The Supreme Court of Georgia issued an important decision on July 11 that will make it easier for accident victims to pursue uninsured motorist claims against their insurance carriers. The Supreme Court, reversing a 2013 decision by the Georgia Court of Appeals, said a plaintiff could allocate part of a settlement with the defendant’s insurance carrier to punitive damages while retaining the right to pursue an uninsured motorist claim for compensatory damages. Georgia law does not permit recovery of punitive damages under an uninsured motorist policy.
Carter v. Progressive Mountain Insurance
This case began with a February 2010 two-vehicle accident. One driver sued the other for negligence. The plaintiff alleged the defendant was driving under the influence of alcohol at the time of the accident. The defendant had an insurance policy limited to $30,000 in liability coverage. The plaintiff had her own uninsured motorist policy with Progressive Mountain Insurance.
The plaintiff eventually signed a limited release with the defendant’s insurer. In exchange for accepting the the coverage limit of $30,000, she agreed to allocate $29,000 of that amount to punitive damages and only $1,000 to compensatory damages. The plaintiff would then pursue an uninsured motorist claim with Progressive for any additional compensatory damages.
Progressive challenged this condition as a violation of Georgia law. The trial court agreed and granted summary judgment to Progressive. Last year, the Georgia Court of Appeals upheld this decision. The appeals court said the plaintiff could not pursue uninsured motorist benefits until she first “exhausted” the liability limits of the defendant’s insurance policy. In that sense, the court said the plaintiff’s agreement with the defendant’s insurer to allocate most of the liability coverage to punitive damages “frustrates” the law’s objectives by unfairly burdening the uninsured motorist carrier with paying more in compensatory damages.
The Georgia Supreme Court disagreed. Presiding Justice P. Harris Hines, writing for a unanimous Court, said the Court of Appeals’ objections were “ill-founded.” Georgia law does not bar a plaintiff and an defendant’s insurer from allocating a portion of liability coverage to punitive damages, Justice Hines explained. The law only addresses the conditions by which an insurer may be released from further liability. Furthermore, the law actually prevents the type of burden-shifting the Court of Appeals objected to, because in this case, any compensatory damage award to the plaintiff must be offset by the $30,000 previously received from the defendant’s insurer—regardless of the fact some of that liability was directed to punitive damages. Ultimately, Justice Hines said, the plaintiff’s “combined recovery will not exceed [her] economic and noneconomic losses.”