Georgia Law Blog

Excess & Umbrella Insurers Beware!

In a landmark decision, the Georgia Court of Appeals ruled last week that excess and umbrella insurance companies are required to provide uninsured/underinsured motorist coverage unless the insured has specifically rejected the coverage – even if the policy contains a provision excluding such coverage.  See, Abrahams v. Atlantic Mut. Ins. Agency, A06A1501 (08/31/2006).  The Court held that Georgia’s uninsured motorist statute, O.C.G.A. 33-7-11, requires all insurers who provided motor vehicle liability coverage – even excess or umbrella insurance – to offer uninsured/underinsured motorist coverage.

 

And, the bad news for the insurance companies didn’t stop there.  The Court went even further, stating that unless the insured specifically rejected coverage in writing or chose lower limits, the amount of coverage would be the same as the policy limits.  Given that most excess and umbrella policies are written for at least a million dollars, and it is unlikely that many, if any, excess carriers have ever offered UM coverage in Georgia, the insurance industry could be on the hook for millions of dollars for a risk they thought they had excluded.

Arguably, this decision could be viewed as “unfair” to the insurance companies as most of their policy holders were made aware (if they closely read their policies) that no such coverage was included.  However, the Court determined that the UM statute is crystal clear that these companies had an obligation to at least offer the coverage and let their insureds choose whether to reject.  The insurance companies had an opportunity to collect the premiums for additional coverage – now they will be providing UM coverage for free.

Orkin Class Action - What's Bugging You?

     The Aug. 23, 2006 Atlanta Journal Constitution (D-1) included an article about an elderly Marietta, Georgia couple who have been fighting in court against Orkin Exterminating and its parent company Rollins, Inc. for 5 years because they said Orkin failed to live up to its contract to provide inspections and treatments to keep their house safe from termites.  Their case and the struggle of their attorney to recover against Orkin and Rollins, was helped this week by the Judge’s decision to expand the scope of the case to include other similar claims against these companies.

     Now up to 70,000 Orkin customers will have a method to seek some compensation for failed treatments, and improper inspections that have occurred since 1995.   The Judge’s approval of a class action status for this case allows many Georgians to obtain some recovery for their claims which otherwise would have been ignored because their individual claims were too small to find someone to fight for them. 

     While politicians, corporate leaders and the Chamber of Commerce frequently complain about class action abuses, the truth is that class action lawsuits are an important and often the only way for many small claims to be handled and to gain meaningful attention from corporate defendants.  When these politicians and companies call out for lawsuit “reform,” what they are really doing is trying to block thousands of average citizens with small or medium sized losses from gaining any recovery for their losses.  That should bug you.

Stopping Insurance Company Abuse

     Insurance companies like to advertise that when you deal with them “You’re In Good Hands” or that they will be “Like a Good Neighbor”.  Advertising is one thing, reality is another. 

     This week the Georgia Insurance Commissioner fined Safeway Insurance Company $500,000.00 for its pattern of unacceptable conduct.  The Sept. 6, 2006 press release by Commissioner Oxendine outlined the terms of an order that put Safeway on probation for the next two years and required it to stop denying injury claims without a reasonable written basis.  The order also forced Safeway to refund money to its customers for improper charges it had used to reduce property damage payments during the last 5 years.

     Unfortunately, the Commissioner’s Office press release didn’t mention the numerous lawsuits and complaints filed by lawyers in recent years against Safeway.  Their efforts to force Safeway to treat Georgians fairly should not have been ignored.

     It would be nice to believe Safeway Insurance Company is the bad apple in the bushel basket, but many lawyers will tell you similar problems exist with many insurance companies they deal with.

Get Rid Of The Lawyers?

     President Bush, Congressional leaders, the Chamber of Commerce and other politicians are busy making speeches attacking the jury system.  You also see doctors, corporations and insurance companies paying for lots of advertisements to do the same thing.  But stop and think how your world would be different, if people didn’t have lawyers to stand up and fight for them.  Many safety issues were fought for and won by the efforts of lawyers.

     Baby cribs used to have rails that were spaced far apart, and tragically, infants slipped through them and were injured or killed.  Now, those cribs are made with the rails close together.  Gas tanks on some cars used to explode into flames when hit, but are now built to avoid that tragic result.  These changes didn’t happen by themselves.  Time and time again, lawyers, fighting for persons and families, brought cases that changed things for the better.

     A few years ago, lawyers in our firm participated in a case against a bus manufacturer, which had a dangerous design to the seals on the door.  This defect caught the strap of a young girl’s backpack as she exited the bus, and resulted in her being dragged and killed. 

This case was similar to several earlier cases in the mid and late 1990’s across the country that fought for safer bus designs because children were being injured and killed getting off the bus because the hand rails had snagged or caught drawstrings on clothing and straps on backpacks.  Many of these design errors have now been corrected by product recalls.

     The issue of school bus safety was highlighted by the Atlanta Journal Constitution, (page MS1) on Aug. 27, 2006 in a story that outlined various innovations such as safer controls and sensors, to help the driver know if a child was in the “danger zone” outside the bus. The article also focused on the new flatter design of the front hood of buses and how that improved visibility.  However, the article failed to tell the reader anything about why those changes occurred.  The role of lawyers and lawsuits was never mentioned.

     In contrast, the role of lawyers was noted in the Aug 27, 2006 New York Times article about Ford Motor Company’s recalling of millions of vehicles because a defective switch was believed to have been causing vehicle fires.  The article noted that multiple lawsuits had been filed against Ford for fires that had caused damages and deaths.  It also highlighted the role of government safety investigators in pinpointing the cause of these fires.  Ford’s spokeswoman continued to deny Ford was at fault for these claims. 

     Before you fall for the current campaign against lawyers and lawsuits, ask yourself how you would do in fighting a Ford Motor Company, or some big insurance company on your own.