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Georgia Court of Appeals Says Insurance Companies Have Burden of Proving Customers Elected Lesser Coverage

Under Georgia law, an automobile insurance policy must provide coverage for damages sustained in an accident with an uninsured motor vehicle. The amount of uninsured motorist (UM) coverage must be at least $25,000 for injury or death to one person ($50,000 to two or more persons) or equal to the policy’s overall limit on bodily injury liability coverage. The person taking out the insurance policy, however, may “affirmatively choose” an amount of UM coverage less than this maximum liability amount.

The Georgia Court of Appeals recently addressed a disagreement between an accident victim and his insurance company over whether he “affirmatively” chose less than the maximum amount of UM coverage presumed under state law. A three-judge panel held the insurance company had the burden of proof to show the insured person elected lesser coverage. This reversed a lower court’s previous ruling granting summary judgment to the insurance company.

“Affirmative” Action Does Not Mean Failure to Act

The insurance policy at issue was first issued to a married couple in 2007. The husband signed the policy, but the wife made all relevant decisions regarding the policy’s terms. The original policy provided for $100,000 per person for bodily injuries and $50,000 per person in UM coverage. In late 2008, the insurance company notified the couple about the Georgia law described above, which took effect in January 2009. The notice included a form offering several options for modified UM coverage. The couple never returned the form, which the insurance company took as a signal to continue the existing policy, which provided for less UM coverage ($50,000) than the default provided under state law ($100,000, the amount of bodily injury coverage).

A few months later, an automobile accident killed the wife and severely injured the husband, who subsequently named the insurance company as the UM insurer. The insurance company counter-sued for a judgment limiting its liability to $50,000. The husband claimed he was entitled to the full $100,000 since he never “affirmatively” chose less coverage.

The trial court agreed with the insurance company’s interpretation of the law and granted it summary judgment. In a decision issued on June 27 of this year, the Georgia Court of Appeals reversed. Judge Christopher J. McFadden, writing for the court, said that while the insurance company “was not required to obtain in writing” the husband’s election regarding his preferred amount of UM coverage, that “does not absolve” the insurer of its duty under the law to show there was “in fact an affirmative choice of lesser coverage.”

The fact that the original 2007 policy stated a lower coverage amount was not controlling, Judge McFadden wrote, because that still did not constitute evidence the husband made an affirmative choice. Nor did his failure to return the 2008 election form provide such evidence. Since the statute expressly requires an “affirmative” act, the court said it would not infer such action from the husband’s failure to act. Therefore, the court had to interpret the insurance policy consistent with state law, which presumes the amount of UM coverage equals bodily liability coverage–which in this case was $100,000.