UM coverage required in umbrella policy and in renewal policy where UM was never rejected
In a landmark decision released August 31, 2006, the Georgia Court of Appeals has resolved in one case two crucial issues on Uninsured Motorist (UM) insurance coverage:
- A liability umbrella policy that includes automobile liability must include UM coverage equal to the liability limits unless the UM coverage is affirmatively rejected in writing, notwithstanding an exclusion of UM coverage in the policy.
- Renewals of auto liability policies that existed before 7/1/01 that did not include UM coverage must include UM coverage equal to the liability coverage unless UM coverage is affirmatively rejected in writing. The statute requiring UM equal to liability coverage exempted renewals of policies existing before 7/1/01. The plain language of OCGA § 33-7-11(a)(3) simply “provides that an insurer is not required to increase UM coverage in renewal policies for coverage existing prior to July 1, 2001.” However, while the amount of UM coverage need not be increased on renewal policies, if there was no UM coverage the exemption does not apply.
Read the full decision below.
RUFFIN, Chief Judge.
Richard Abrohams and his minor son were injured in a motor vehicle collision with an underinsured motorist. After the collision, the Abrohams sought underinsured motorist (“UM”) benefits from Atlantic Mutual for injuries under both an automobile policy and an umbrella policy. Although the UM coverage provided by the automobile policy was not in dispute, Atlantic Mutual argued that the umbrella policy did not provide UM coverage. Atlantic Mutual filed a declaratory judgment action to resolve whether it was required to provide UM benefits to the Abrohams under their umbrella policy pursuant to OCGA § 33-7-11.. Atlantic Mutual further maintained that even if the trial court concluded that OCGA § 33-7-11 did require insurers to provide UM coverage in umbrella policies, the statute did not apply in this case because the Abrohams’ policy was a renewal policy. The Abrohams disagreed and filed a counterclaim for declaratory judgment. The trial court granted Atlantic Mutual’s motion for summary judgment and denied the Abrohams’ motion for summary judgment. The Abrohams appealed the trial court’s ruling. For reasons that follow, we reverse and remand.
To prevail on a motion for summary judgment, the moving party must demonstrate that there is no genuine issue of material fact, and that the undisputed facts, viewed in a light most favorable to the party opposing the motion, warrant judgment as a matter of law.FN1 Our review of a grant of summary judgment is de novo, and we review the evidence and all reasonable conclusions and inferences drawn therefrom in a light most favorable to the nonmovant.FN2
FN1. OCGA § 9-11-56(c); Lau’s Corp. v. Haskins, 261 Ga. 491 (405 S.E.2d 474) (1991).
FN2. See AKA Mgmt., Inc. v. Branch Banking & Trust Co., 275 Ga.App. 615, 616 (621 S.E.2d 576) (2005).
The undisputed facts establish that Richard Abrohams and his minor son, David, were injured in an automobile collision on December 28, 2002. David Abrohams’ injuries are permanent in nature, and his resulting expenses currently total $250,000. The parties specifically stipulated that liability for the collision rested solely with the driver of the vehicle that collided with the Abrohams.
At the time of the collision, Richard and Barbara Abrohams were the named insureds under an Atlantic Mutual insurance policy comprised of a homeowners policy, an automobile liability policy, a valuables policy, and a personal umbrella policy. Richard and Barbara Abrohams’ claims arising out of the collision were resolved by a settlement with the at-fault driver’s insurance company and a portion of the Abrohams’ UM coverage under their automobile policy. The parties stipulated that the value of David Abrohams’ claim resulting from the collision will exceed $1,450,000. Although David has received or will receive benefits from the at-fault driver’s insurance policy and proceeds from the UM coverage contained in his parents’ automobile liability policy, the value of his claim exceeds the limits of those policies. FN3
FN3. The Abrohams’ automobile liability policy provided $500,000 in UM coverage. The at-fault driver’s motor vehicle liability policy contained minimum limits, which would be $25,000 per person and $50,000 per accident, pursuant to OCGA § 33-7-11(a)(1)(A).
