Facts
Plaintiffs Brian Nunan and Earl Kindley were injured during a motor vehicle collision with Akeem Walthour, the at-fault driver. At the time of the collision, Walthour was driving a vehicle owned by Janene Clark, with whom he lived. Clark insured her vehicle with First Acceptance Insurance and did not list Walthour as a driver, despite the insurance application providing that it would not provide coverage for unlisted drivers who were household members ages 15 or older. If Clark listed Walthour as a driver, her annual premium would have increased by $986.00.
Based on the insurance provision that excluded unlisted drivers, First Acceptance Insurance filed a declaratory judgment, contending it had no obligation to provide coverage based on the unlisted driver exclusion. First Acceptance filed a Motion for Summary Judgment on the matter. The trial court denied the Motion for Nunan’s damages since Nunan presented evidence that he lacked access to other insurance to cover his injuries. However, the trial court granted the Motion regarding Kindley since Kindley failed to present evidence regarding any insurance coverage he may have had.
First Acceptance appealed the denial of the Motion with respect to Nunan, and Kindley appealed the grant of the Motion for Summary Judgment regarding Kindley’s claims.
Issues & Holdings
The issue in this case was whether First Acceptance’s unlisted driver exclusion was void for public policy. The Court of Appeals reversed the trial court’s decision with respect to Nunan, holding that the exclusion was enforceable, even though Nunan did not have access to other insurance. The Court of Appeals also affirmed the grant of summary judgment as to Kindley.
Reasoning
The Court of Appeals held that the trial court erred in denying summary judgment because Clark made an agreement with First Acceptance to exclude unlisted drivers in exchange for consideration of a lower policy premium amount.
The Supreme Court of Georgia has provided three public interests that the trial court should use to determine if an insurance provision is void against public policy. “(1) as insureds, to limit the insurer’s risks and thereby keep automobile premiums as low as possible; (2) as members of the public in general, to improve safety on the highways; and (3) as accident victims, to have access to insurance funds to satisfy their judgments.” Cotton States Mut. Ins. Co. v. Neese, 254 Ga. 335 (1985). Each exclusion provision is determined on a case-by-case basis.
Although Georgia courts have previously found that exclusions are void for public policy when the injured victim has no other source of recovery, there are cases where the exclusion was still enforced when the injured party had no access to other insurance. See Ison v. State Farm Fire & Cas. Co., 230 Ga. App. 554 (1998); Kovacs v. Cornerstone Nat. Ins. Co., 318 Ga. App. 99 (2012). In those cases, the court of appeals found that a “named driver exclusion [was] analogous to there being no policy at all [for] the named excluded driver.” On the other hand, policies that exclude coverage based on an insured driver’s conduct or the circumstances of the accident may be void for public policy reasons.
In this case, Clarke failed to list Walthour as a driver on the First Acceptance Policy; therefore, Walthour was not insured and was never covered under the policy. The Court of Appeals reasoned that this type of exclusion was distinguishable form an exclusion based on how the particulars of the accident occurred. This exclusion “simply removed [Walthour] completely from the category of insured.” As a result, the exclusion was valid and enforceable, regardless of whether any injured party had access to other insurance.
Conclusion
It’s important to remember that insurance exclusion provisions are considered on a case-by-case basis when considering public policy issues. If the exclusion attempts to deny coverage based on the circumstances of the accident or how the driver was driving when the accident occurred, the exclusion is likely void for public policy reasons if it would result in the injured party having no source of recovery. But if the exclusion takes the at-fault driver completely out of the category of insureds, the exclusion is more likely to be enforceable.
What remains to be seen if how a court would consider a lawsuit against the owner/named insured for negligent entrustment where an excluded driver caused the wreck. Under that scenario, the owner/named insured would be in the category of insureds, but the exclusion as to the owner would be based on the circumstances of the wreck. One could argue that, in that scenario, the exclusion would be void against public policy if it would result in the plaintiff being left without any source of recovery.
To learn more about The Champion Firm and the personal injury practice areas we cover, visit our main website here. If you’re an attorney seeking to refer a case or partner with us as co-counsel, learn more here.
Citation: Kindley v. First Acceptance Insurance Company of Georgia, Inc., No. A23A0143 (Ga. Ct. App. June 20, 2023)
