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Georgia Court of Appeals Affirms that Parties May Contract Away Uninsured Motorist Coverage

On April 3, 2015, Verlinda and Kevin Jones were test-driving a car owned by Five Star Automotive Group (“Five Star”). While on the test-drive, the Joneses vehicle was rear-ended by a vehicle driven by Rashod Lamar. The Joneses did not own a personal auto insurance policy and sought to recover damages for their alleged injuries from Lamar. The Joneses also served a copy of the action on Federated Mutual, Five Star’s insurer. The Joneses accepted the liability limits from Lamar's insurer; however, their medical bills exceeded the limits. Therefore, the Joneses sought uninsured motorist coverage pursuant to O.C.G.A. § 33-7-11, the Georgia Uninsured Motorist Act (“UM Statute”) from Federated Mutual. Jones v. Federated Mut. Ins. Co., 346 Ga. App. 237 (2018). The trial court granted Federated Mutual’s motion for summary judgment, holding that the Joneses were validly excluded from uninsured motorist coverage provided by the policy issued to Five Star, and the Joneses appealed.

In support of its motion, Federated Mutual presented evidence that the policy issued to Five Star limited uninsured motorist coverage limit to “directors, officers, partners or owners of the named insured and family members who qualify as an insured.” In addition, Five Star's authorized representative expressly rejected uninsured motorist coverage for “any other person who qualifies as an insured.” The Joneses stipulated that neither of them was a director, officer, owner, or partner of Five Star, nor was either a family member of any Five Star director, officer, owner, or partner. However, the Joneses argued that the policy was void as contravening both the plain language of the UM Statute and Georgia's public policy.

In Georgia, an insurer may fix the terms of its policy as it wishes, insuring against certain risks and excluding others, provided the terms are not contrary to law. Hurst v. Grange Mut. Cas. Co., 266 Ga. 712, 716 (4) (1996). Therefore, it was clear that Federated Mutual intended to exclude uninsured motorist coverage for persons such as the Joneses. In addition, the Joneses could not point to a specific public policy which was violated. In fact, each option selected by Five Star on the Uninsured Motorist Provision set out in the policy: (i) one selecting “excess” uninsured motorist coverage; and (ii) the other rejecting uninsured motorist coverage; was expressly authorized by the UM Statute. O.C.G.A. § 33-7-11 (a) (1, 3). As a result, the Georgia Court of Appeals affirmed the grant of summary judgment entered in favor of Federated Mutual. Jones’ application for certiorari is pending.

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