Thus, the Abrohams sought UM benefits from Atlantic Mutual under their umbrella policy. The umbrella policy provided $1 million in excess liability coverage and covered the Abrohams’ residence and two vehicles. The umbrella policy specifically excluded UM Coverage, stating that “[w]e won’t pay for Uninsured/Underinsured Motorists coverage or No-Fault benefits unless such coverage is specifically shown on the Declarations Page as an Umbrella Coverage.” The Declarations Page does not list “Uninsured/Underinsured Motorists Coverage” as an Umbrella Coverage. Atlantic Mutual never offered UM coverage as part of the Abrohams’ umbrella policy, and the Abrohams never rejected such coverage.
1. As amended in 2001,FN4 OCGA § 33-7-11(a)(1) provides that no “automobile liability policy or motor vehicle liability policy” may be issued in this state unless it contains provisions for UM coverage which, at the option of the insured, shall be (i) not less than $25,000 per person and $50,000 per accident, or (ii) equal to the policy’s bodily injury liability insurance coverage, if higher. The statute further provides that “the insured may affirmatively choose uninsured motorist limits in an amount less than the limits of liability.” FN5 This coverage “shall not be applicable where any insured named in the policy shall reject the coverage in writing .” FN6
FN4. Ga. L.2001, p. 1228.
The Abrohams maintain that the UM statute requires that an umbrella policy provide UM coverage in an amount greater or equal to the amount of their liability coverage, unless the insured rejects UM coverage in writing. The Abrohams thus argue that they are entitled to $1 million in UM coverage under their umbrella policy because they were never offered, nor did they reject, such coverage. Atlantic Mutual contended, and the trial court agreed, that OCGA § 33-7-11 does not apply to umbrella policies and, because the Abrohams’ umbrella policy specifically excluded UM coverage, the Abrohams did not have UM coverage under that policy at the time of the collision.
Thus, the resolution of this case turns on the narrow issue of whether an umbrella policy is subject to the requirements of OCGA § 33-7-11. “ Uninsured motorist statutes are remedial in nature and must be broadly construed to accomplish the legislative purpose.” FN7 Moreover, statutes
FN7. (Citations and punctuation omitted.) Smith v. Commercial Union Assurance Co., 246 Ga. 50, 51 (268 S.E.2d 632) (1980).
should be read according to the natural and most obvious import of the language, without resorting to subtle and forced constructions, for the purpose of either limiting or extending their operation. In the absence of words of limitation, words in a statute should be given their ordinary and everyday meaning.FN8
FN8. (Citations and punctuation omitted.) Ga. Mut. Ins. Co. v. Gardner, 205 Ga.App. 458, 460 (422 S.E.2d 324) (1992).
“In construing a statute, the cardinal rule is to glean the intent of the legislature in the light of the legislative intent as found in the statute as a whole.” FN9
FN9. (Citations and punctuation omitted.) Ga. Emission Testing Co. v. Jackson, 259 Ga.App. 250, 252 (576 S.E.2d 642) (2003).
Although Georgia’s UM statute does not define “automobile liability” or “motor vehicle liability” policies,FN10 Chapter 7 of the Georgia Insurance Code defines “vehicle insurance” as
insurance against loss of or damage to any land vehicle or aircraft, any draft or riding animal, or to property while contained therein or thereon or being loaded or unloaded therein or therefrom from any hazard or cause, and against any loss, liability, or expense resulting from or incident to ownership, maintenance, or use of any such vehicle, aircraft, or animal, together with insurance against accidental death or accidental injury to individuals, including the named insured, while in, entering, alighting from, adjusting, repairing, cranking, or caused by being struck by a vehicle, aircraft, or draft or riding animal, if such insurance is issued as a part of insurance on the vehicle, aircraft, or draft or riding animal; and provisions of medical, hospital, surgical, and disability benefits to injured persons, funeral and death benefits to dependents, beneficiaries or personal representatives of persons killed, irrespective of legal liability of the insured, when issued as an incidental coverage with or supplemental to liability insurance.FN11
Although OCGA § 33-7-11 does not specify that it covers umbrella or excess liability statutes, neither does it exclude such policies.FN12 More importantly, however, the language of the statute does not limit its application to primary policies, and Atlantic Mutual points to nothing in the Insurance Code that draws any distinction between primary versus excess coverage policies.FN13 Had the legislature intended to limit the application of OCGA § 33-7-11 to primary policies only, as argued by Atlantic Mutual, it could easily have done so.
