Georgia law provides that an insurer may rescind a policy if there was a material misrepresentation in the application; however, if after learning of the misrepresentation an insurer acts inconsistent with the decision to rescind the policy, the insurer has waived the ability to assert the defense of recission. Fla. Int'l Indem. Co. v. Osgood, 233 Ga. App. 111, 112-13, 503 S.E.2d 371, 373 (1998). The parties agree that there were misrepresentations in Baconsfield's application, but Baconsfield argues that the misrepresentations were not material and that, in any event, Nautilus waived its right to rescind the policy.

(Punctuation and footnotes omitted.) Florida Intl. Indem. Co. v. Osgood, 233 Ga.App. 111, 116(4), 503 S.E.2d 371 (1998).OCGA § 33–25–10 governs the entitlement to prejudgment interest on life insurance proceeds, see Southwestern Life Ins. Co. v. Middle Ga. Neurological Specialists, 262 Ga. 273, 276(2), 416 S.E.2d 496 (1992), but the statute expressly states that it does not apply “to policies of credit life insurance.”

Lively, supra, 256 Ga. App. at 198 (2), 568 S.E.2d 98. "One significant reason for this rule in insurance cases is that leading the insured to believe the validity of the policy is not questioned lulls the insured into not purchasing other insurance and thus subjects the insured's property to continuing non-coverage." Florida Intl. Indemn. Co. v. Osgood, 233 Ga. App. 111, 113-114 (1), 503 S.E.2d 371 (1998).The record shows that the fire occurred on May 5, 2012.

(Punctuation and footnotes omitted.) Florida Intl. Indem. Co. v. Osgood, 233 Ga. App. 111, 116 (4) ( 503 SE2d 371) (1998). OCGA § 33-25-10 governs the entitlement to prejudgment interest on life insurance proceeds, see Southwestern Life Ins. Co. v. Middle Ga. Neurological Specialists, 262 Ga. 273, 276 (2) ( 416 SE2d 496) (1992), but the statute expressly states that it does not apply "to policies of credit life insurance."

The cases upon which Valley Wood relies to argue to the contrary are distinguishable because they involve denials of coverage. See Weems v. American Nat. Ins. Co., 197 Ga. 493, 29 S.E.2d 500 (1944) ; Minnesota Lawyers Mut. Ins. Co. v. Gordon, 315 Ga.App. 72, 726 S.E.2d 562 (2012) ; Lively v. Southern Heritage Ins. Co., 256 Ga.App. 195, 198 –199(2), 568 S.E.2d 98 (2002) ; Thompson v. Permanent Gen. Assur. Corp., 238 Ga.App. 450, 519 S.E.2d 249 (1999) ; Florida Intl. Indemnity Co. v. Osgood, 233 Ga.App. 111, 503 S.E.2d 371 (1998) ; Haugseth v. Cotton States Mut. Ins. Co., 192 Ga.App. 853, 386 S.E.2d 725 (1989). And here, as pointed out by Georgia Casualty, there was no danger that the insured was lulled into not purchasing other insurance because it is undisputed that Georgia Casualty did not renew Valley Wood's policy before Valley Wood submitted a proof of loss in this case.

“Because the damages are in the nature of a penalty, the statute is strictly construed and the right to such recovery must be clearly shown.” Fla. Int'l Indem. Co. v. Osgood, 233 Ga.App. 111, 115-16, 503 S.E.2d 371, 375 (1998). Summary judgment is appropriate “where the insurer has reasonable grounds to contest the claim or the question of liability is close.” Id.

Because the damages available under O.C.G.A. § 33-4-6 "are in the nature of a penalty, the statute is strictly construed and the right to such recovery must be clearly shown." Fla. Int'l Indem. Co. v. Osgood, 233 Ga. App. 111, 115-16, 503 S.E.2d 371 (1998) (citing Interstate Life & Accident Ins. Co. v. Williamson, 220 Ga. 323, 325, 138 S.E.2d 668 (1964)). To prevail on a claim brought under O.C.G.A. § 33-4-6 the insured bears the burden of proving the denial was made in bad faith.

Legally, this is a distinction without a difference; insurance policies are governed by the same general rules as any other contract under Georgia law. See, e.g., State Farm Fire & Cas. Co. v. Goodman, 259 Ga. App. 62, 63-64 (2002). 233 Ga. App. 111 (1998). Id. at 113 (quoting Haugseth v. Cotton States Mut. Ins. Co., 192 Ga. App. 853, 855 (1989)).

If an insurer, instead of rescission, issues a denial of coverage and cancels the policy with a future effective date, as the Insurer did in this case, the right and defense of rescission is waived as a matter of law. Id . at 272, 802 S.E.2d 448. See also Florida Intl. Indem. Co. v. Osgood , 233 Ga. App. 111, 113-14 (1), 503 S.E.2d 371 (1998) ("One significant reason for this rule in insurance cases is that leading the insured to believe the validity of the policy is not questioned lulls the insured into not purchasing other insurance and thus subjects the insured's property to continuing non-coverage." footnote omitted)).

' ” King, 279 Ga.App. at 556, 631 S.E.2d 786, citing Fortson v. Cotton States Mut. Ins. Co., 168 Ga.App. 155, 157(1), 308 S.E.2d 382 (1983) (emphasis supplied). “ ‘[O]rdinarily, the question of good or bad faith is for the jury, but when there is no evidence of unfounded reason for the nonpayment, or if the issue of liability is close, the court should disallow imposition of bad faith penalties.’ ” King, 279 Ga.App. at 556–557, 631 S.E.2d 786, quoting Florida Intl. Indem. Co. v. Osgood, 233 Ga.App. 111, 115–116(3), 503 S.E.2d 371 (1998) (emphasis supplied); see also Griffin, supra, 302 Ga.App. at 731(2)(b), 691 S.E.2d 633 (“Bad faith is shown by evidence that under the terms of the policy upon which the demand is made and under the facts surrounding the response to that demand, the insurer had no good cause for resisting and delaying payment”; bad faith penalties are not authorized “where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact”) (citation and punctuation omitted; emphasis supplied). An insurer thus having any reasonable factual or legal ground for contesting a claim is entitled to summary judgment under either OCGA §§ 33–4–6 or 33–4–7.