Insurance Chapter 7 Kinds of Insurance and Chapter 9 Regulation of Rates, Underwriting Rules, and Related Organizations: Amend Title 33 of the Official Code of Georgia Annotated, Relating to Insurance, So as to Limit Coverages Under Uninsured Motorist Provisions to Automobile and Motor Vehicle Liability Policies and Exclude Umbrella and Excess Liability Policies; Change the Definition of "uninsured Motor Vehicle" to Allow Uninsured Motorists Coverage to Be Stacked With Other Available Liability Coverages; Allow Insureds to Select More Restrictive Uninsured Motorist Coverages; Changes Standards Applicable to Making and Use of Rates; Changes Prior Approval Requirements Above Mandatory Minimum Limits; Provide for Related Matters; Provide for Effective Dates and Applicability; Repeal Conflicting Laws; and for Other Purposes

• Jurisdiction: Georgia,United States
• Publication year: 2010
• Citation: Vol. 25 No. 1

Georgia State University Law Review

Volume 25 . , , _n

Issue 1 Fall 2008 ^{Artlcle 10}

3-21-2012

INSURANCE Chapter 7 Kinds of Insurance and Chapter 9 Regulation of Rates, Underwriting Rules, and Related Organizations: Amend Title 33 of the Official Code ofGeorgia Annotated, Relating to Insurance, so as to Limit Coverages Under Uninsured Motorist Provisions to Automobile and Motor Vehicle Liability Policies and Exclude Umbrella and Excess Liability Policies; Change the Definition ofUninsured Motor Vehicle" to Allow Uninsured Motorists Coverage to be Stacked with Other Available Liability Coverages; Allow Insureds to Select More Restrictive Uninsured Motorist Coverages; Changes Standards

Recommended Citation

Georgia State University Law Review (2008) "INSURANCE Chapter 7 Kinds of Insurance and Chapter 9 Regulation of Rates, Underwriting Rules, and Related Organizations: Amend Title 33 of the Official Code of Georgia Annotated, Relating to Insurance, so as to Limit Coverages Under Uninsured Motorist Provisions to Automobile and Motor Vehicle Liability Policies and Exclude Umbrella and Excess Liability Policies; Change the Definition of "Uninsured Motor Vehicle" to Allow Uninsured Motorists Coverage to be Stacked with Other Available Liability Coverages; Allow Insureds to Select More Restrictive Uninsured Motorist Coverages; Changes Standards Applicable to Making and Use of Rates; Changes Prior Approval Requirements Above Mandatory Minimum Limits; Provide for Related Matters; Provide for Effective Dates and Applicability; Repeal Conflicting Laws; and for Other Purposes," Georgia State University Law Review: Vol. 25: Iss. 1, Article 10. Available at: http://digitalarchive.gsu.edu/gsulr/vol25/iss1/10

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Applicable to Making and Use of Rates; Changes Prior Approval Requirements Above Mandatory Minimum Limits; Provide for Related Matters; Provide for Effective Dates and Applicability; Repeal Conflicting Laws; and for Other Purposes

Georgia State University Law Review

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INSURANCE

Chapter 7 Kinds of Insurance and Chapter 9 Regulation of Rates, Underwriting Rules, and Related Organizations: Amend Title 33 of the Official Code of Georgia Annotated, Relating to Insurance, so as to Limit Coverages Under Uninsured Motorist Provisions to Automobile and Motor Vehicle Liability Policies and Exclude Umbrella and Excess Liability Policies; Change the Definition of "Uninsured Motor Vehicle" to Allow Uninsured Motorist Coverage

to be Stacked with Other Available Liability Coverages; Allow Insureds to Select More Restrictive Uninsured Motorist Coverages; Changes Standards Applicable to Making and Use of Rates; Changes Prior Approval Requirements Above Mandatory Minimum Limits; Provide for Related Matters; Provide for Effective Dates and Applicability; Repeal Conflicting Laws; and for

Other Purposes

Code Section:

Bill Number: Act Number: Georgia Laws: Summary:

O.C.G.A. § 33-7-11 (amended), O.C.G.A. § 33-9-4 (amended), and O.C.G.A. § 33-9-21 (amended) SB 276 801

2008 Ga. Laws 1192 The Act provides that an uninsured motor vehicle includes a motor vehicle for which the available coverages are inadequate to cover a person's bodily injury and property damage losses and that such motor vehicle shall be considered uninsured to the full extent of the limits of the uninsured motorist coverage provided under the insured's motor vehicle insurance policy. The Act provides for related matters, repeals conflicting laws, and provides for other purposes.

Produced by The Berkeley Electronic Press,2008

HeinOnline -- 25 Ga. St. U. L. Rev. 167 2008-2009

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Georgia State University Law Review, Vol. 25 [2008], Iss. 1, Art. 10

168 GEORGIA STATE UNIVERSITY LAW REVIEW [Vol. 25:1

Effective Date: O.C.G.A. § 33-7-11, January 1, 2009;

