An “uninsured motorist” policy provides coverage to the insured when he or she is the victim of an accident caused by another party that has insufficient resources to pay the full amount of any legal damages. In this context, “uninsured” also means under-insured. Thus, for example, if Driver A is in an accident caused by Driver B, and Driver B’s insurance only covers half of the damages awarded in a subsequent lawsuit, Driver A’s uninsured motorist carrier would pay the remaining half.
But what if Driver B is an agent of the State of Georgia? Normally, state agencies (and their employees) enjoy “sovereign immunity” from most civil lawsuits. The idea is that a state cannot be sued in its own courts without its consent, which is normally granted through legislation. However, when a local government in Georgia purchases liability insurance, sovereign immunity is waived up to the limit of said policy. What does this mean for accident victims with uninsured motorist coverage? A federal judge in Savannah recently attempted to answer this very question.
FCCI Insurance Company v. McLendon Enterprises, Inc.
In 2011, an employee of McLendon Enterprises was driving his company-owned truck when it was struck by a school bus owned by Evans County. McLendon’s vehicle was insured by FCCI. The policy included uninsured motorist coverage. Evans County had a $1 million liability policy with GSBA Risk Management Fund.
The McLendon driver and Evans County reached a settlement without litigation. GSBA paid out $650,000 to the driver–$350,000 short of the county’s policy limit. The driver then demanded FCCI pay out the remaining sum under the uninsured motorist policy. FCCI then filed an action in federal court, seeking a judicial declaration that it owed the driver nothing.
Under the FCCI policy, the uninsured motorist provision applies when there “is not enough to pay the full amount the covered ‘insured’ is legally entitled to recover as damages” from the party responsible for the accident. FCCI argued that “legally entitled to recover” meant that recovery from the responsible party was possible. The driver argued the phrase only meant that the uninsured motorist was at fault for the accident.
Both sides moved for summary judgment. U.S. District Judge B. Avant Edenfield ruled in favor of the driver. Noting that “[n]o Georgia opinion has directly addressed uninsured motorist coverage in light of the statutory, provision waiving sovereign immunity to the extent that a county obtains liability coverage,” Judge Edenfield said that Evans County was no different than a private person for purposes of this case. The county here is no different than a private person who only has $1 million in resources to pay for any damage award.
In 1994, the Georgia Court of Appeals held that when a county had total sovereign immunity from a civil judgment, a person injured by a county employee could recover uninsured motorist benefits from his own insurer. Judge Edenfield reasoned it therefore made no sense to deny such benefits when the county only had partial immunity. Otherwise, it would make no sense for counties to purchase insurance policies at all, and “a victim in a county with liability insurance would recover less than one in a county without coverage.” Judge Edenfield said this would defeat the Georgia General Assembly’s goals of ensuring accident victims receive adequate compensation.