Given the ubiquity of motor vehicle accidents, numerous states have enacted legislation seeking to assure some level of recovery through compulsory insurance coverage and hopefully dissuade litigation as a result. However, although the availability of insurance recovery has purged some judicial resolution of auto-accident fault, the courts have not been completely freed from questions of law involving auto accidents. For instance, in Carter v. Progressive Mountain Insurance, the Supreme Court of Georgia weighed in on the proper interpretation of OCGA § 33-24-41.1, a statute governing how a claimant may settle claims with a third party’s insurance provider while still seeking recovery from his or her personal insurance provider.
This case arose from a car accident on February 22, 2010, when a motorist who was alleged to be under the influence of alcohol struck the claimant. The claimant sued the other motorist and served Progressive Mountain Insurance, her personal under-insured motorist insurance provider. The claimant executed a limited liability release with the other motorist’s insurance provider, GEICO, for the full amount of its $30,000 per-person liability limit, with $29,000 allocated to punitive damages and the remaining $1,000 allocated to compensatory damages. Progressive objected to the allocation and moved for summary judgment on the claimaint’s right to under-insured motorist benefits. The trial court granted the motion, ruling that by conditioning that $29,000 be allocated to punitive damages, the claimant had failed to satisfy the prerequisites for the receipt of under-insured motorist benefits. The Court of Appeals of Georgia concurred and held that by not allocating the entire policy limit to compensatory damages, the claimant had failed to exhaust the limits of the policy and accordingly forfeited her right to under-insured motorist benefits.
However, in an unanimous decision, the Supreme Court of Georgia reversed the Georgia Court of Appeals and held that a claimant may, in conformity with OCGA § 33-24-41.1, settle claims with a third party’s insurance provider and allocate the overwhelming majority of the settled amount to punitive damages while still seeking under-insured coverage from his or her personal insurance provider for the remaining amount of actual compensatory damages. The Supreme Court held that the Court of Appeals erred in holding that no allocation to punitive damages may be made in the limited release, since the text of OCGA § 33-24-41.1 contained no language that would foreclose such an allocation. Specifically, the court noted that the section of the statute that requires payment be “based on injuries” does not prohibit the allocation of punitive damages, since the availability of punitive damages necessarily depends on there being some form of compensatory injury. Therefore, such payment would still be “based on injuries.”
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