One of the most important things an experienced lawyer can do at the outset of a new case is to investigate all sources of potential insurance coverage available to cover the client’s damages. One such source of recovery is frequently a client’s own uninsured or underinsured motorist coverage through their own automobile insurance policy. We’ve written extensively on this topic before, but it is an area full of potential pitfalls. Many of the issues involved with UM claims need to be evaluated from the earliest days of the case to prevent serious problems down the road. Two of the most common hurdles involve the insurance policy’s notice provision and the question of the client’s election or rejection of any UM coverage.
In regard to notice, every insurance policy will contain a provision requiring the injured person to inform the insurance company of the event that led to their injury. The specific language of the policy will determine how long the injured person has to put their insurance company on notice, but no matter what the policy says, an insured should always notify their carrier as soon as possible. Some policies will say that the insurer has to have notice within 30 days. Any delay without a very good excuse is going to be subject to a denial of the claim or a motion to dismiss or a motion for summary judgment. The Georgia appellate courts have held that delays of four to twelve months are unreasonable as a matter of law that precludes recovery under the policy. Kay-Lex Co. v. Essex Inc. Co, 286 Ga.App. 484 (2007) (twelve-month delay unreasonable as a matter of law); State Farm Fire & Cas. Co. v. LeBlanc, 494 F. App’x 17, 23 (11th Cir. 2012) (four-month delay unreasonable).
With respect to any rejection of UM coverage, unless the insured driver has rejected the coverage in writing, the policy must provide coverage with limits (1) not less than $25,000/$50,000 or (2) equal to the liability coverage limits contained in the policy. O.C.G.A. § 33-7-11(a). You should always ask to see the signed rejection form if the UM carrier is claiming there is no coverage available.
Let’s assume you have the appropriate coverage and you’ve put your carrier on notice- how, then, do you go about pursuing that available source of coverage? Now, we’ll investigate handling claims against UM coverage in a pre-suit context.
First of all, the liability limits under the at-fault driver’s policy have to be exhausted before any recovery can be made under a claimant’s own policy. If the liability carrier agrees to pay its policy limits, you will want to execute a limited liability release, which will then allow you to pursue the UM carrier.
UM demands are governed by O.C.G.A § 33-7-11(j). Pursuant to this statute, UM carriers have 60 days to consider a UM demand. If you have a clear policy limits case, but the UM carrier refuses to tender its limits within that 60 day period, you may have a statutory bad faith claim against the UM insurer. If you later receive a verdict for more than the policy limits at trial after giving the UM carrier a reasonable opportunity to resolve the case within its limits via the policy limits demand, the UM carrier will be liable for up to 25% of the total recovery and reasonable attorney’s fees on top of the amount of the award. Granted, these consequences are not nearly as severe as those that can be levied against a liability carrier for the same conduct, but we can still use the threat of these statutory bad faith penalties to our clients’ advantage.
These demands should always be sent via certified mail in order to document when the statutory timeline begins. Unlike demands sent to liability carriers pursuant to O.C.G.A § 9-11-67.1, there is no prescribed language that needs to be included in these demands; however, the best practice would be to state the amount of the policy you are demanding, that the carrier has 60 days to tender its policy limits and that the demand is being made in accordance with O.C.G.A §33-7-11.