Insurers Must Pay Close Attention to Statutes When Attempting to Limit Coverage

On January 31, 2016, officers with the City of College Park were chasing a vehicle that collided with the vehicle of a third party, killing three of the occupants. Atlantic Specialty Insurance Company v. City of College Park, --- S.E.2d ----; 2020 WL 6390041 (November 2, 2020). The estates of the occupants sued the City of College Park alleging the officers’ recklessness caused the accident. Atlantic Specialty Insurance Company (“Atlantic”), the insurer for the City of College Park, intervened for the limited purpose of determining the limits of liability.


The coverage agreement contained an endorsement under both the Business Auto Coverage and the Excess Liability Coverage, limiting coverage to only those instances where sovereign immunity was not waived. Under the agreement, the policy stated:


This policy and any coverages associated therewith does not constitute, nor reflect an intent by you, to waive or forego any defenses of sovereign and governmental immunity available to any insured, whether based upon statute(s), common law or otherwise, including Georgia Code Section 36-33-1, or any amendments.


Atlantic contended insurance was limited by OCGA § 36-33-1 to $700,000. The estates argued that the available limits were $1 million under the Business Automobile Coverage and $4 million under the Excess Liability coverage. The City of College Park took no stance on the amount of coverage available. The trial court determined the estates did not have standing to bring a motion for partial summary judgment regarding the amount of coverage. However, as a matter of law, the trial court determined there was a total of $5 million of available coverage. Atlantic appealed.


On appeal, Atlantic argued that the appellate court’s decision in Gatto v. City of Statesboro, 353 Ga. App. 178, 183-185 (2019) was dispositive, limiting coverage to the amount stated in OCGA § 36-33-1. In Gatto, the court found a provision similar to the one in the instant matter foreclosed coverage where an estate had brought suit for nuisance after their son was beaten to death at a bar. The court found that the policy language expressly excluded coverage under the circumstances.


In this matter, the Georgia Court of Appeals determined that because OCGA §§ 36-92-2 and 33-24-51 carved out exceptions to sovereign immunity, the policy language was insufficient to limit coverage to the $700,000 as mentioned in OCGA § 36-33-1. Therefore, the court upheld the decision of the trial court finding Atlantic’s policy limits under the Business Auto Coverage and Excess Liability Coverage totaled $5 million. Specifically, the Georgia Court of Appeals found “to read the endorsements as suggested by Atlantic would essentially grant insurers and local governmental entities carte blanche to contract around the legislature’s clear intent to increase compensation for those who sustain injuries arising out of the use of a government motor vehicle.”


Atlantic also contended that the court’s ruling would render the endorsements ineffective. However, the Georgia Court of Appeals disagreed. The Georgia Court of Appeals noted that Atlantic was only required to pay if the defense of sovereign immunity was inapplicable. While there was an explicit waiver of sovereign immunity in OCGA §§ 36-92-2 and 33-24-51, statutes only offering an implied waiver would not overcome the policy language.

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