An appellate court in Georgia, affirming a trial court's decision, has ruled that Georgia law permits a name insured such as a car dealer to purchase uninsured motorist coverage for itself while waiving it for everyone else, including people who test drive its vehicles.
The Case
Verlinda and Kevin Jones were test-driving a car owned by Five Star Automotive Group when they were rear-ended by another vehicle. Neither of the Joneses had a personal automobile insurance policy.
Seeking to recover damages for injuries they allegedly incurred in the accident, the Joneses sued Five Star's insurer, Federal Mutual Insurance Company, for uninsured motorist (“UM”) benefits.
Federated Mutual moved for summary judgment, asserting that its policy afforded no UM coverage for the Joneses. In support of its motion, Federal Mutual presented evidence that when Five Star obtained the policy, it executed a “Georgia Commercial Automobile Uninsured Motorists Coverage Option Form” (the “Uninsured Motorist Provision”) selecting a $1,000,000 uninsured motorist coverage limit for “directors, officers, partners or owners of the named insured and family members who qualify as an insured.”
On that same form, Federated Mutual said, Five Star expressly rejected UM coverage for “any other person who qualifies as an insured.”
The Joneses opposed Federated Mutual's motion, contending that the Uninsured Motorist Provision – which resulted in “tiered” UM coverage (for different groups of individuals) – was void as contravening Georgia's UM statute and Georgia public policy. Therefore, the Joneses urged that the $1,000,000 option be applied to them each as an “insured” in accordance with Georgia's UM statute.
The trial court ruled in favor of Federated Mutual, and the Joneses appealed.
The Appellate Court's Decision
The appellate court affirmed.
In its decision, the appellate court explained that, under Georgia law, UM coverage must appear in every automobile liability insurance policy unless rejected in writing by the insured named in the policy.
Five Star was the named insured and Five Star, therefore, could (and did) reject UM coverage for any insureds other than for its “directors, officers, partners or owners” of Five Star, and family members who qualified as an insured.
The appellate court rejected the Joneses' contention that Georgia law allowed a named insured such as Five Star either to choose an amount of UM coverage or to reject UM coverage in its entirety, but not to do both. The appellate court found “no language” in the UM statute that imposed an “all or nothing” restriction on UM coverage. According to the appellate court, if the legislature intended for a rejection of UM coverage as to any one “insured” to apply to all other “insureds,” it could have said so, “but it did not.”
A named insured such as Five Star had the freedom of contract to choose tiered UM coverage, the appellate court concluded.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].