SECOND DIVISION
ANDREWS, P. J.,
MILLER and BRANCH, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules/
June 30, 2015
In the Court of Appeals of Georgia
A15A0266. ALLSTATE FIRE AND CASUALTY INSURANCE
COMPANY v. ROTHMAN.
BRANCH, Judge.
Charles Rothman was injured in an automobile accident involving a vehicle
driven by Duc Nyguen. The truck driven by Rothman at the time of the accident
belonged to his employer, Allgood Services of Georgia. Rothman subsequently filed
suit against Nyguen, seeking to recover medical expenses in excess of $53,000 and
lost wages in excess of $20,000. Rothman also served the complaint on his personal
automobile liability insurance carrier, Allstate Fire and Casualty Insurance Company
(“Allstate”), as well as Allgood’s insurer, Westfield Insurance Company
(“Westfield”), in their capacity as uninsured motorist (UM) carriers.1
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Under Georgia law, an “[u]ninsured motor vehicle” is defined to include an
underinsured vehicle, i.e., an insured vehicle whose insurance coverage is insufficient
to compensate fully an individual injured in an accident involving that vehicle. See
OCGA § 33-7-11 (b) (1) (D) (ii).
Nyguen was insured by Travelers Indemnity Company under an automobile
liability insurance policy with a limit of $100,000. After Travelers paid Rothman the
$100,000 available under Nyguen’s policy, a dispute arose between Allstate and
Westfield as to whether Allstate was entitled to set off the $100,000 Rothman
received from Nyguen’s insurer against the limits of liability otherwise available
under the Allstate policy. As a result of this dispute, Rothman filed a motion in the
trial court seeking a determination as to the priority of the UM coverages available
under the Allstate and Westfield policies. Following a hearing on that motion, the
trial court found that because Allstate had received a premium from Rothman, it was
“primarily responsible for compensating [Rothman], without a set-off [against] or
reduction [of its policy limits] for any recovery [Rothman received] from [Nyguen’s]
liability [insurer].” The trial court subsequently certified its order for immediate
review, and Allstate filed an application for an interlocutory appeal, which we
granted. This appeal followed. For reasons explained more fully below, we reverse
the trial court’s order.
To understand the current dispute, it is necessary to examine briefly the
evolution of UM coverage in Georgia. Prior to 2009, all UM policies issued in
Georgia were so-called “reduced by” or “difference in limits” policies which allowed
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the UM insurer to set off against its policy limits any payments its insured received
from the tortfeasor’s insurer. See OCGA § 33-7-11 (b) (1) (D) (ii) (2000). Put another
way, under these policies, payments received from the tortfeasor’s insurer reduced the
limits of liability available under the insured’s UM coverage. Because prior to 2009
all UM policies were “reduced by” policies, the courts developed stacking rules (also
known as priority of payment rules) to be applied in cases where more than one UM
policy was available to an injured insured. See Progressive Classic Ins. Co. v.
Nationwide Mut. Fire Ins. Co., 294 Ga. App. 787, 788 (670 SE2d 497) (2008). These
rules are used to determine which policy provides primary coverage and which
policies are considered excess.2 Id. See also Donovan v. State Farm Mut. Auto. Ins.
2
Specifically, courts employ three tests to determine the order in which
available UM policies should be stacked:
the “receipt of premium” test, the “more closely identified with” test,
and the “circumstances of the injury” test. Under the “receipt of
premium” test, the insurer that receives a premium from the injured
insured is deemed to be primarily responsible for providing coverage.
Under the “more closely identified with” test, the policy with which the
injured party is most closely identified must provide primary coverage.
If neither of those tests is helpful in a particular case, the courts look to
the circumstances of the injury to see which policy provides primary
coverage.
Dairyland Ins. Co. v. State Farm Automobile Ins. Co., 289 Ga. App. 216, 217 (656
SE2d 560) (2008) (footnotes omitted), disapproved on other grounds, Progressive
Classic, 294 Ga. App. at 791-792.
3
Co., 329 Ga. App. 609, 611 (765 SE2d 755) (2014), cert. denied, Case No.
S15C0516, Feb. 2, 2015. Additionally, under these stacking rules, the policy last in
line for payment is entitled to the set-off for any payments the insured received from
the tortfeasor’s insurer. See Donovan, 329 Ga. App. at 611.
Following the development of these stacking rules, the legislature amended the
relevant statute effective January 1, 2009. See OCGA § 33-7-11 (b) (1) (D) (2009).
Under the current law, insurers are required to offer two types of UM coverage. The
first type is “added on” or excess UM coverage, which provides that the applicable
limits of liability are available to cover any damages an insured suffers which exceed
the tortfeasor’s policy limits. See OCGA § 33-7-11 (b) (1) (D) (ii) (I). The second
type of available UM coverage is the traditional “reduced by” coverage, under which
the UM limits of liability are reduced by any amount that the insured received from
the tortfeasor’s insurer. See OCGA § 33-7-11 (b) (1) (D) (ii) (II). Insureds who elect
the “reduced by” coverage generally pay a lower premium than that charged for
excess or added on UM coverage. See Frank E. Jenkins and Wallace Miller, III, Ga.
