Assignment of Rights Against an Insurer in Georgia

Insurance coverage can be challenging in personal injury cases. While car accident coverage is often relatively straightforward, coverage for other claims such as claims for intentional conduct or premises liability can be complicated. Although a judgment may be obtained, it doesn’t mean very much if the defendant’s insurer refuses to defend a valid claim. One way this issue is sometimes handled is for a defendant to assign its rights against an insurer to a plaintiff. A recent case arose from a dispute about whether shooting damages were covered by insurance.
A man was shot with a gun in a nightclub parking lot. He filed a lawsuit against the business that operated the nightclub. He claimed he was shot by or at the direction of an employee that was acting in the course and scope of the business. The business asked its insurer to give a defense based on the policy.
Unfortunately, the policy expressly excluded bodily injury claims that arose from assault or battery, unless they were committed by employees who were trying to protect a person or property. The insurer denied coverage and the business did not answer discovery. Khan got a default judgment and was awarded more than $2 million in damages.
In order to settle, the business assigned its insurance coverage claims to the plaintiff. The business had claims based on the insurers’ failure to defend the premises liability lawsuit or to provide coverage.
The plaintiff filed suit against the insurer, asserting a breach of its contractual duty to defend. The insurer filed a motion to dismiss, and the plaintiff moved for partial summary judgment on the issue of the insurer failing to defend the business in the premises liability suit. The trial court granted partial summary judgment on the issue of failure to defend.
The insurer appealed. The appellate court affirmed the rulings. When the case was sent back to the lower court, it was transferred. The parties filed cross-motions for partial summary judgment, and the trial court granted the insurer’s motion finding there was no bad faith. The trial court found that the default judgment in the premises liability case did not prevent the defendant from contesting the motives or identity of the shooter. It also found that the insurer’s failure to defend did not mean it owed liability beyond the policy limits, which was the amount of the assault and battery exclusion of $100,000.
The plaintiff appealed, arguing among other things that the default judgment in the prior premises liability case precluded the insurer from challenging both the shooter’s motive and his identity. The appellate court disagreed. It explained that the refusal to defend the business in the premises liability case did not mean that the insurer had waived its right to contest the plaintiff’s claim that the insurance policy provided coverage for the underlying claim.
It explained that the issue of whether a claim is covered is separate from the legal consequences of an insurer’s failure to indemnify or defend. The policy at issue expressly excluded assault and battery except in limited circumstances. For the plaintiff’s injuries to be covered, he had to prove the shooting was committed by a business employee who was trying to protect people or property.
The court explained that an insurer can contest coverage by proving the shooting was not committed by a business employee trying to protect people or property. The default judgment established that the shooter was a business employee because the complaint included that allegation. However, the specific identity of the employee wasn’t alleged in the complaint. Neither were the shooter’s motives.
The appellate court did agree that the trial court erred in ruling damages could not exceed the $100,000 coverage limit. The plaintiff in this case was not suing for breach of duty to defend, but as an assignee of the insured. Where an insurer fails to offer a defense, it can be liable to the insured beyond the policy limits to the full amount of the judgment.
If you are hurt or a loved one is killed due to negligence or an intentional act, you may be able to recover compensation for your losses. It is important to retain a personal injury attorney who understands not only how to take a case to trial, but also understands the potential insurance issues. Experienced Atlanta personal injury attorney Terrence R. Bethune can evaluate your case and fight for any compensation you may deserve. Contact us at 404-875-7800 or via our online form.
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