Georgia law allows motorists to purchase insurance coverage for injuries caused by other drivers who are either uninsured or who do not have enough insurance to cover the full extent of injured motorists’ damages.
Uninsured/underinsured (UIM) coverage only becomes available when the full amount of liability coverage is “exhausted.”
UIM coverage seems straightforward enough in concept. But insurance carriers often try to avoid their obligations under the insurance policies they issue. They make all kinds of excuses for not paying up, based on the facts of a case, the language of a policy, and Georgia law.
The Georgia Supreme Court recently rejected an insurance company’s argument that it was not responsible for paying UIM coverage because of how the parties characterized the settlement money that the injured motorist obtained from the at-fault driver’s insurance company.
In the case, the parties agreed to settle the injured driver’s claim against a drunk driver for the full amount of liability coverage available under the at-fault driver’s insurance policy ($30,000). Evidence in the case indicated the at-fault driver was driving under the influence of alcohol at the time of the accident.
The parties in the case decided to apportion $29,000 of the settlement to “punitive” damages, and $1,000 toward compensation for the injured driver’s personal injuries. Punitive damages are akin to a fine, penalizing a wrongdoer for bad behavior, on top of any compensatory damages for lost wages, medical bills and pain and suffering resulting from personal injuries.
The injured driver had $25,000 in UIM coverage. Her carrier denied coverage on the basis that by apportioning $29,000 of the liability settlement to punitive damages, she had failed to “exhaust” all of the at-fault driver’s liability policy for compensatory damages for personal injuries.
The Georgia Supreme Court rejected this argument and overturned lower court rulings in favor of the UIM carrier.
The Supreme Court ruled that Georgia law does not prohibit parties from allocating punitive and compensatory damages in a contractual release of an at-fault driver and his or her liability carrier.
The bottom line is that UIM coverage is triggered under Georgia law only when an injured driver can prove that compensatory damages exceed liability insurance coverage, the court said.
The court was not persuaded that allowing an injured driver to allocate punitive damages in a liability settlement would improperly shift punitive damages to a UIM policy.
Punitive damages are not considered “losses” under Georgia law, the court noted, meaning that an injured motorist must still prove that his or her lost wages, medical bills, pain and suffering, and other compensatory damages (i.e., “losses”) exceed the liability coverage before UIM coverage is triggered.
The case is Carter v. Progressive Mountain Insurance (Case No. S13G1048).
In Georgia, collecting uninsured or underinsured motorist compensation can be challenging and complicated. If you have been injured in a motor vehicle accident, contact our car accident attorneys to discuss your case and assess what insurance coverage(s) are available.