Automobile Ins. Law § 39:12 (d) (2014-2015 ed.).
The current case involves the two different types of UM policies available in
Georgia. The Allstate policy provides “reduced by” coverage and states that its limits
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of liability “will be reduced by all amounts paid by or on behalf of the owner or
operator of the uninsured or underinsured motor vehicle.” The Westfield policy
provides “added on” coverage and the relevant policy provisions are set forth in an
endorsement titled “GEORGIA UNINSURED MOTORISTS COVERAGE –
ADDED ON TO AT-FAULT LIABILITY LIMITS.” This endorsement states that
Westfield’s policy “will pay all sums in excess of the applicable deductible . . . that
the ‘insured’ is legally entitled to recover as compensatory damages from the owner
or driver of an ‘uninsured motor vehicle.’” The Allstate policy has limits of liability
of $100,000 while the Westfield policy has a UM limit of $500,000.
None of the parties dispute that to the extent Nyguen’s policy limits did not did
not fully compensate Rothman for the injuries he suffered, Rothman is entitled to
recover under the UM provisions of the Allstate and/or Westfield policies. The parties
also appear to agree that in terms of priority, the Allstate policy would provide the
primary UM coverage with the Westfield policy providing excess coverage, i.e.,
Westfield would be required to pay only if Allstate’s policy limits are exhausted.
Allstate and Westfield disagree, however, as to whether Allstate is entitled to set off
against its own policy limits the amount paid to Rothman by Nyguen’s insurer. If
Allstate is entitled to such a set-off, then its policy limits will be considered exhausted
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and Westfield would be responsible for paying any damages incurred by Rothman in
excess of $100,000. If Allstate is not entitled to claim a set-off, then it would be liable
for any of Rothman’s damages in excess of $100,000 and up to $200,000, while
Westfield would be liable for any damages incurred by Rothman in excess of
$200,000 and up to Westfield’s policy limits.
In the trial court, Westfield argued that because under the stacking rules
Allstate was the primary UM insurer and was therefore “first in line” for payment of
UM benefits, it was not entitled to a set-off, despite Allstate’s express policy
language to the contrary. The trial court agreed and refused to allow Allstate a set-off
against its policy limits for the payment Rothman received from Nyguen’s insurer,
reasoning that such a set-off would relieve Allstate of its obligation to provide any
UM coverage. On appeal, Allstate argues that under the circumstances of this case,
the trial court erred in applying the stacking rules so as to void Allstate’s policy
language and deprive Allstate of its contractual right to a set-off. In light of Donovan,
which was decided after the trial court made its ruling, we agree.
In Donovan, we explained that where multiple UM carriers provide coverage
but only one of those carriers provides “reduced by” coverage, then the carrier
providing the “reduced by” coverage is entitled to the set-off, regardless of whether
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that carrier would be considered primary, secondary, or excess under the stacking
rules. See Donovan, 329 Ga. App. at 612. In such situations, it is the policy language
that controls such that the carrier whose policy provides for a set-off may take that
set-off, regardless of where the policy falls in priority of payment. Id. (“the trial court
was not required to apply the priority of payment rules, because this case involves
only one insurance carrier . . . who is entitled to a set-off”). See also Frank E. Jenkins
and Wallace Miller III, Ga. Automobile Ins. Law § 39:5 (d) (2014-2015 ed.) (where
more than one UM policy is at issue, “including both traditional, ‘reduced’ UM
coverage and ‘added on’ UM coverage . . . the liability coverage set-off should
remain intact but would simply default to the ‘reduced’ coverage carrier”).
In this case, Allstate’s is the only “reduced by” policy and so it is entitled to
set-off against its policy limits the $100,000 Rothman received from Nyguen’s
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insurer.3 See Donovan, 329 Ga. App. at 612. Accordingly, we reverse the trial court’s
order.
Judgment reversed. Andrews, P. J., and Miller, J., concur.
3
The mere fact that Allstate would be considered the primary UM insurer and
that allowing a set-off will relieve Allstate of any payment obligation under its UM
policy does not, without more, void Allstate’s contractual right to a set-off. To hold
otherwise would require us to rewrite Allstate’s policy to provide Rothman with a
benefit that he neither selected nor paid for. This Court, however, is “without the
authority to interpret, rewrite, or change [the] terms” of an unambiguous insurance
policy. Marett Properties v. Prudential Ins. Co. of America, 167 Ga. App. 631, 633
(307 SE2d 69) (1983) (citation omitted). See also Cotton States Mut. Ins. Co. v.
Coleman, 242 Ga. App. 531, 533 (530 SE2d 229) (2000) (“[w]hen the language of
an insurance policy defining the extent of the insurer’s liability is unambiguous and
capable of but one reasonable construction, the courts must [apply] the contract as
made by the parties”) (citation and punctuation omitted); Crouch v. Federated Mut.
Ins. Co., 257 Ga. App. 604, 605-606 (a) (571 SE2d 574) (2002).
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