First-Party vs Third-Party Claims: Which Insurance Pays in Georgia?

Published Read 5 min read

On this page

After an injury, an insurance claim runs one of two ways. A first-party claim is made on the injured person’s own policy. A third-party claim is made against the person who caused the injury, and it is defended and paid, if at all, by that person’s liability insurer. Georgia law sets different duties and different remedies for each, and a single collision can require both.

The Third-Party Claim

The person who caused the injury is required to carry liability insurance: no owner of a motor vehicle required to be registered in this state “shall operate or authorize any other person to operate the motor vehicle unless the owner has motor vehicle liability insurance equivalent to that required as evidence of security for bodily injury and property damage liability under Chapter 9 of Title 40” (OCGA 33-34-4). The injured person is not a party to that policy.

For property damage, the liability insurer owes the claimant a statutory duty to adjust the loss fairly and promptly, to investigate and evaluate the claim, and, where liability is reasonably clear, to make a good faith effort to settle. A claimant who sent a qualifying demand letter, was refused within 60 days, and later recovered at least the amount demanded can seek up to 50 percent of the insured’s liability for the loss or $5,000, whichever is greater, plus reasonable attorney’s fees (OCGA 33-4-7(a), (c)). For bodily injury, an insurer’s refusal to settle within the policy limits is addressed by case law, under which the claim belongs to the insured and can be assigned to the injured person (Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992)). A separate statute on limited releases states that it does not interfere with claims based on a negligent or bad faith refusal to settle and does not create any new claim (OCGA 33-24-41.1(f)).

The First-Party Claim

Georgia requires a motor vehicle liability policy to include uninsured motorist coverage for the insured’s bodily injury, loss of consortium, death, and property damage caused by an uninsured motorist, in limits the insured chooses: at least $25,000 per person, $50,000 per accident, and $25,000 for property, or limits equal to the insured’s own liability limits where those are higher, and the insured may affirmatively choose uninsured motorist limits lower than the liability limits (OCGA 33-7-11(a)(1)). Medical payments coverage is another first-party coverage: it reimburses reasonable and necessary medical and funeral expenses from a motor vehicle accident without regard to the insured’s liability for it (OCGA 33-34-2(1)).

A policyholder whose insurer refuses in bad faith to pay a covered loss within 60 days after demand can recover up to 50 percent of the insurer’s liability for the loss or $5,000, whichever is greater, plus reasonable attorney’s fees (OCGA 33-4-6(a)). For uninsured motorist coverage, the Supreme Court of Georgia has described OCGA 33-7-11(j) as “authorizing suit for recovery of penalties and attorney fees for insurer’s bad faith refusal to pay covered loss” (Travelers Home & Marine Insurance Co. v. Castellanos, 297 Ga. 174 (2015)).

For example, imagine an insurer whose liability for a covered loss is $6,000. Fifty percent of the loss is $3,000, the statute’s alternative is $5,000, and the greater figure, $5,000, is the ceiling on the additional recovery, plus reasonable attorney’s fees. If the loss were $40,000, the ceiling would be $20,000.

When the Two Claims Meet

Castellanos shows how one collision can move from the third-party side to the first-party side. The injured driver won a judgment against the at-fault driver. The at-fault driver’s liability insurer offered to settle for less than the judgment and then denied coverage, on the ground that its insured had failed to cooperate in the defense. The injured driver turned to the uninsured motorist carrier on the injured driver’s own policy, which never responded to the written demand, and sued it for bad faith refusal to pay.

The Court placed the burden on the insured. To show that the at-fault vehicle was uninsured because its insurer had denied coverage, the insured had to show that the denial was legally sustainable, which for a denial based on non-cooperation meant evidence that the liability insurer reasonably requested cooperation, that its insured willfully and intentionally failed to cooperate, and that the failure prejudiced the defense. The Court held that the insured had not carried that burden and reversed the Court of Appeals.

Frequently Asked Questions

Does a policy from another state cover a crash in Georgia?
Insurers authorized to do business in Georgia, and insurers under common control with them, that issue motor vehicle liability policies in any state “shall include in the policies or contracts of insurance a provision which provides at least the minimum liability coverage required under Code Section 33-34-4” for their insured motorists involved in accidents in Georgia (OCGA 33-34-3(a)(2)).

Must an insurer offer medical payments coverage?
Insurers writing private passenger automobile insurance must file rates and forms for medical payments coverage of at least $2,000, but that filing requirement does not require them to offer or quote the coverage to insureds (OCGA 33-34-3.1(a)).

How long does medical payments coverage last after an accident?
Expenses must be incurred for services rendered within three years from the date of the accident, and an insurer may allow a longer period (OCGA 33-34-2(1)).

