Georgia Farm Bureau Mutual Insurance Co. v. North

714 S.E.2d 428, 311 Ga. App. 281

• Court: Court of Appeals of Georgia
• Decided: July 14, 2011
• Docket: A11A0047, A11A0134
• Status: Published

Opinions

Adams, Judge.

The underlying facts in the uninsured/underinsured motorist (UM) case are undisputed. Plaintiff/appellee Ricky North was injured in a collision between an automobile and the motorcycle he was riding in August 2007. He and his wife subsequently brought suit against the driver of the vehicle, and additionally sought to recover $250,000 in UM coverage under North’s motor vehicle insurance policy and $1,000,000 in UM coverage under an umbrella insurance policy issued to him by appellant Georgia Farm Bureau Mutual Insurance Company (GFB). The Norths subsequently filed a motion for partial summary judgment against GFB on the issue of their entitlement to UM benefits under the umbrella policy, and GFB filed a response and an opposing motion for summary judgment, contending that the Norths were not entitled to UM coverage under the umbrella policy because Ricky North had rejected UM coverage in writing at the time he applied for the policy. The trial court granted the Norths’ motion for partial summary judgment and denied GFB’s motion. GFB then filed the present appeal, which was docketed in this Court as Case No. A11A0047. The Norths also filed a cross-appeal, which was docketed in this Court as Case No. A11A0134, challenging portions of the trial court’s factual findings, and arguing that summary judgment was proper here for the additional reason that GFB placed an impermissible condition on their ability to obtain uninsured motorist coverage. We have consolidated the main appeal and cross-appeal, and now affirm the judgment of the trial court.

The starting point for our analysis is OCGA § 33-7-11 (a).¹ In pertinent part, subsection (a) (1) of the relevant version of that statute provided:

No automobile liability policy or motor vehicle liability policy shall be issued or delivered in this state . . . unless it contains an endorsement or provisions undertaking to pay the insured all sums which said insured shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle, within limits exclusive of interests and costs which at the option of the insured shall be:

(A) Not less than $25,000.00 because of bodily injury to or death of one person in any one accident, . . . ; or

(B) Equal to the limits of liability because of bodily injury to or death of one person in any one accident... if those limits of liability exceed the limits of liability set forth in subparagraph (A) of this paragraph of this Code section. In any event, the insured may affirmatively choose uninsured motorist limits in an amount less than the limits of liability. . . .

Pursuant to subsection (a) (3) “[t]he coverage required under paragraph (1) of this subsection shall not be applicable where any insured named in the policy shall reject the coverage in writing.”

The application North completed at the time the umbrella policy was issued contained the following:

VIII. UNINSURED/UNDER INSURED MOTORISTS COVERAGE:

A. DO YOU DESIRE UNINSURED/UNDER INSURED MOTORIST COVERAGE:

□ YES. IF YES, THE UM-UI LIMITS FOR THE UNDERLYING POLICY MUST EQUAL THE BI AND PD LIMITS OF THE UNDERLYING AUTOMOBILE LIABILITY POLICY.

□ NO. IF NO, THE UNDERSIGNED CERTIFY THAT IN CONSIDERATION OF PREMIUM CHARGED, I DO NOT DESIRE THE UMBRELLA LIABILITY POLICY TO

APPLY TO UNINSURED/UNDER INSURED MOTORISTS COVERAGE.

Ricky North checked the “NO” box.

On appeal, GFB argues the trial court erred by granting the Norths’ motion for summary judgment and denying its motion because the governing statute only imposes one requirement in order for there to be a valid rejection of UM coverage under OCGA § 33-7-11 (a) (3) — that such rejection be in writing — and that requirement was met here. See Nat. Union Fire Ins. Co. v. Johnson, 183 Ga. App. 38, 39 (357 SE2d 859) (1987) (rejection must be in writing but no further formal requisites pertain to the rejection of UM coverage). Further, GFB argues “[a] written rejection pursuant to OCGA § 33-7-11 (a) (3) eliminates the necessity to offer optional coverages under OCGA § 33-7-11 (a) (1).” However, in our view GFB has mis-framed the issue because the assumption underlying its argument is that the rejection of coverage in this case was binding and proper, which is, in fact, the issue to be decided here. We find that it was not, and thus agree with the trial court that the Norths were entitled to UM coverage up to the limits of liability of the umbrella policy.

Before we begin our analysis, we note the following overarching considerations. “Under Georgia law, an insurance company is free to fix the terms of its policies as it sees fit, so long as they are not contrary to the law. However, provisions in insurance policies that conflict with the plain terms of Georgia’s insurance statutes are illegal and of no effect.” (Punctuation and footnote omitted.) Abrohams v. Atlantic Mut. Ins. Agency, 282 Ga. App. 176, 181 (638 SE2d 330) (2006). As to uninsured motorist coverage, Georgia law requires that an insured under an automobile or motor vehicle liability coverage policy be given the option of rejecting uninsured/under-insured motorist coverage, selecting minimum coverage or selecting coverage up to the limits of liability under the policy, OCGA § 33-7-11 (a), and GFB acknowledges that those requirements applied to umbrella policies as well as primary policies at the time the umbrella policy was issued here. Abrohams, 282 Ga. App. at 181. However, it is equally true, as GFB argues and the Norths acknowledge, that there are no formal, statutory requirements or appellate court decisions governing how and in what manner the insurer must offer the available options for uninsured motorist coverage, just as there are no formal requirements governing the manner in which such coverage must be rejected, beyond requiring that rejections must be in writing, and it is for the legislature and not this Court to further specify how these requirements are to be met. Nat. Union Fire Ins. Co. v. Johnson, 183 Ga. App. at 39. Further, in deciding issues relating to uninsured motorist coverage, we must remember the legislative intent behind the uninsured motorist statute:

The purpose of uninsured motorist legislation is to require some provision for first-party insurance coverage to facilitate indemnification for injuries to a person who is legally entitled to recover damages from an uninsured motorist, and thereby to protect innocent victims from the negligence of irresponsible drivers. Uninsured motorist statutes are remedial in nature and must be broadly construed to accomplish the legislative purpose.

