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Auto Insurer May Be Liable for Alleged Forgery by Agent

On June 5, the Georgia Court of Appeals issued an important decision in a dispute between an accident victim and his insurance company over whether his policy covered uninsured and underinsured motorist damage. The case centered on the victim’s allegation that the insurance agent that sold him the policy illegally forged his name on a waiver depriving him of such coverage. The insurance company argued that even if the victim’s name was forged, it relied in good faith on the waiver. The trial court sided with the insurance company and granted it summary judgment. The Court of Appeals reversed and returned the case for trial.

Assaf v. Cincinnati Insurance Company

While walking alongside a road, the victim was struck and injured by an automobile. The vehicle was not insured. Accordingly, the victim filed a claim with his own automobile insurance insurance company for uninsured/underinsured motorist coverage. The victim said his policy covered up to $1 million in coverage.

The insurance company acknowledged the victim held an umbrella policy but said it did not provide excess uninsured/underinsured motorist coverage. In fact, the insurance company produced a copy of the victim’s insurance application, which included an express waiver of such coverage signed by the victim. Prior to 2009, when this policy was first issued, Georgia insurance law declared umbrella policies included uninsured/underinsured motorist coverage unless the policyholder signed a written waiver. (Undercurrent law, the opposite is true; an umbrella policy does not include such coverage unless expressly stated in writing.)

The victim argued his signature was forged by the agent who sold him the policy. The agent represented both the victim and the insurance company. The insurance company said even if that was true, it could not be held liable for relying on a misrepresentation made by the agent. Normally, that is true. Georgia law provides that when two parties to a contract use the same agent, neither party is liable for the agent’s misconduct unless there is evidence one party was complicit. There was no such allegation of complicity here.

Nevertheless, as the Court of Appeals explained, Georgia law also says a party is bound by any “willful concealment of material facts” made by its agent even if the party was unaware of the concealment. That means that if the victim in this case can prove the agent forged his signature on the waiver, the insurance company cannot escape responsibility by saying it did not know about the misconduct.

The Court of Appeals also rejected the insurance company’s argument that the victim was responsible for examining the insurance policy for any errors beforehand. Assuming that is true, the court said, the law in effect at that time required uninsured/underinsured motorist coverage unless waived in writing. Therefore, the victim’s failure to inspect the policy or object to the absence of such coverage does not prevent him from seeking to enforce the policy in court.

It must be reiterated the Court of Appeals did not decide any of these issues on the merits. This case will now be returned to a lower court for trial. The appeals court limited its decision to holding there were sufficient disputed facts such that summary judgment was not appropriate.