Getting to the Bottom of Insurance Coverage
Here is a trite sounding but fundamentally important truism of personal injury law: understanding insurance coverage is very important. It is very important because in most serious injury cases—unless the at-fault party happens to be a very wealthy individual or a large corporation with proverbial “deep pockets”—the defendant will possess insufficient assets to fully and fairly compensate the injury victim. That is, most individuals and even companies lack enough cash-on-hand to fully and fairly compensate someone who is seriously injured due to their negligence. Instead, individuals and companies use and rely upon insurance to mitigate their risk and, often, insurance coverage constitutes an injury victim’s only path to compensation. That is why it is critically important for an injury victim, working with his or her attorneys, to identify all insurance policies that might provide any coverage for a loss and to promptly notify the issuers of those policies of a potential claim.
Broadly speaking, in serious injury cases, there are two potential sources of insurance coverage: (1) insurance policies that provide coverage to the at-fault party (third-party coverage); and (2) insurance policies that provide coverage to the injury victim (first-party coverage). For example, in a serious car wreck case, the at-fault driver will (hopefully) be covered by an automobile insurance policy that provides at least $25,000.00 in liability coverage—the state minimum in Georgia. If the at-fault driver happened to be operating a commercial vehicle at the time of the wreck, the driver may be covered by a commercial liability policy. If the at-fault driver happened to be working at the time of the wreck, the driver may be covered by a fleet policy or other business policy. If the at-fault driver happened to be driving for a rideshare company (e.g., Lyft or Uber) at the time of the wreck, the driver may be covered by a rideshare policy. Additionally, the at-fault driver, or the company for which he or she was driving, may be covered by an “excess” or “umbrella” policy that provides for additional coverage on top of whatever liability policy or policies provide primary coverage. This may include an excess policy on an individual’s home. On the injury victim’s side of the equation, the victim may be covered by an uninsured motorist (UM) or underinsured motorist (UIM) liability policy that provides coverage in the event the at-fault driver carries either no insurance or an insufficient amount of insurance to cover the loss. The victim may also carry medical payments, or “med pay,” coverage that can be used to pay a victim’s medical bills.
In Georgia, insurers generally have a duty to adjust claims in good faith for the protection of their policyholders. See Francis v. Newton, 75 Ga. App. 341 (1947) (“the duty of the insurance company to use ordinary care and good faith in the handling of a claim against its insured arises out of the relationship between the insurer and the insured created by the contract or policy of insurance”).
Obviously, however, the duty to adjust a claim in good faith only arises if the insurer knows about the claim in the first place. Thus, it is critical to put insurance carriers on notice of potential claims—particularly potential first-party claims, in which a policyholder makes a claim against his or her own insurance policy. Returning to our earlier car wreck case example, assume an injury victim has UM/UIM coverage under his or her own automobile liability insurance. The victim’s insurance policy will, invariably, include a provision that requires the policyholder to promptly notify the insurer of a covered loss and cooperate with the insurer in its investigation of the loss. If a policyholder fails to promptly notify his/her own insurer of the loss, or fails to cooperate in its investigation of the loss, the insurer can deny coverage. E.g., Manzi v. Cotton States Mut. Ins. Co., 243 Ga. App. 277 (2000) (denying UM coverage because policyholder failed to timely notify insurer of claim). That is, the insurer can avoid compensating its own policyholder due to his/her delay in providing notice or lack of cooperation. Thus, it is critically important, at the very beginning of every case, to identify all insurance policies that might provide any coverage for a loss and then do what is necessary to preserve coverage under those policies.
Fortunately, Georgia law provides some good tools. One of those tools is Georgia Code Section 33-3-28. That statute enables an injury victim, or an injury victim’s attorney, to request insurance information from an at-fault party and his or her insurer, if the insurer is known. (In car wreck cases, the accident report often identifies the at-fault driver’s insurer.) One of the first things we do after opening a new injury case is to send out requests for insurance information, pursuant to O.C.G.A. § 33-3-28, to all known involved parties and insurers. While O.C.G.A. § 33-3-28 imposes no penalty upon a party or insurer that fails to timely respond to a request for insurance information, our experience is that parties and insurers (in particular) take their compliance obligations seriously. Moreover, an insurer’s failure to truthfully respond to a request for insurance information can expose it to liability. That is what happened in Merritt v. State Farm Mut. Auto. Ins. Co., 247 Ga. App. 442 (2000). In that case, State Farm responded to a request for insurance information by disclosing a $250,000.00 automobile liability insurance policy; however, it also failed to disclose a $1 million dollar umbrella policy. The injury victim settled her claim for the $250,000.00 limits of the automobile liability insurance policy, believing that was the extent of the at-fault party’s coverage. When she later discovered the $1 million umbrella policy, she sued State Farm for fraud and racketeering. The Georgia Court of Appeals held she stated valid claims against State Farm for fraud and racketeering, overturning a trial court decision awarding judgment to the insurer.
On the injury victim’s side of the ledger, during our intake process, we routinely ask our injury clients to identify:
All health insurance policies that may provide cover for their injury-related medical bills;
All automobile insurance policies that cover all vehicles within the household or which are regularly used by the injury victim or his/her family members;
All homeowners or renter’s insurance policies that cover the victim’s residence; and
All excess or umbrella policies that cover the injury victim or his/her family members.
It is beyond the scope of this article to discuss how any of the policies listed above might or might not come into play in an injury case. The point, especially at the intake phase, is simply to identify all insurance policies that might provide any coverage (even if they ultimately don’t) and put those carriers on notice of our client’s potential claim. As discussed above, the failure to provide such notice can be fatal to a claim.