What Liability Insurance is Involved in Georgia Injury and Wrongful Death Cases?

Liability insurance policies typically create at least two general protections for an insured:

1. the duty to pay any amounts up to the policy limits that an insured is found to be liable to a third party, and
2. the duty to defend, in which the insurer is required to provide a legal defense to the insured.

Although the terms “policyholder” and “insured” are sometimes used interchangeably, they are often not the same. While a policyholder (sometimes called the “named insured”) will nearly always be an insured, the policy may define a number of other individuals, including others specifically listed on the policy and resident relatives of the policyholder’s household, as insureds.

The policy typically also includes, in the case of automobile policies, those driving the insured motor vehicle with permission of the driver. A thorough reading of the applicable policy, and any amendments or endorsements, may be necessary to determine who is insured, and for how much, in connection with a claim.

(a) Automobile Coverage

Georgia law requires that all vehicles be covered by a policy of liability insurance, which must be in an amount not less than $25,000 per person and $50,000 per accident for bodily injury, and not less than $25,000 for property damage. Since all vehicles must be insured to be operated, it is said that insurance “follows the vehicle” and the liability insurance policy covering that specific vehicle is generally first in line of priority to provide coverage.

(b) Rental Cars

Liability insurance for rental cars must be provided by the person renting the car, either through her own auto policy or by purchase of “spot insurance” through the rental car company. That does not exempt the rental car company from having statutory minimum coverage, but the renter’s coverage is primary and the rental company’s coverage is secondary. A vehicle rental company is not required to offer insurance to renter or to require the renter to purchase insurance to be exempt from where notations on face of rental contract demonstrated that it ascertained that renter had insurance coverage before renting car to him.  However, vehicle rental agreements may define by contract whose insurance coverage is primary.

(c) Out of State Vehicles in Georgia

Out-of-state vehicles covered by policies issued by insurers in other states that also transact business in Georgia must provide this same minimum coverage, regardless of the amount of coverage required by the foreign state or the amount provided by the policy.

(d) Interstate Motor Carriers

For interstate motor carriers the Federal Motor Carrier Safety Regulations (FMCSRs), and a corresponding state statute, require the following minimum coverages which have not been adjusted for inflation since 1980:

1. For-hire hauling general freight, with gross vehicle weight rating of 10,001 or more pounds) …. $750,000. However, $1,000,000 policies are more common.
2. For-hire hauling hazardous substances as defined in 49 CFR § 171.8 in tanks or hoppers with capacities over 3,500 water gallons, with gross vehicle weight rating of 10,001 or more pounds) …. $5,000,000
3. For-hire and Private (In interstate or foreign commerce, in any quantity; or in intrastate commerce, in bulk only; with a gross vehicle weight rating of 10,001 or more pounds) hauling oil listed in 49 CFR 172.101; hazardous waste, hazardous materials, and hazardous substances defined in 49 CFR 171.8 and listed in 49 CFR 172.101 …. $1,000,000
4. For-hire and Private (In interstate or foreign commerce, with a gross vehicle weight rating of less than 10,001 pounds), hauling any quantity of Division 1.1, 1.2, or 1.3 material; any quantity of a Division 2.3, Hazard Zone A, or Division 6.1, Packing Group I, Hazard Zone A material; or highway route controlled
5. quantities of a Class 7 material as defined in 49 CFR 173.403 …. $5,000,000
6. Any vehicle with a seating capacity of 16 passengers or more, including the driver …. $5,000,000
7. Any vehicle with a seating capacity of 15 passengers or less, including the driver … $1,500,000

(e) Intrastate Motor Carriers

An intrastate motor carrier is one that operates solely within one state. For intrastate motor carriers in Georgia the shockingly low minimum levels of insurance required are as follows:

(f) No General Requirements of Liability Insurance for Businesses

Aside from the automobile and trucking context, Georgia law generally does not require liability insurance coverage. Retailers, for example, are not required to purchase liability insurance for injuries resulting from the retailer or property owner’s negligence in a store, although as a practical matter most do have insurance though there is often a large deducible or self-insured reserve.

(g) Self Insurance

Self-insurance means that entities, generally large corporations with substantial assets that expect to pay claims in the course of their business, elect to absorb the risk of loss themselves rather than pool their assets with others through the purchase of an insurance policy. In these instances, the company will often have a third-party administrator that handles the claims, although payments made resulting from liability claims come from the company itself rather than the administrator. In Georgia, there are numerous statutes and regulations addressing self-insurance for governmental entities, workers compensation coverage for employers, motor carriers Regarding self-insurance of owners of motor vehicles see O.C.G.A. § § 33-34-5.1 and O.C.G.A. § 40-2-137.

Self-insurance may be inadvertent or ill-advised when a company buys an insurance policy that excludes a large category of claims, thus “going naked” with regard potentially catastrophic losses. Whether by oversight or by calculated gamble, this risk management decision exposes corporate assets to liability.

(h) Deductibles and Self-Insured Reserves

Often a prospective defendant may have insurance coverage, but will also have a large deductible or “self-insured retention” (referred to as an SIR, or the “retained risk”) for which it is responsible for paying all losses up to a certain amount, which can often be in excess of most claims, meaning that the company is effectively self-insured in most instances.

Self-insured retention amounts can vary from hundreds to millions of dollars depending on the risk management policies of the company. In the case of retail businesses, lease contracts may require that a business or landlord purchase insurance covering claims on the property. For most businesses, therefore, there will typically be at least some liability insurance available.

In in many situations there are be multiple layers of coverage, which may include a self-insured retention, one or more primary liability policies, and, potentially, excess or umbrella policies. Discovering that insurance, however, may be difficult. A lawyer handling significant cases must know strategies for obtaining this information and dealing with potential conflict between the policyholders and each of the respective insurance companies.

(g) Insurer’s Authority to Settle

Liability insurance policies often contain clauses entitling the insurer to settle claims against the insured at the discretion of the insurance company without the consent or permission of the insured. Under these circumstances, the insurer is considered to be an independent contractor of the insured, and actions taken in the settlement of the case are not imputed to the insured, “including any” explicit or implied admission of any facts underlying the claim.

For example, an insurer’s settlement on behalf of an insured of a liability claim in favor of a claimant does not preclude the insured from making a claim against the party having previously made a claim against the insured. Therefore, settlement documents in Georgia usually include a statement that the settlement consummated is without the insured’s consent and does not preclude the insured’s right to sue. Failure include that language renders the settlement null and void. Usually it is just another paragraph of boilerplate language with little practical significance.

A claimant wishing to preclude such a claim, where it is a concern, should seek to obtain a mutual release of claims by all parties, although the decision to agree to that type of release would rest with the insured, as the insurer would have no authority to release the insured’s own claims.

Ken Shigley is a past chair of the Tort & Insurance Practice Section of the State Bar of Georgia and the Georgia Insurance Law Institute. He worked a decade in a law firm that represented numerous insurance companies in both defense of injury and death cases and in insurance coverage litigation. He is also a past president of the State Bar of Georgia with a long list of professional honors and distinctions.