Velicia Carter, the injured tort claimant in an automobile accident, settled with the alleged tortfeasor’s insurance carrier for payment of the $30,000 limit of liability coverage and provided a limited release pursuant to the provisions of OCGA § 33-24-41.1. Carter provided the limited release and accepted the $30,000 payment exhausting liability coverage on the condition stated in the release that $29,000 of the coverage limit be allocated toward payment of punitive damages and $1,000 toward payment of compensatory damages. At issue is whether under the provisions of OCGA § 33-24-41.1 Carter was entitled to condition the limited release on the requirement that punitive damages be allocated to liability coverage for the purpose of substantially exhausting the coverage limit before recovery of underinsured motorist benefits in Carter’s insurance policy with Progressive Mountain Insurance. We find that the limited release provisions of OCGA § 33-24-41.1 do not permit the claimant to accept payment of the tortfeasor’s liability coverage limit on this
In December 2011, Carter sued Jeova Claudino Oliveira for injuries she suffered in a February 2010 automobile accident alleging that, while under the influence of alcohol, Oliveira negligently drove his vehicle into Carter’s vehicle. In the same suit, Carter served Progressive, her underinsured motorist carrier, pursuant to the provisions of OCGA § 33-7-11 (d). Prior to the suit, Carter entered into a settlement in which Oliveira’s liability insurance carrier, GEICO General Insurance Company, paid Carter the liability coverage limit of $30,000 in Oliveira’s policy. In return, Carter gave GEICO and Oliveira a limited release pursuant to the provisions of OCGA § 33-24-41.1 with the added condition that the $30,000 payment she accepted as the liability coverage limit be allocated $29,000 toward punitive damages and $1,000 toward compensatory damages. After being served in the suit as Carter’s underinsured motorist carrier, Progressive answered and cross-claimed against Oliveira for any amounts required to be paid to Carter on its underinsured motorist coverage.
The Georgia uninsured (and underinsured) motorist statute (OCGA § 33-7-11) is designed to protect injured insureds only as to “actual loss” within the policy limits. State Farm Mut. Automobile Ins. Co. v. Adams,
Before an injured claimant is entitled to recover underinsured motorist benefits against the claimant’s own insurance policy, the claimant must, as a condition precedent, exhaust available liability coverage in the tortfeasor’s insurance policy.
We find that this condition was inconsistent with the language and purpose of OCGA § 33-24-41.1. The statute provides that, when an injured claimant accepts the limits of the tortfeasor’s liability insurance coverage, the claimant “may execute a limited release applicable to the settling carrier and its insured based on injuries to such claimants. . . .” OCGA § 33-24-41.1 (a). As set forth above, the limited release is part of a statutory framework to facilitate settlement of underinsured motorist claims by (1) allowing the injured claimant to settle by accepting payment exhausting liability insurance coverage for “injuries to such claimants,” and (2) preserving the injured claimant’s right to recover against available uninsured motorist coverage — coverage which applies only to the claimant’s actual injuries or losses and not to punitive damages. The statute’s reference to a limited release based on “injuries to such claimants,” is consistent with the purpose of underinsured motorist coverage to more fully compensate the injured insured for actual injuries or losses which the tortfeasor’s inadequate liability insurance failed to cover. Given the plain language of the statute and the purpose of underinsured motorist coverage, we find that the limited release under OCGA § 33-24-41.1 was intended by the legislature to apply only to the claimant’s actual injuries or losses. See Ga. Automobile Ins. Law § 39:16 (2012 ed.). The condition added by Carter to the limited release — that $29,000 of the $30,000 liability coverage limit be allocated to payment of punitive damages — frustrates this intention by allocating punitive damages to substantially exhaust available liability coverage for actual injuries or losses. The allocation of punitive damages to force exhaustion of liability coverage does not advance the purpose of underinsured motorist coverage to increase available compensation for actual injuries and losses; indirectly shifts payment of punitive damages from the liability carrier to the underinsured motorist carrier, contrary to the purpose of underinsured motorist
With the above-stated condition added to the limited release, Carter failed to accept the limits of Oliveira’s liability coverage and provide the limited release in a manner consistent with the provisions of OCGA § 33-24-41.1. Accordingly, Carter was precluded from pursuing a claim for underinsured motorist benefits, and the trial court correctly granted summary judgment in favor of Progressive. Holland,
Judgment affirmed.
Notes
Progressive’s pleadings show that it elected to participate in the suit directly in its own name and become a party to the action. Langford v. Royal Indem. Co.,
An “uninsured motor vehicle” under OCGA § 33-7-11 (b) (1) (D) includes a tortfeasor’s motor vehicle that is underinsured. Under the “added on” or “excess” underinsured motorist coverage option for policies issued, delivered, renewed on or after January 1, 2009 (OCGA § 33-7-11 (b) (1) (D) (ii) (I)), benefits are provided up to the limits of the injured claimant’s coverage for the amount that the claimant’s actual losses exceed the liability coverage on the tortfeasor’s motor vehicle. Ga. Automobile Ins. Law § 32:3 (2012 ed.). Under this coverage option, “[i]t matters not that the available liability coverage on the [tortfeasor’s] motor vehicle is equal to or greater than the [claimant’s] uninsured motorist coverage.” Id. at § 32:3 (i) (3). By contrast, traditional or “reduced” underinsured motorist coverage provides benefits to the injured claimant only when the claimant’s underinsured coverage limit is greater than the liability coverage limit on the tortfeasor’s motor vehicle. Id. at (a); see OCGA § 33-7-11 (b) (1) (D) (ii) (II). The record shows that the $30,000 liability limit in Oliveira’s GEICO policy exceeded the $25,000 limit of underinsured motorist coverage in Carter’s Progressive policy. Although the policies at issue were not included in the record, there was no dispute between the parties in the trial court that Progressive had potential exposure under its policy for payment of underinsured motorist benefits, and that the tortfeasor’s liability coverage did not exclude payment for punitive damages.