Duties of UM Carrier Not Expanded Beyond Statutory Construct of O.C.G.A. § 33-7-11

Written by: Mark Maholick, Esq.

The case Hunter v. Progressive Mountain Insurance Company, —S.E.2d— 2020 WL 255361 (GA App. Jan. 17, 2020) recently reaffirmed the statutory obligations of an automobile insurance carrier in issuing a UM endorsement on a policy and failed to allow Plaintiff’s counsel in expanding those requirements beyond the statutory framework provided by O.C.G.A. § 33-7-11.

Prior to January 1, 2009, Georgia only had one type of UM coverage.  This changed with a 2008 statutory amendment that went into effect on January 1, 2009.  Prior to the amendment, simply put, the amount of UM coverage available in Georgia in a given scenario was determined by subtracting the total amount of liability coverage from the total amount of the UM coverage.  This was the only type of UM coverage GA provided.  This type of UM coverage is now referred to by insurance carriers and those familiar with the industry as “reduced by”, “standard coverage”, “traditional”, “off-setting”, “U”, or several other less common monikers.

When the 2008 amendment went into effect, the “reduced by” UM coverage was not eliminated, but rather supplemented with a new type of UM coverage being made available and required to be offered by insurance carriers issuing policies in the state.  Carriers have since been required to “offer” as part of any policy issued, delivered or renewed on or after January 1, 2009 UM coverage known as “added on”, “excess” or “UE”.  This type of UM coverage when in effect, stacks on top of liability coverage and does not get “set-off” by said liability coverage.

With this framework in mind, insurance carriers were required to abide by a completely new set of statutory guidelines when underwriting UM coverage post-2008 in order to avoid having to graft on certain coverage types and amounts.  In short, and for brevity sake, in order for UM carriers to meet their new statutory obligations for any policy issued, delivered or renewed on or after January 1, 2009, the UM carrier must at a minimum offer the insured the option of selecting “added on” or “reduced by” UM coverage.  Of course, even with the 2008 amendment, an insured still maintained the long-standing right to fully reject UM coverage altogether as long as it was done so in writing.  Furthermore, this “offer” must only be done once and the same need not be performed on each renewal of the same policy.

In the absence a proper “offer” conforming to the statutory requirements, and in the absence of being able to prove a proper election was made by the insured (usually done by showing a written  selection/election/rejection), the UM carrier would be required to provide the insured both “excess” / “UE” style UM coverage in an amount equal to the insureds liability limits.  That said it should be noted that a 2001 amendment to the UM statute did not require a UM carrier to increase the UM policy limits beyond the original amount selected by the insured, and which is shown on the declarations page, in any subsequent renewal of the policy issued by the same insurer once coverage is issued.  This is where the Hunter case comes in…

In Hunter, the Plaintiffs were allegedly injured in an automobile accident that occurred on February 16, 2015 and sought UM benefits.  The Plaintiffs contended that their UM carrier was required to provide them UM coverage in amount greater than what their carrier contended it was obligated to provide under GA law.  Plaintiff’s made this contention by virtue of the fact that the Plaintiffs had increased their liability policy limits in September 2012, and, at that time, no “offer” to likewise increase their corresponding UM coverage was made by their carrier, Progressive.

Plaintiffs contended that Progressive’s failure to do so lead to Progressive being required to provide UM coverage limits that matched their increased liability limits from the September 2012 change in liability coverage they had requested.  It should be noted that the Plaintiffs admitted that they did not ask for or otherwise seek a corresponding increase in their UM coverage at the time they sought the increase in their liability coverage.

Progressive contended that the Plaintiffs affirmatively selected UM coverage with coverage limits of 25/50 when they first opened and created the policy back in 2010.  The liability coverage limits they originally selected were 50/100.  Plaintiffs continually renewed their policy up to and through the time of their requested change to increase their liability coverage in September of 2012.  At that time, they increased their liability coverage to 100/300.  Prior to that the policy had been continually renewed since inception in 2010, and, after that, the policy was continually renewed with declared liability coverage limits of 100/300 and UM coverage limits of 25/50 all the way through the date of their car accident (Feb. 16, 2015).

Progressive filed a Motion for Summary Judgment which the trial Court partially granted.  The sole issue for the Court of Appeals was whether or not Progressive was required to offer an increase in the UM coverage amount when the Plaintiffs decided to increase their liability coverage in September of 2012 and if Progressive’s failure to do so required Progressive to graft on default levels and types of UM coverage.

Given that the law is clear that a carrier is not required to increase coverage in a renewal policy, the Plaintiffs attempted to distinguish the policy transaction in increasing their liability coverage as one not constituting a renewal.  The Court passed on this contention and essentially found it to be nothing of consequence.  The Court instead held that a UM carrier, by statute, is ONLY required to make an offer to provide the statutory minimum UM required pursuant to the 2008 amendment when the policy is originally issued or delivered and there is no requirement to make a new offer even with a change in the policy, such as a policy number, premium amount, number of vehicles covered or the like.  These events do not create a “new” policy such that a new corresponding UM offer meeting the statutory requirements of O.C.G.A. § 33-7-11 must be made.

The Court’s decision essentially boils down to language it quoted from Merastar Inc. Co. v. Wheat, 220 Ga. App. 695 (1996)…”Once an insured has exercised the option to reject the coverage, the insurer is under no further duty or obligation to offer the coverage for the life of the policy.”  Even though this language was from caselaw prior to both the 2001 and 2008 UM amendments, the Court found it applicable to the current situation.

In short, by virtue of the holding in Hunter, absent appeal and reversal, UM carriers can rest assured that so long as they make a proper offer meeting the statutory minimum guidelines set forth by O.C.G.A. § 33-7-11 at the inception of the policy (or at a renewal post-January 1, 2009) that they can rely on the insureds selection/election/rejection for the life of the policy in spite of other minor changes and tweaks to the policy itself.   The Court did in dicta state that a good business practice may have been to offer increased UM coverage when the liability limits were increased by the Plaintiffs, but this was not something that the law required and not something that ultimately changed the UM coverage afforded by operation of law.