Can uninsured motorist coverage carry a deductible?
Yes. For bodily injury or death, the named insured may choose a deductible of $250, $500, or $1,000, and higher deductibles may be offered subject to the Commissioner’s approval (OCGA 33-7-11(a)(2)(A)).

  • OCGA 33-34-4; OCGA 33-34-3(a)(2); OCGA 33-34-2(1); OCGA 33-34-3.1(a)
  • OCGA 33-4-7(a), (c); OCGA 33-24-41.1(f); Southern General Insurance Co. v. Holt, 262 Ga. 267 (1992)
  • OCGA 33-7-11(a)(1), (a)(2)(A), (j)
  • OCGA 33-4-6(a); Travelers Home & Marine Insurance Co. v. Castellanos, 297 Ga. 174 (2015)

Disclaimer

This article provides general information about first-party and third-party insurance claims under Georgia law. It is not legal advice and does not create an attorney-client relationship. Which claim is available depends on the policies in force, the demands made, and the specific facts. A person injured in Georgia should consult a licensed Georgia attorney promptly about the particular situation.

Related posts:

  1. Gym and Fitness Center Injuries in Georgia Georgia's courts have held that a business can release itself from its own negligence but not from gross negligence or wilful misconduct, and the exact words of a release can......
  2. Laundromat and Car Wash Injury Claims in Georgia A customer who slips on a wet laundromat floor or is hurt in a car wash bay can recover from the operator in Georgia only by proving something about what......
  3. Texting While Driving: Proving Distracted Driver Negligence The distraction that causes a texting crash happens inside the other car, where no one outside it can see. A driver who does not brake, swerve, or react leaves a......
  4. Spinal Cord Injury Claims in Georgia: Seeking Justice for Paralysis and Permanent Disability A person left paralyzed or permanently impaired by a spinal cord injury may face decades of future care, and a Georgia claim has to turn that care into a figure......
  5. Rideshare Driver Injury Claims: When Uber and Lyft Drivers Get Hurt Which insurance pays for a rideshare driver's crash in Georgia depends on what the driver's app was doing at the moment of impact. Georgia's statute on rideshare insurance, which calls......
  6. Dram Shop Liability in Georgia: Claims Against Bars and Restaurants for Alcohol-Related Injuries A person hurt by an intoxicated driver who had been served at a bar, restaurant, or store meets a hard default in Georgia: the law treats the drinker's own consumption,......
  7. Rear-End Collisions: Who Is Really At Fault? After a rear-end crash, fault is not settled by which car was in back: Georgia has no rule that the rear driver is presumed to be at fault. A collision......
  8. Defective Guardrail Claims in Georgia A guardrail injury can put two kinds of defendant on two different legal tracks: the company that made the hardware, and the public body or contractor that chose, installed, or......
  9. Wrong-Way Driver Collisions: Catastrophic Crash Claims A person hit by a driver going the wrong way has a Georgia claim that starts with the rule that driver broke, and its size then depends on whether impairment......
  10. Loss of Consortium Claims in Georgia: Spousal Injury Rights A loss-of-consortium claim in Georgia belongs to the uninjured spouse, compensates the marital relationship rather than the bodily injury, and runs on a longer clock than the injury claim it......
  11. Nursing Home Neglect in Georgia: Bedsores, Malnutrition, and Accountability When a nursing home resident develops pressure sores or loses weight, the family's first question is what the facility was supposed to do. Federal rules for long term care facilities......
  12. Stacking UM/UIM Coverage in Georgia: Maximizing Your Protection When a Georgia driver carrying low liability limits causes a serious crash, the at-fault policy can run out long before the injured person's losses do. Uninsured motorist coverage is Georgia's......
  13. Mitigation of Damages in Georgia Personal Injury Cases Georgia law looks at an injured person's own conduct after the defendant's negligence through a duty to mitigate and a rule on avoidable consequences. The first requires ordinary care and......
  14. Anesthesia Errors in Georgia: Dosing Mistakes and Intraoperative Awareness When a patient is harmed under anesthesia, the claim in Georgia is a medical malpractice claim, and two features set it apart. The defendant may be a physician anesthesiologist or......
  15. Bicycle Accidents Involving Children in Georgia A child hurt on a bicycle is measured against a different statutory standard of care than an adult, a statute says a helmet violation is not evidence of negligence or......
  16. How Georgia’s Collateral Source Rule Protects Your Recovery When health insurance paid part of an injured person's medical bills, what the jury may hear about those payments in Georgia depends on when the claim arose. For causes of......

Leave a comment

Your email address will not be published. Required fields are marked *