O.C.G.A. § 33-9-4, October 1, 2008; O.C.G.A. § 33-9-21, October 1,2008

History

Stacking Uninsured Motorist Coverage

Uninsured motorist ("UM") coverage "pays victims of car crashes for medical bills and property damage when the at-fault driver either has no insurance, or their insurance coverage is so low that it doesn't fully cover the costs."¹ Georgia law governing UM coverage is codified in Code section 33-7-11.² The statue defines "uninsured motor vehicle" as encompassing, inter alia, "a motor vehicle [of a tortfeasor] ... as to which there is . . . [b]odily injury liability insurance and property damage liability insurance with available coverages which are less than the limits of the uninsured motorist coverage provided under the insured's insurance policy."³ Georgia courts have interpreted this provision as limiting an insured accident victim's recovery to "the difference between the limits of the coverage on the tortfeasor's automobile and that of the insured's motor vehicle policy."⁴ In other words, an accident victim's coverage will not be applied in addition to, or "stack" on top of, the at-fault driver's liability coverage.⁵ Instead, "the other [at-fault] driver's policy counts against, or eats into" the innocent driver's UM coverage.⁶

1. Georgia Watch, Uninsured Motorist Stacking, http://www.georgiawatch.org/insurance.html (last visited April 15, 2008). See also Frank E. Jenkins III & Wallace Miller III, Ga. Automobile Insurance Law § 29:1 (2007).

2. O.C.G.A. § 33-7-11 (Supp. 2008).

3. O.C.G.A. § 33-7-1 l(b)(l)(D)(ii) (Supp. 2008) (emphasis added).

4. State Farm Mut. Auto. Ins. Co. v. Hancock, 295 S.E.2d 359, 360 (Ga. Ct. App. 1982).

5. Although the current law does not allow an innocent driver to stack her UM coverage on top of an at-fault driver's liability coverage, an innocent driver may stack all available UM coverage accessible to her (e.g. a spouse's policy). See Crafter v. State Farm Ins. Co., 554 S.E.2d 571, 573 (Ga. Ct. App. 2001) ("Under Georgia law, uninsured motorist benefits are calculated by 'stacking the limits of all the available uninsured motorist coverage and setting off the limits of the available liability coverage'") (internal citation omitted).

6. Georgia Watch, supra note 1.

The limitations of UM coverage created by Code section 33-7-ll(b)(l)(D)(ii) are illustrated by the following example: An innocent driver who has $50,000 in UM coverage is hit by an at-fault driver who has $50,000 in liability coverage.⁷ Assume that the innocent driver incurs $100,000 in medical expenses and property damage.⁸ Under current Georgia law, the innocent driver only gets UM dollars that exceed liability coverage.⁹ Here, the innocent driver's $50,000 in UM coverage does not exceed the at-fault driver's $50,000 liability coverage; therefore, the innocent driver gets zero of the UM benefits.¹⁰

Those proposing to allow for "stacking" of UM coverage indicate that consumers have been confused about the current limitations on coverage and perceive they are not getting the benefit of their bargain.¹¹ However, according to John Oxendine, Georgia's Insurance Commissioner, the aforementioned example misrepresents what the consumer is actually buying.¹² More accurately, when a consumer is shopping for automobile insurance, the insurance agent should ask how much coverage is needed in the event that the consumer is hit by someone with no insurance.¹³ If, for example, the consumer wants $50,000 of coverage, the insurance agent will sell $50,000 of coverage.¹⁴ The agent is not, however, selling the promise of $50,000.¹⁵ Therefore, if the consumer is hit by an at-fault driver with $50,000 in liability coverage, the consumer gets the expected amount of coverage.¹⁶ More importantly, the consumer is getting the

7. See Video Recording of House Judiciary Non-Civil Committee Meeting, Apr. 12, 2007 at 1 hr., 17 min., 19 sec. (remarks by Sen. Cecil Staton (R-18th)), http://www.legis.state.ga.us/legis/2007_08/house/Conimittees/judiciaryNonCivil/judyncArch [hereinafter House Judy-NC Video]; see also Interview with Sen. Cecil Staton (R-18th) (Apr. 1, 2008) [hereinafter Staton Interview]; Interview with Bill Clark, Political Affairs Director, Georgia Trial Lawyers Association (Apr. 1,2008) [hereinafter Clark Interview].

8. House Judy-NC Video , supra note 7; Staton Interview, supra note 7; Clark Interview, supra note 7.

9. Phillips v. Gov't Employees Ins. Co., 654 S.E.2d 635, 637 n.2 (Ga. Ct. App. 2007).

10. See House Judy-NC Video, supra note 7; Staton Interview, supra note 7; Clark Interview, supra note 7.

11. Interview with Rep. Tom Knox (R-24th) (Apr. 1,2008) [hereinafter Knox Interview].

12. See Interview with John Oxendine, Georgia Insurance Commissioner (Apr. 3, 2008) [hereinafter Oxendine Interview].

13. Id.

14. Id.

15. Id.

16. Id.

benefit of their bargain because the insurance company sets UM prices with the expectation that most at-fault drivers will have some coverage. In other words, the consumer pays less in premiums because UM prices reflect the fact that insurance companies tend to pay out less than the limit of UM coverage.¹⁸

Umbrella Coverage

The Georgia Court of Appeals recently held that "umbrella and excess policies that provide motor vehicle or automobile liability coverage are subject to the requirements of O.C.G.A. § 33-7-11."¹⁹ Specifically, unless the insured rejects UM coverage in writing, all motor vehicle liability policies must provide either the mandatory minimum of UM coverage or optional UM coverage equal to the underlying liability coverage.²⁰ In Abrohams v. Atlantic Mutual Insurance Agency, innocent driver, Mr. Abrohams, sought to recover benefits under a $1 million umbrella policy even though the terms of the umbrella policy²¹ expressly excluded UM coverage.²² The Court, in looking to its plain language, noted...