Strategy for Defending UM claims

Joseph Kaiser – Managing Partner
Groth, Makarenko, Kaiser & Eidex
March 1, 2024

Overview and Determination as to whether UM Coverage applies:

Generally the strategy for defending UM claims is similar to defending any automobile claims, however, there are some important distinctions. The claim against the UM/UIM carrier is governed by O.C.G.A. 33-7-11, The Georgia Uninsured Motorist Act. Because of this, there are remedies that can be pursued in a tort claim against a 3 ^rd party tortfeasor that can not be awarded against a UM/UIM carrier. The two primary examples would be punitive damages or attorney’s fees under other statutory constructs such as O.C.G.A. 13-6-11 or O.C.G.A. 9-11-68.

To understand the strategic decisions related to defending a UM/UIM claim, we must first understand the coverage scheme created by O.C.G>A. 33-7-11 and how it defines an insured:

O.C.G.A. 33-7-11 (a)(1) states :

No automobile liability policy or motor vehicle liability policy shall be issued or delivered in this state to the owner of such vehicle or shall be issued or delivered by any insurer licensed in this state upon any motor vehicle then principally garaged or principally used in this state unless it contains an endorsement or provisions undertaking to pay the insured damages for bodily injury, loss of consortium or death of an insured, or for injury to or destruction of property of an insured under the named insured’s policy sustained from the owner or operator of an uninsured motor vehicle…

O.C.G.A 33-7-11 (b)(1)(B) defines insured as follows:

(B) “Insured” means the named insured and, while resident of the same household, the spouse of any such named insured and relatives of either, while in a motor vehicle or otherwise; any person who uses, with the expressed or implied consent of the named insured, the motor vehicle to which the policy applies; a guest in such motor vehicle to which the policy applies; or the personal representatives of any of the above.

This construct creates The statute creates essentially two classes of insureds:

CLASS 1

The actual people named in the policy and the relatives or spouse of named people when they live in the same household. Same household generally means under the same roof.

CLASS 2

People that use the insured car with permission and people that are passengers in a covered car.

Once we understand the coverage scheme, we can address the First strategy question:

Do I Answer in my own name or not?

A UM Carrier is not Required to Answer, however, not doing so will preclude actively conducting discovery. A UM carrier that is past the 30 (Really 45 days) to Answer would be in default if it files an Answer in its own name.  Kelly v. Harris, 329 Ga. App. 752, 766 S.E.2d 146 (2014) There are times when this still may be an appropriate strategy, for Example – Defendant is also in default and negligence is not in dispute. Any other situation where the need to conduct formal discovery outweighs the perils of the default.

A UM carrier has options available that a 3 ^rd party defendant does not when it comes to litigating a case. It may 1.) File no Answer at all, 2.) File an Answer in the name of the UM/UIM Carrier, 3.) File an appearance of additional counsel for the Defendant or 4.) File an Answer in the name of the Defendant.

A UM Carrier is not Required to Answer, however, not doing so will preclude actively conducting discovery in its own name. There are times when this still may be an appropriate strategy, for example – Defendant is also in default and negligence is not in dispute. Any other situation where the need to conduct formal discovery outweighs the perils of the default.

One potential pitfall or ramification related to the choice of whether to defend in the name of the Defendant or in a UM/UIM carrier’s own name would be the status of any Admissions. [A Defendant’s] default can not be permitted to injure the statutory right of the appellee insurer to defend the action in its own name, which would be the result if the insurer were held to be bound by the defendant’s admissions.   Glover v. Davenport, 133 Ga. App. 146, 147, 210 S.E.2d 370, 371 (1974)

An unusual situation that may arise relates to the fact that many UM/UIM policies Most policies contain a provision similar to: We are not bound by any default judgment taken against any person other than us. Thus a Plaintiff who takes a default against the Defendant with the intent to present that default judgment to the UM/UIM carrier for payment does so at his own risk. A UM Action is a first party action that is grounded in the Contract, but O.C.G.A 33-7-11 makes the action sound in Tort law rather than Contract law.

This leads to the Second strategy question:

If the named Defendant/tortfeasor has not been served?

The election the UM/UIM carrier makes will also likely be dependent up on the status of service as to the named Defendant. This status will certainly influence the strategy question. If there is no service, consider 1.) Has the Plaintiff been diligent in trying to locate Defendant, 2. Has the Plaintiff moved for Service by Publication, and 3. When does the Statute of Limitations Expire?

There is nothing in the law preventing a UM carrier from hiring a process server and attempting to locate and serve the Defendant and often it is a smart decision because it will likely trigger coverage in front of your policy. Remember that a Plaintiff is always required to exercise Diligence in serving a Defendant, further O.C.G.A. 33-7-11 (e) clearly provides a Plaintiff has a continuing duty to exercise diligence in attempting to locate a defendant. This requirement is not relived by the Plaintiff moving for or obtaining service by publication. See Williams v. Patterson, 306 Ga. App. 624, 628-629 (2) (703 SE2d 74) (2010).  Hayward v. Retention Alternatives, Ltd., 291 Ga. App. 232, 235 (2) (661 SE2d 862) (2008); see also Williams v. Patterson, 306 Ga. App. 624, 629 (2) (703 SE2d 74) (2010).

A word on UM Bad Faith

Per O.C.G.A. 33-7-11, a UM demand must provide 60 days. The statutory language provides that the question of bad faith and the penalty is a separate action & jury question. Many in the Plaintiff’s bar are attempting to challenge this and add a bad faith or “breach of contract” claim in the tort suit.  However, this is not recognized as a cause of action under Georgia law. The Exclusive remedy for Bad Faith against a UM carrier – i.e. 9-11-68, 9-15-14 & 13-6-11 do not apply to UM carriers. See Generally Smith v. Stoddard. The recovery is limited to 25% of the policy limits (or $25,000 whichever is more) plus reasonable attorney’s fees for bringing the bad faith action.