However, Georgia’s UM statute states in plain language that every policy issued or delivered in this state shall undertake to pay the insured all sums which he is legally entitled to recover from the owner or operator of an uninsured motor vehicle. There are no exceptions or qualifications to this statutory requirement.FN14
FN14. (Emphasis supplied.) St. Paul Fire & Marine Ins. Co. v. Goza, 137 Ga.App. 581, 584(1) (224 S.E.2d 429) (1976).
“The plain mandate of the statute is to provide payment for all sums which the insured is legally entitled to recover as damages from the uninsured motorist.” FN15 “The statute is designed to protect the insured as to his actual loss, within the limits of the policy or policies of which he is the beneficiary.” FN16
FN15. (Punctuation omitted.) Id. at 583-584.
FN16. (Punctuation omitted and emphasis supplied.) Id. at 584. The use of the plural term “policies” arguably suggests that the legislature intended the UM statute to apply to excess or umbrella liability policies.
To hold that umbrella and excess policies are exempt from the UM statute would contravene that intent. We see nothing in the statute suggesting that an umbrella or excess policy that provides automobile or motor vehicle liability insurance should be exempt from the requirements of the statute merely because it is not a primary policy or covers additional types of liability. There is nothing in the language to suggest that the legislature intended to limit the amount of UM protection available to consumers-in fact, it specifically requires that, without a written waiver, all automobile policies provide UM coverage equal to the policies’ overall liability limits.FN17
The Abrohams insist that this Court has already specifically decided that umbrella and excess liability policies are subject to Georgia’s UM statute in St. Paul Fire & Marine Ins. Co. v. Goza.FN18 Indeed, other jurisdictions have interpreted the Goza decision as holding that Georgia’s UM statute applies to umbrella and excess policies.FN19 Nevertheless, we believe that Goza is not so explicit, and that this particular matter is an issue of first impression in Georgia. The decisions from other jurisdictions are divided. Courts of some states with full coverage UM statutes have concluded that an umbrella policy must include UM coverage.FN20 There are, however, courts in other states with full coverage UM statutes that have reached the opposite conclusion.FN21
FN19. See, e.g., Stoumen v. Public Svc. Mut. Ins. Co., 834 F.Supp. 140, 142(II) (E.D.Pa.1993); Hartbarger v. Country Mut. Ins. Co., 107 Ill.App.3d 391, 437 N.E.2d 691, 694 (1982).
FN20. See, e.g., Estate of Delmue v. Allstate Ins. Co., 113 Nev. 414, 936 P.2d 326 (1997); Ormsbee v. Allstate Ins. Co., 176 Ariz. 109, 859 P.2d 732 (1993); House v. State Auto. Mut. Ins. Co., 44 Ohio App.3d 12, 540 N.E.2d 738 (1988); Southern American Ins. Co. v. Dobson, 441 So.2d 1185 (La.1983).
FN21. See, e.g., Kromer v. Reliance Ins. Co., 450 Pa.Super. 631, 677 A.2d 1224 (1996); Mass v. U.S. Fidelity and Guaranty Co., 222 Conn. 631, 610 A.2d 1185 (1992); United Svcs. Automobile Assn. v. Wilkinson, 132 N.H. 439, 569 A.2d 749 (1989).
Notwithstanding the decisions of other jurisdictions, given the clear purpose of OCGA § 33-7-11, we decline to create a judicial exemption for umbrella or excess policies, absent express direction from the legislature.FN22 Thus, we necessarily conclude that umbrella and excess policies that provide motor vehicle or automobile liability coverage are subject to the requirements of OCGA § 33-7-11.
