What is a “Reduced-by” Uninsured Motorist (UM) Coverage in an Insurance Policy?

In a dispute over uninsured motorist (UM) coverage, the insurance company was properly granted summary judgment because the UM option form and accompanying cover letter unambiguously explained the difference between reduced-by and add-on UM coverage and provided the deceased insured with detailed instructions on how to make the selection between the two.


On June 4, 2017, the decedent who was driving a motorcycle, crashed into a truck driven by the defendant when he took a left turn into the path of a funeral procession. The decedent died as a result of the injuries he sustained in the accident. His wife filed a personal injury and wrongful death action against the defendant. After a trial, the jury found that the defendant caused the accident and awarded the wife $1,6 million in damages. However, the judgment was only enforceable against any remaining liability insurance and/or underinsured motorist coverage that provided coverage for the claims contained within [the] case.

At the time of the accident, the decedent was covered by an insurance policy with Liberty Mutual and two policies with Progressive Insurance Company. The Liberty Mutual policy was secondary to the Progressive policies, and each of the Progressive policies provided $25,000 in UM coverage. As a result, Progressive paid the wife a total of $50,000 in UM benefits under those policies. Liberty Mutual also paid her $50,000 in UM benefits under its policy, and on or about May 18, 2018, she “negotiated and endorsed” that check.

During the course of litigation, Liberty Mutual filed a motion for summary judgment, seeking to establish that the decedent was only entitled to $50,000 in UM benefits under his policy. Specifically, Liberty argued that, although the decedent ‘s policy provided for $100,000 in UM coverage, he selected reduced-by coverage in executing the policy, which meant the full amount was reduced by the $50,000 in UM coverage Progressive paid the wife. The decedent’s wife opposed the motion, arguing that, due to certain statements in the UM coverage selection form and accompanying cover letter, as well as the fact that her husband didn’t return the form by the required deadline, he was entitled to the “broadest [UM] coverage available”—which she claimed was $250,000 add-on coverage. And she contended the amount of coverage provided for in the policy shouldn’t be reduced by the $50,000 Progressive paid under its policies. But the trial court granted Liberty Mutual’s motion, and the wife appealed.

The Evolution of Georgia’s UM Statute

Presiding Judge Dillard wrote that to understand the parties’ dispute over the amount of UM coverage provided for under the decedent ‘s Liberty Mutual policy, it was necessary to briefly examine the evolution of Georgia’s UM statute, OCGA § 33-7-11. Among other things, the UM statute requires insurers to “provide UM coverage in automobile insurance policies unless the insured rejects the coverage in writing.”

The judge explained that in 2008, the General Assembly amended the UM statute to offer two different types of UM coverage. Importantly, prior to that amendment, all UM policies offered in Georgia were reduced-by policies, under which the UM limits of liability were reduced by any amount that the insured received from the tortfeasor’s insurer. But the 2008 amendment introduced the option of add-on UM coverage that provides that “the applicable limits of liability are available to cover any damages an insured suffers which exceed the tortfeasor’s policy limits.” The amendment also mandated that UM policies include add-on coverage by default, “unless the insured requested [reduced-by] coverage in writing.” And insureds who choose the reduced-by coverage generally pay a lower premium than that charged for excess or [add-on] UM coverage.

The Decedent’s Policy’s “Reduced-By” Language

In 2004, the decedent bought a car insurance policy with Liberty Mutual, which was to be effective from August 23, 2004, through August 23, 2005. He renewed the policy each year such that it was still in effect at the time of his death in 2017. When he renewed this policy in 2009, he opted to forego any UM coverage under the policy. But in July 2009, he modified his policy by executing a “Georgia Option Form” (“UM selection form”) that gave him the option to select reduced-by UM coverage, add-on UM coverage, or no UM coverage. And on the form (which the decedent signed, dated, and returned to Liberty Mutual), he chose reduced-by coverage in the amount of $100,000 per person for bodily injuries.

As to this term, the UM selection form explained,

Reduced Coverage will only pay up to the difference between the at-fault driver’s Liability Coverage and your Reduced Coverage. This means Reduced Coverage will allow you to collect from the at-fault driver and your Reduced Coverage combined, up to the same limit of Reduced Coverage you have purchased.

When the decedent renewed the policy in 2013, he signed an updated UM selection form, in which he again selected reduced-by UM coverage of $100,000 per bodily injury. But this time, the form provided a more detailed explanation on the difference between reduced-by and add-on coverage. Specifically, the form explained that add-on coverage required a higher premium, but would “pay for your damages in addition to the at-fault driver’s [l]iability coverage limit, up to your Added On Coverage Limit.” The form also said:

[i]f [he] rejected the Added On Coverage, [he] may select [UM] Coverage Reduced By At-Fault Limits Coverage . … Reduced Coverage provides less protection than Added On Coverage, but Reduced Coverage is available at a lower cost. Unlike Added On Coverage that provides up to [the] full limit of protection over and above the at-fault driver’s liability coverage, Reduced Coverage will only pay up to the difference between the at-fault driver’s [l]iability [c]overage and your Reduced Coverage.