(Citations and punctuation omitted.) Smith v. Commercial Union Assurance Co., 246 Ga. 50, 51 (268 SE2d 632) (1980).

With those considerations in mind, we now turn to the facts of this case. It appears undisputed that North was not informed about the coverage options available to him under his umbrella policy, although it is true, as GFB also argues, that it does appear that North knew about the possibility of obtaining uninsured motorist coverage under the umbrella policy, since the possibility of obtaining such coverage was indicated on the application for the umbrella policy. Although in our view the better policy would require the insurer to inform the insured of all his or her uninsured coverage options before the insured makes any decision regarding uninsured motorist coverage so that the insured can make an informed election or rejection of such coverage, in this case it is unnecessary for us to decide whether GFB’s failure to inform North of his uninsured motorist coverage options invalidated his rejection of such coverage because the facts here show that in addition to not informing North about his coverage options, an impermissible condition was imposed on North’s ability to obtain such coverage as well. Specifically, that condition appeared beside the “yes” option on the application, notifying North that the only way he could obtain uninsured motorist coverage under his umbrella policy would be to increase his uninsured coverage limits in his primary liability insurance policies to equal the bodily injury and property damage limits of those policies.² Indeed, GFB’s underwriter testified that North would have only ‘qualified” for uninsured motorist coverage under the umbrella policy if this condition was met.³ Thus, while the application may have informed North of the possibility of obtaining uninsured motorist coverage under his umbrella policy, it misinformed him that he could only obtain that coverage if his uninsured motorist coverage in his primary automobile liability policies equaled his coverage limits under those policies. This clearly contravened the requirement that existed at the time the umbrella policy was issued here that umbrella policies that provided automobile and liability coverage be treated the same as primary automobile and motor vehicle liability insurance policies with respect to the statutory requirements governing uninsured motorist coverage. Moreover, although GFB’s underwriter testified that once North rejected uninsured motorist coverage under his umbrella policy he was not entitled to such coverage no matter what subsequent action he took in regard to the primary policies, it is also evident that because of the way in which the application was worded, once North chose not to meet the condition specified under the “yes” option, the only other option was to reject uninsured coverage, which he did. Just as an insurer generally cannot carve out exclusions when extending uninsured motorist coverage, see, e.g., Wagner v. Nationwide Mut. Fire Ins. Co., 288 Ga. App. 132 (653 SE2d 526) (2007), we do not believe that an insurer can impose conditions to obtaining such coverage which the law does not allow. Compare Crouch v. Federated Mut. Ins. Co., 257 Ga. App. 604, 606 (571 SE2d 574) (2002) (“As long as the mandatory UM minimum is met and optional UM coverage is offered pursuant to statutory requirements, a combination of sublimits and interests . . . contravenes neither the law nor public policy.”) (Punctuation omitted; emphasis supplied). The statute clearly provided the UM coverage options from which the insured could elect, and those options were never available to the insured in this case because he did not increase his uninsured motorist coverage limits in his primary liability automobile insurance policies to equal the amount of his liability coverage limits in those policies. Under the circumstances of this case, we find that the rejection of UM coverage, although in writing as required by the statute, was not binding, and the Norths were entitled to UM coverage in the amount of the umbrella policy’s $1,000,000 liability limits. Abrohams, 282 Ga. App. at 180 (1). Thus, the trial court did not err by granting the Norths’ motion for partial summary judgment, and denying GFB’s motion.

Judgments affirmed.

Ellington, C. J., Barnes, B J., Miller, P. J., and Phipps, P J., concur. Doyle and Blackwell, JJ., dissent.

1 The umbrella policy was issued in March 2003, and OCGA § 33-7-11, as amended in 2001 (effective to policies issued on or after January 1, 2002), applies here. Ga. L. 2001, p. 1228, § 3. The statute was subsequently amended to exclude umbrella or excess liability policies “unless affirmatively provided for in such policies or in a policy endorsement.” Ga. L. 2008, p. 1192, § 1.

2 The trial court in this case found that North was offered UM coverage equal to the liability limits of the policy, but was not offered the minimum limits of UM coverage. Although the basis of the trial court’s finding is not clear from the order on partial summary judgment, we do note that at the hearing on the motions, counsel for the Norths made the following statement about the language beside the “yes” box on the umbrella policy application. “ ‘If yes, the UMUI limit’ — being uninsured motorist limits — ‘with an underlying policy must equal the bodily injury and property damage limits of the underlying policy.’ ” Although the actual language on the application reads in full as follows: “Yes. If yes, the UM-UI limits for the underlying policy must equal the BI and PD limits of the underlying automobile liability policy,” we can apprehend how the trial court, in light of counsel’s statement, may have concluded that North was in fact “offered” UM coverage equal to the liability limits of the umbrella policy. However, and despite the fact that this language could also be interpreted to mean that North was only given the option of selecting uninsured motorist coverage under his umbrella policy up to the limits of liability of the underlying, or primary, automobile policies, it does appear undisputed that this language does not reference the umbrella policy at all, but rather imposes the requirement that in order to obtain uninsured motorist coverage under his umbrella policy, North had to have, or obtain, uninsured motorist coverage in his underlying, or primary, automobile liability policies with limits equal to the bodily injury and property damage coverage provided in those primary policies.

3 North’s uninsured limits in his five liability policies was less than the specified coverage limits in those policies.