  In this paper we consider algebraic geometry (AG) codes: a class of codes
constructed from algebraic codes (equivalently, using function fields) by
Goppa. These codes can be list-decoded using the famous Guruswami-Sudan (GS)
list-decoder, but the genus $g$ of the used function field gives rise to
negative term in the decoding radius, which we call the genus penalty. In this
article, we present a GS-like list-decoding algorithm for arbitrary AG codes,
which we call the \emph{inseparable GS list-decoder}. Apart from the
multiplicity parameter $s$ and designed list size $\ell$, common for the GS
list-decoder, we introduce an inseparability exponent $e$. Choosing this
exponent to be positive gives rise to a list-decoder for which the genus
penalty is reduced with a factor $1/p^e$ compared to the usual GS list-decoder.
Here $p$ is the characteristic. Our list-decoder can be executed in
$\tilde{\mathcal{O}}(s\ell^{\omega}\mu^{\omega-1}p^e(n+g))$ field operations,
where $n$ is the code length.