In signing the form, the decedent confirmed that he understood Liberty Mutual’s explanation of UM coverage.

Language on the Cover Letter

Judge Dillard noted that although reduced-by coverage was pre-selected on the form by Liberty Mutual, the cover letter accompanying it stated, “[i]f you would like to select [ ] different coverage than is currently being afforded, please contact Liberty Mutual using the number provided below.” It was undisputed that the decedent never contacted Liberty Mutual to select different coverage than was marked on the form. The cover letter also provided another detailed explanation of the difference between reduced-by and add-on UM coverage, as well as a hypothetical scenario to illustrate this distinction.

The wife argued that the trial court erred by finding that certain language on the cover letter accompanying the UM coverage selection form—which limited what could be written on it—did not discourage her husband from selecting add-on coverage or coerce him into choosing reduced-by coverage, which had been pre-selected on the form by Liberty Mutual. Judge Dillard and the Court of Appeals disagreed.

In 2013, when the decedent renewed the Liberty Mutual insurance policy at issue, it gave him an option to select (in writing) the reduced-by UM coverage he’d maintained since 2009, add-on UM coverage, or decline this coverage. The cover letter accompanying the UM selection form explained:

  1. The limit selected on the enclosed form represents the limit currently being afforded on your auto policy.
  2. If you would like to maintain your current coverage, please sign, date, and return the form by 2/27/2013 . …
  3. If you would like to select different coverage than is currently being afforded, please contact Liberty Mutual Insurance using the number provided below.

As to the option for the decedent to maintain reduced-by coverage by signing, dating, and returning the form, the cover letter instructed that “[t]he only markings permitted on the form are your signature and date. Additional markings may invalidate the coverage selection.”

The wife argued that this language limiting what her husband could write on the form discouraged him from selecting add-on UM coverage and coerced him into maintaining his reduced-by selection. But contrary to the wife’s argument, Judge Dillard reiterated that the cover letter indicated that those limitations only apply if he wanted to “maintain [his] current coverage.” And there was no question that the decedent selected to keep his reduced-by UM coverage by signing, dating, and returning the option form to Liberty Mutual as instructed.

Significantly, the cover letter and UM selection form explained the difference between reduced-by and add-on coverage, even providing a hypothetical scenario to further clarify that difference. And in signing the form, he represented that he understood Liberty Mutual’s explanation of coverage. Moreover, the wife provided no evidence that her husband was coerced into making that selection. In fact, the option form emphasized in bold lettering that he could select a different kind of coverage simply by making a phone call—but he never did.

Nonetheless, the wife summarily asserted that the language in the cover letter precluded her husband’s ability to change his UM coverage on the form, “even though there were blanks … ,” and “cannot be what our legislature had in mind when it declared that the terms and amount of coverage were to be ‘at the option of the insured.’” She also argued, again without citing any legal authority, that “[p]lacing the burden on [the decedent ] to request a change in the coverage Liberty [Mutual] selected is not equivalent to the option required by statute.”

But Judge Dillard said these were merely the wife’s personal opinions about what the UM statute should require and prohibit, and she cited no language in the statute prohibiting an insurance company from “burdening” an insured with a phone call to obtain add-on UM coverage. Plus, whatever the numerous legislators’ personal understandings of (or aspirations for) the UM statute may have been at the time of enactment are ultimately of no consequence, the judge said. The Court of Appeals’ only concern was with the plain meaning of the statutes at issue, which was rightfully its sole focus in determining the General Assembly’s collective “intent.”

Judge Dillard concluded that because the UM option form and accompanying cover letter unambiguously explained the difference between reduced-by and add-on UM coverage and provided the decedent with detailed instructions on how to make his selection between the two, the wife couldn’t show he was coerced into selecting reduced-by coverage—the same type of insurance he’d maintained since 2009. And it was undisputed he followed the simple instructions necessary to maintain his reduced-by UM coverage by signing, dating, and returning the form, rather than calling Liberty Mutual to select add-on coverage instead.

As a result, at the time of his accident, the decedent only maintained reduced-by UM coverage. The Court of Appeals affirmed the trial court’s grant of summary judgment to Liberty Mutual. Frey v. Jesperson, 2023 Ga. App. LEXIS 27 (Ga. App. January 23, 2023)

Questions on UM Auto Insurance Coverage After an Accident?

If you have any questions about an accident in which you were involved, contact an experienced Atlanta personal injury lawyer Atlanta residents trust.  Our lawyers and staff at Tobin Injury Law are ready to help answer your questions and guide you through the litigation process. We offer free no-obligation consultations to all prospective clients. Contact an Atlanta personal injury attorney by calling 404-JUSTICE (404-587-8423) or using our online contact form.