By Jeffrey A. Kershaw | November 5, 2021

In a decision issued on October 22, 2021, the Georgia Court of Appeals reversed the trial court’s denial of summary judgment to Allstate and enforced an underinsured motorist policy as written notwithstanding some “creative” machinations on the part of Plaintiff’s counsel to seek coverage where none was contemplated.

The Plaintiff was injured when a drunk driver struck her vehicle. She and her husband settled with that driver’s insurer for its $100,000 limit, then turned around and sought the $100,000 limit of her own policy’s underinsured motorist coverage. Such coverage provides protection in the case of an accident in which the at-fault driver’s own liability coverage is insufficient.

Unfortunately for Plaintiff, the terms of her Allstate insurance policy provided for so-called “traditional” UM coverage, which, by its terms, is reduced by the amount of the at-fault driver’s liability insurance. Here, because both the UM coverage and the liability coverage were in the amount of $100,000, the settlement by the at-fault driver’s carrier reduced the UM coverage to zero.

Plaintiff’s counsel had entered into a statutory limited liability release with the driver’s carrier stating, in part, that the $100,000 payment was allocated as $1,000 in compensatory damages and $99,000 in punitive damages. Plaintiff’s counsel argued that this designation rendered Allstate’s UM policy on the hook for at least $99,000 in further compensatory damages.

The Court of Appeals unequivocally rejected this argument, determining that Allstate’s policy in fact means what it says – not a foregone conclusion in the insurance coverage context.

The case is Allstate Property and Casualty Insurance Company v. Nay, 2021 WL 4931359 (Ga. App. Oct. 22, 2021).

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