia law establishes that a limited liability release shall “[r]elease the insured tort feasor covered by the policy of the settling carrier from all personal liability from any and all claims arising from the occurrence on which the claim is based except to the extent other insurance coverage is available which covers such claim or claims.”  In addition, I refer you to McKeel v. State Farm Mut. Auto. Ins. Co., 2015 U.S. App. LEXIS 12698 (11th Cir. 2015) as support for the proposition that a limited liability release must protect each insured in order to provide a liability insurer with an opportunity to resolve a claim against its insureds in consideration of the payment of policy limits.  Please contact me to further discuss your limited liability release in regards to our named insureds John Yim and Bok Yim.  Pursuant to O.C.G.A. § 9-11-67.1 we also request clarification from you that Ms. Carr does not intend to assert claims against the named insureds under the applicable policy. . . .  To reiterate, both our discussions, as well as this letter, are in no way intended to be either a rejection of your demand or a counter-offer.  Rather, it is Liberty Mutual’s intent to accept your settlement demand unequivocally and without variance.  If anything in this letter is inconsistent with our discussions and/or Liberty Mutual’s acceptance of your demand, please make me aware immediately. . . .

(emphasis added).  Liberty Mutual also tendered a check for the $100,000 policy limit.  Nevertheless, in spite of Liberty Mutual’s expressed intention of accepting the offer “unequivocally and without variance,” the plaintiff’s attorney interpreted the letter as a counteroffer and, in turn, rejected that counteroffer and returned the settlement check.

After the plaintiff filed suit, Liberty Mutual moved to enforce the settlement agreement, contending that it had unequivocally accepted the plaintiff’s offer and that the clarification it requested was permitted by O.C.G.A. § 9-11-67.1(d).  The trial court agreed that “the mere suggestion that the named insureds might be included in the release was at most a precatory request that did not impose any new conditions of settlement,” and granted Liberty Mutual’s motion to enforce the agreement.

The Court of Appeals reversed, finding that there was no meeting of the minds between the plaintiff and Liberty Mutual, and therefore no agreement.  Pointing to the fact that the plaintiff’s demand specifically stated that “any request for a release of other persons or entities that are or may be liable will constitute a rejection of this offer and a counter-offer,” the Court concluded that “a reasonable person in the position of Liberty Mutual would have understood that [the plaintiff] considered the particular release form attached to the Settlement offer to be essential to her willingness to settle her bodily injury claims and that she would not agree to a settlement that released any parties other than [the at-fault driver].”  In other words, even after Liberty Mutual stated that its request for clarification was in “no way intended to be either a rejection of [the plaintiff’s] demand or a counter-offer,” the Court of Appeals found it to be just that.  As a result, Liberty Mutual finds itself potentially exposed in the event of a judgment in excess of the policy limits.

The Court of Appeals’ holding in Yim may still face scrutiny in the Supreme Court of Georgia, but until then, insurers responding to time-limited settlement demands should proceed with caution when seeking clarification on any of the offer’s terms.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions