The Georgia Court of Appeals recently considered the issue of whether a business auto insurance policy provides uninsured/underinsured motorist (UM) coverage.
Background
The plaintiff was injured in a vehicle collision while operating a tractor belonging to the companies he owned. An insurance company had issued a business automobile policy to the companies. The Insurance Company argued that the tractor wasn’t included in the policy’s UM coverage. In response, the plaintiff (and his companies) filed an action against the insurer, asserting claims for declaratory judgment, breach of contract, and negligent failure to procure insurance.
The plaintiff’s companies grow Vidalia onions. In 2015, he spoke with an insurance agent about getting business auto insurance for his companies’ farming operations. The plaintiff applied for a business auto policy that provided UM coverage for “All Owned Autos” and liability coverage for “Autos Specified on Schedule.” But the plaintiff didn’t specifically discuss UM coverage with the agent. The application quoted a premium and stated:
Coverage is not bound and no coverage will be afforded by this quotation. This insurance quote is not a part of the insurance policy. If there is any discrepancy in the coverages shown in this quote and that of the actual policy issued, the policy coverages will prevail.
The insurance agency then provided the plaintiff with a proposal for insurance from the Insurance Company that included business auto insurance. Consistent with the application, the proposal quoted a premium for UM coverage for “All Owned Autos” and a premium for liability coverage for “Autos Specified on Schedule.” And the proposal stated the same caveat.
The Insurance Company issued a business auto policy to the companies as part of a larger package of insurance. That policy provided liability and UM coverage, among other types of coverage, to specific categories of “autos.” The policy expressly defined which “autos” fell within each category by referring to numeric symbols placed next to each of the specific types of coverage under “ITEM TWO” of the policy’s declarations page. It stated:
This policy provides only those coverages where a charge is shown in the premium column below. Each of these coverages will apply only to those “autos” shown as covered “autos.” “Autos” are shown as covered “autos” for a particular coverage by the entry of one or more of the symbols from the COVERED AUTOS section of the Business Auto or Motor Carrier Coverage Form next to the name of the coverage.
The declarations page showed that the policy provides UM coverage for “autos” that were specifically described on a schedule under another part of the declarations page. Symbol 19 pertains to “autos” that were land vehicles and that would fall under the policy’s definition of “mobile equipment,” except for the fact that they were subject to compulsory insurance laws.
Notably, although the business auto policy included another numeric symbol for all “Owned ‘Autos,’” the declarations page of the companies’ policy in this case didn’t refer to that symbol when describing either the liability or UM coverage provided. So, although the plaintiff had requested UM coverage for “All Owned Autos” and the agency had included that request in the proposal, the policy expressly provided UM coverage to only some of the autos for which it provided liability coverage.
The Accident
On November 1, 2017, the plaintiff was driving a tractor belonging to one of the companies on a public road when he was rear-ended by another vehicle. At the time, the plaintiff was engaged in agricultural business, traveling from a field where he’d been working with the tractor to another location to pick up some fertilizer. The plaintiff was seriously injured in this accident, and he ultimately obtained a judgment against the other driver for $464,000. The other driver had liability insurance which paid the policy limits of $25,000.
After the accident, the insurance agent told the plaintiff that the UM coverage in the companies’ business auto policy would apply. The plaintiff sought to recover the remainder of his judgment from the Insurance Company, but it declined to pay.
The plaintiff sued the Insurance Company, arguing that it breached a duty under the policy to provide UM coverage on the tractor. He sought declarations that the policy provided such coverage and that the UM coverage applied to the injuries the plaintiff sustained in the accident.
The trial court granted the plaintiffs’ motion and denied the Insurance Company’s motion. The Insurance Company appealed.
The Decision of the Court of Appeals
On appeal, the Insurance Company argued that the trial court erred in finding that the policy afforded UM coverage for the tractor, which was the basis for the grant of partial summary judgment to the plaintiff on the claims for declaratory judgment and breach of contract. The Court of Appeals agreed that the policy doesn’t provide the claimed UM coverage.
Insurance policies are construed under settled rules of law, and Presiding Judge Christopher J. McFadden wrote:
As with any contract, in construing the terms of an insurance policy, we look first to the text of the policy itself. Words used in the policy are given their usual and common meaning, and the policy should be read as a layman would read it and not as it might be analyzed by an insurance expert or attorney. Where the contractual language is explicit and unambiguous, the court’s job is simply to apply the terms of the contract as written, regardless of whether doing so benefits the carrier or the insured. This is so because Georgia law permits an insurance company to fix the terms of its policies as it sees fit, so long as they are not contrary to the law, thus companies are free to insure against certain risks while excluding others. However, when a policy provision is susceptible to more than one meaning, even if each meaning is logical and reasonable, the provision is ambiguous and, pursuant to O.C.G.A. § 13-2-2 (5), will be construed strictly against the insurer/drafter and in favor of the insured.
Judge McFadden found that the business auto policy unambiguously didn’t afford UM coverage for the tractor. The tractor wasn’t one of the scheduled vehicles expressly afforded UM coverage. And contrary to the position taken by the plaintiff, the tractor didn’t fall within the category of autos afforded liability coverage, which would also have UM coverage unless the companies rejected that coverage in writing. Because the policy must be enforced against the companies as written, the judge held that the plaintiff wasn’t entitled to summary judgment as to either the claim for declaratory judgment or for breach of contract, and the Insurance Company was entitled to summary judgment on those claims.
The policy language didn’t expressly provide UM coverage for the tractor. It defined “Specifically Described ‘Autos’” as “[o]nly those ‘autos’ described in Item Three of the Declarations for which a premium charge is shown. …” And Item Three is a “Schedule of Covered Autos You Own” on which the tractor wasn’t listed.
The plaintiff argued that the tractor nevertheless had UM coverage because the policy extends liability coverage to the tractor under symbol 19, and liability coverage entailed UM coverage by operation of law.
Automobile liability policies issued in Georgia must provide for certain amounts of UM coverage unless the insured rejects such coverage in writing. “When an insurer issues a policy with provisions not in compliance with the law[,] the provisions of the statute will be grafted into the policy,” the plaintiff argued, quoting a 1987 decision. So O.C.G.A. § 33-7-11 (a) (1) makes a policy’s liability limits the default provision for UM coverage in the absence of an affirmative election of UM coverage in a lesser amount, he concluded. It followed, the plaintiff asserted, that if the business auto policy provided liability coverage for the tractor under symbol 19, then by operation of law it also provides UM coverage for the tractor.
But the Court of Appeals disagreed. Under the language of the policy the question in determining if the tractor fell within symbol 19 was whether Georgia law requires the tractor to have liability coverage. The statutes governing that issue, O.C.G.A. §§ 33-34-4 and 40-2-20 (b) (2), do not require the tractor to have liability coverage, and the Court wasn’t persuaded by the plaintiff’s argument that Georgia Supreme Court precedent required the tractor to have liability coverage.
Does Georgia Law Require the Tractor to Have Liability Insurance?
In determining if the tractor fell within symbol 19 and had liability coverage under the policy, the Court of Appeals examined the policy language. Symbol 19 was titled “Mobile Equipment Subject To Compulsory Or Financial Responsibility Or Other Motor Vehicle Insurance Law” and encompassed “[o]nly those ‘autos’ that are land vehicles and that would qualify under the definition of ‘mobile equipment’ under this policy if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged.” In other provisions, the policy defined the terms “auto” and “mobile equipment”; and under those contractual definitions, the two terms were mutually exclusive.
The term “auto” was defined as “(1) A land motor vehicle, ‘trailer’ or semitrailer designed for travel on public roads; or (2) Any other land vehicle that is subject to a compulsory or financial responsibility law or other motor vehicle insurance law where it is licensed or principally garaged. However, “auto” doesn’t include ‘mobile equipment.’”
The term “mobile equipment” was defined as any of a list of land vehicles that includes “farm machinery … designed for use principally off public roads.” However, the definition of “‘mobile equipment’ excluded land vehicles that were subject to a compulsory or financial responsibility law or other motor vehicle law where it was licensed or principally garaged. Land vehicles subject to a compulsory or financial responsibility law or other motor vehicle insurance law were considered “autos.”
So defined, “autos” and “mobile equipment” were mutually exclusive categories of land vehicles. Where a vehicle fell within the list contained in the definition of “mobile equipment,” it was categorized as “mobile equipment” unless it was “subject to a compulsory or financial responsibility law or other motor vehicle insurance law.” But if it was subject to such a law, then it was categorized as an “auto.”
Symbol 19 covered “‘autos’ … that would qualify under the definition of ‘mobile equipment’ … if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law …” The tractor in this case “would qualify under the definition of ‘mobile equipment’” because it was “farm machinery… designed for use principally off public roads.” As such, for the tractor to instead be an “auto” that fell within symbol 19, it must be “subject to a compulsory or financial responsibility law or other motor vehicle insurance law.” But the tractor in this case wasn’t subject to such a law, the Court concluded.
O.C.G.A. § 33-34-4 mandates liability insurance coverage for the operation of motor vehicles that are “required to be registered in this state.” Tractors are not required to be registered in Georgia if they are “used only for agricultural purposes,” as O.C.G.A. § 40-2-20(b)(2) says. The plaintiff didn’t argue or point to evidence that the tractor was used for any nonagricultural purposes. Instead, he testified that the tractor’s purpose was to spread fertilizer, and he was engaged in that activity when the accident happened. Because the tractor wasn’t used for anything other than agricultural purposes, and wasn’t required to be registered under state law, it wasn’t required by § 33-34-4 to have liability insurance.
The policy’s declarations page stated that it provided liability coverage to autos described by symbols 7 and 19. The tractor wasn’t covered under symbol 7 because it wasn’t listed on the schedule of covered autos. Plus, the tractor wasn’t covered under symbol 19 because it wasn’t “subject to a compulsory or financial responsibility law or other motor vehicle insurance law,” given that it wasn’t required to be registered and thus wasn’t required by law to have liability insurance coverage.
The Court of Appeals concluded that the policy wasn’t ambiguous because, despite symbol 19’s lack of clarity, there was no reasonable interpretation of the policy that would extend liability coverage to a vehicle that was neither specifically listed on the schedule of covered autos nor required by law to have liability coverage. Because the unambiguous language of the policy didn’t afford UM coverage to the tractor, either expressly or by operation of law, it didn’t matter that the companies’ insurance agent testified to a different understanding of the policy’s meaning.
For these reasons, the Court of Appeals held that the Insurance Company was entitled to summary judgment on the claims for declaratory judgment and breach of contract. Nationwide Agribusiness Ins. Co. v. The Onionman Comp., 2023 Ga. App. LEXIS 496 (Ga. App. October 20, 2023).
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