FN22. We note that the legislatures of several states with full coverage UM statutes similar to OCGA § 33-7-11 specifically amended their relevant statutes to exclude umbrella policies from UM coverage requirements. See, e.g., Ariz.Rev.Stat. § 20-259.01(L); Kan. Stat. § 40-284(a); Fla. Stat. § 627.727(2). They did so after their respective appellate courts interpreted their UM statutes to include umbrella and excess policies. See Ormsbee, supra at 113(III); Bartee v. R.T.C. Transp., Inc., 245 Kan. 499, 515, 781 P.2d 1084 (1989); Aetna Cas. & Sur. Co. v. Green, 327 So.2d 65, 66 (Fla.Ct.App.1976).
2. Atlantic Mutual further argues that even if this Court finds that OCGA § 33-7-11 does require umbrella and excess policies to provide UM coverage, summary judgment was proper because the Abrohams’ policy was a renewal policy and therefore exempt from the UM statute. We disagree.
As amended in 2001,FN23 OCGA § 33-7-11(a)(3) provides, in pertinent part, that the
FN23. Ga. L.2001, p. 1228.
amount of coverage need not be increased in a renewal policy from the amount shown on the declarations page for coverage existing prior to July 1, 2001. The amount of coverage need not be increased from the amounts shown on the declarations page on renewal once coverage is issued.FN24
FN24. (Emphasis supplied.) OCGA § 33-7-11(a)(3).
The Abrohams’ umbrella policy in effect at the time of the collision was a renewal policy of coverage which existed prior to July 1, 2001. However, the Abrohams had never been offered nor had they declined UM coverage as part of their umbrella policy, either before or after July 1, 2001.
Atlantic Mutual’s reliance upon Tice v. American Employers’ Ins. Co. FN25 and McKinnon v. Progressive Bayside Ins. Co.FN26 is misplaced. Neither Tice nor McKinnon supports Atlantic Mutual’s position that an insurer is not required to offer UM coverage for renewal policies when the insurers were never offered UM coverage in the original policies existing prior to July 1, 2001. The plain language of OCGA § 33-7-11(a)(3) simply “provides that an insurer is not required to increase UM coverage in renewal policies for coverage existing prior to July 1, 2001.” FN27 Thus, the renewal exception set forth in OCGA § 33-7-11(a)(3) does not exempt the Abrohams’ umbrella policy from UM requirements.FN28
FN27. (Punctuation omitted and emphasis supplied.) Id. at 431.
FN28. However, because the Abrohams made no election of any kind regarding UM coverage, minimum coverage was the default coverage when Atlantic Mutual initially issued the Abrohams’ policy. See id; Jones v. Ga. Farm etc. Ins. Co., 248 Ga.App. 394, 397 (546 S.E.2d 791) (2001).
3. The Abrohams’ umbrella policy specifically excluded UM coverage. “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.” FN29 However, provisions in insurance policies that conflict with the plain terms of Georgia’s insurance statutes are illegal and of no effect.FN30
FN29. Sorema North American Reinsurance Co. v. Johnson, 258 Ga.App. 304, 306 (574 S.E.2d 377) (2003).
FN30. See Olukoya v. American Assn. of Cab Companies, Inc., 202 Ga.App. 251, 253(2) (414 S.E.2d 275) (1991); Travelers Indem. Co. v. Williams, 119 Ga.App. 414, 417 (167 S.E.2d 174) (1969).
As explained in Division 1, supra, OCGA § 33-7-11 requires that insurers provide UM coverage in umbrella and excess policies that provide automobile and motor vehicle liability insurance. The provision in the Abrohams’ umbrella policy, which specifically excluded UM coverage, was therefore void.FN31
For the foregoing reasons, the judgment below is reversed, and the case is remanded to the superior court for entry of judgment consistent with this opinion.
Judgment reversed and remanded.
SMITH, P.J., and PHIPPS, J., concur.
ABROHAMS et al.