We are called upon in this case to answer two questions certified to us by the United States Court of Appeals for the Eleventh Circuit pursuant to constitutional and statutory authority. 1983 Ga. Const., Art. VI, Sec. VI, Par. IV; OCGA § 15-2-9 (a). We have been asked to determine whether an insurer’s failure to notify the Georgia Public Service Commission (“PSC”) of the insurer’s cancellation of coverage after the insurance policy lapsed for nonpayment of premiums, continues the policy and its limits of liability, or continues the minimum limits of insurance coverage under the certificate of insurance attesting to the fact that the insured had obtained at least the minimum insurance coverage required by law, earlier filed by the insurer with the PSC. We are also asked to examine whether a limitation of liability clause in the insurance policy limits coverage to the statutory minimum when the insurance policy has lapsed but the insurer has not notified the PSC of the cancellation of coverage.
Ramirez v. Progressive Preferred Ins. Co.,
The questions arose in the following context. In April 1999, 1 Progressive Preferred Insurance Company (“Progressive”) issued a policy to Paul Haney covering trucks used in his business and, in order to comply with Rule 1-8-1-.01 of the PSC, sent a certificate of insurance to the PSC (“Form E”) in July 1999. When Haney did not pay the premiums, Progressive cancelled the policy in July 1999 by giving notice to Haney, but did not give notice to the PSC until September 1999, after Ramirez’s mother was killed in a vehicular collision involving one of Haney’s trucks. Ramirez obtained a $1,000,000 wrongful death judgment against Haney and filed suit in the Superior Court of Coweta County against Progressive seeking the $500,000 limits of the policy Progressive had issued to Haney. Progressive removed the case to the United States District Court for the Northern District of Georgia, which granted summary judgment to Ramirez. Progressive appealed to the Eleventh Circuit which found Georgia law unclear on two points and certified two questions of law to this Court.* 1 2
Progressive contends its liability is based on the certificate it submitted to the PSC rather than the policy it issued to Haney. Progressive argues that Rules 1-8-1-.01, permitting the filing of a certificate of insurance in lieu of filing the actual policy, and 1-8-1-.07 (c), providing that “policies of insurance ... or certificates of insurance . . . shall not be cancelled . . . until . . . notice . . . has been given the [PSC],” should not be read together to provide that the policy certified by the certificate to be in effect remains in effect until the certificate of insurance is cancelled by way of proper notice to the PSC. Rather, Progressive argues, a certificate of insurance has a legal existence separate from the insurance policy the existence of which it certifies, and since Progressive filed a certificate of insurance rather than the actual policy with the PSC, it is liable only for the statuto rily-mandated coverage of $100,000, not the $500,000 limit under the actual policy.
We disagree. PSC Rule 1-8-1-.01 allows insurers to file a certificate of insurance in lieu of filing the actual policy, the existence of which is mandatory under OCGA § 46-7-12. The certificate of insurance is not an insurance policy, but merely serves to assure the PSC that the motor carrier has complied with the requirement of providing either a surety bond or insurance for the protection of the motoring public. By filing the Form E certificate, the insurer certifies to the PSC that it “has issued a policy ... of insurance effective from [a stated date] and continuing until cancelled . . . by . . . giving thirty (30) days notice to the . . . [PSC].” Thus, the language of the Form E certificate demonstrates it is the policy of insurance, not the certificate, which establishes the extent of the insurer’s liability. Progressive’s argument that if the certificate were intended to provide the full coverage of the policy, it would have a place on it to show the extent of coverage ignores the fact that the required information on the certificate includes the policy number, which would make establishment of the extent of coverage simple. We conclude, therefore, that under PSC Rule 1-8-1-.07, policies of insurance evidenced by a Form E certificate filed with the PSC remain in effect until cancelled as prescribed by the rule.
Our conclusion is supported by prior decisions of the appellate courts of Georgia. In
Smith v. Nat. Union Fire Ins. Co.,
The decision in
Ross v. Stephens,
Accordingly, we answer the first question certified in this case in the affirmative: When a Form E endorsement filed with the PSC provides that an insurance company has issued its insured an insurance policy and the policy lapses before an incident giving rise to liability on the part of the insured and before proper notice of cancellation is given to the PSC, the insurer’s liability to a third party injured by the insured is based on the policy itself as opposed to liability based on the minimum coverage imposed by law.
2. Since we have concluded that the insurer’s liability is based on its policy of insurance, the Eleventh Circuit asks us to consider whether the policy’s provision limiting the insurer’s liability to pay damages to others is applicable to the situation presented by this case. The policy sets out 24 circumstances that result in exclusion of coverage. The policy then states a limitation on liability:
If we are required by any applicable filing which we have made on your behalf to provide coverage not otherwise provided by this policy under this PART I — LIABILITY TO OTHERS, to any person or organization, the coverage provided hereunder for such person shall be the minimum coverage required by law. If we are required to make any payment under this policy that would not have been made except for the certification, you must reimburse us.
We conclude the limitation comes into play when the insurer’s liability is based, not on the policy, but on the “applicable filing.” See, e.g.,
Ross v. Stephens,
supra,
Questions answered.
Notes
All the events involved in this case occurred prior to the effective date of OCGA Ch. 40-16, transferring from the Public Service Commission to the Department of Motor Vehicle Safety the responsibility for regulating motor carriers. All references herein are to the statutes and rules in effect when this case arose.
Those questions are:
1. When a Form E filed with the PSC provides that an insurance company has issued its insured an insurance policy “effective from 04/16/99 . . . continuing until cancelled as provided herein” by “giving thirty (30) days notice in writing to the [PSC],” and when the policy lapses for nonpayment two days before the accident at issue but before the company has given 30 days notice to the PSC, is the insurer liable on the policy itself (i.e., a continuation of the policy and its limits of liability) to a third party injured by the insured, as opposed to being liable on the certificate for the minimum coverage obligations imposed by law?
2. Does subsection 1 of the “Limit of Liability’ section of PART I — LIABILITY TO OTHERS limit coverage to the statutory minimum only with respect to the scope of the substantive coverage described in Part I of the policy, or does that language also limit all coverage to the statutory minimum when the policy has lapsed as between the insurance company and its insured but before the insurer has provided the 30 day cancellation notice required under Georgia law?
The contents of the certificate, known as a Form E certificate, are prescribed by PSC Rule 1-8-1-.07 (d).