Georgia insurance subrogation: questions and answers

If you were in an accident and the other driver’s insurer paid for their repairs, that insurer has the right to recover from you what it paid. If you had liability insurance at the time, send us your carrier and policy information and we will deal with your insurer directly. If you were uninsured, the claim is against you personally, and we can usually discuss a payment arrangement.

The fastest way to resolve it is to call us. Payments can also be made online or by mail.

Subrogation exists so that the party at fault, rather than the insurance company that happened to issue the policy, ultimately bears the cost of a loss. When a carrier pays to repair an insured’s vehicle or rebuild a fire-damaged home, that payment does not excuse the at-fault driver, the negligent contractor, or the maker of a defective product. The right to pursue that party passes to the insurer.

In Georgia, subrogation rights come from two places: the policy itself, which normally contains an express subrogation clause, and equity, which recognizes the right in appropriate circumstances even where the contract is silent. A subrogated insurer takes the claim as its insured held it. That means it inherits both the insured’s rights and any defenses the at-fault party could have raised against the insured.

Georgia adopted the made whole rule in Duncan v. Integon General Insurance Corp., 267 Ga. 646, 482 S.E.2d 325 (1997). The reasoning is that where either the insurer or the insured must go unpaid, the loss should fall on the insurer, which collected a premium to assume exactly that risk.

In Woodcraft by Macdonald, Inc. v. Georgia Casualty & Surety Co., 293 Ga. 9, 743 S.E.2d 373 (2013), the Supreme Court of Georgia held that the made whole doctrine does not apply to a commercial property insurance contract that expressly authorizes the insurer to pursue subrogation after paying its insured for property damage. The Court noted that the made whole rule had only been applied in Georgia to personal injury claims and to an insurer’s right to be reimbursed by its insured for medical or other benefits paid.

For property and automobile carriers, the policy language decides it. Check the subrogation clause before conceding a made whole objection on a first-party property claim.

O.C.G.A. § 33-24-56.1 governs benefit providers, a term defined broadly to include insurers, health maintenance organizations, health benefit plans, preferred provider organizations, and employee benefit plans that pay or reimburse health care expenses. Three rules matter most:

1. No direct subrogation. Subrogation against the person at fault for medical expenses and disability payments is prohibited, and a liability carrier may not name a reimbursement-seeking insurer as a copayee on a settlement check or draft.
2. Reimbursement only after full compensation. A benefit provider may recover from the injured party’s third-party recovery only if that recovery exceeds the sum of all economic and non-economic losses, and the reimbursement is reduced pro rata by the attorney’s fees and litigation expenses the injured party incurred.
3. Notice runs both directions. The person asserting the third-party claim must notify any benefit provider it has reason to believe paid benefits, no later than ten days before a settlement is consummated or a trial begins, requesting an itemization of what the provider claims. Separately, a reimbursement claim is enforceable against the injured party only to the extent that person had actual notice of it before settlement or trial.

ERISA. Section 33-24-56.1 does not reach a self-funded plan governed by ERISA. Under FMC Corp. v. Holliday, 498 U.S. 52 (1990), ERISA preempts state anti-subrogation laws as applied to self-funded plans, so a ten-day letter sent to a self-funded plan will not defeat its reimbursement claim.

The statute governs health and disability benefit providers. It does not limit an insurer’s subrogation for property damage, and it is no bar to the automobile, property and fire recovery work described on our services page.

A negligence cause of action accrues when the negligent act combines with a resulting injury, and in construction and product cases Georgia courts have measured that from the negligent act rather than from the date the damage became apparent.

In Stamschror v. Allstate Insurance Co., 600 S.E.2d 751 (Ga. App. 2004), a home was substantially completed in August 1994 and burned in December 1998. The carrier filed suit in April 2001, within four years of the fire but more than four years after completion, and the claim was dismissed as untimely. Howard v. McFarland, 515 S.E.2d 629 (Ga. App. 1999), states the underlying rule that ignorance of the facts constituting a cause of action does not prevent the limitation period from running.

Georgia also imposes an eight-year statute of repose on actions arising out of improvements to real property, measured from substantial completion, under O.C.G.A. § 9-3-51.

Running the other direction, O.C.G.A. § 9-3-99 tolls the limitation period for a tort action brought by the victim of an alleged crime, from the date of the crime until the prosecution becomes final or is otherwise terminated, up to six years. On a claim arising from a DUI, a hit and run, or vehicular homicide, a file that looks time-barred on its face may not be.

This trips up carriers that handle claims in several states, because the answer turns on which document controls rather than on a single fixed rule.

• If an assignment is followed by a loan agreement, the assignment controls. Alta Refrigeration, Inc. v. AmeriCold Logistics, LLC, 688 S.E.2d 658 (Ga. Ct. App. 2009).
• A loan agreement is also ineffective if it is preceded by policy terms that themselves work an assignment. U.S.F. & G. v. J. I. Case Co., 432 S.E.2d 654 (Ga. Ct. App. 1993).
• Policy conditions that do not expressly speak of transfers or assignments of causes of action do not work an assignment. Allstate Ins. Co. v. Welch, 576 S.E.2d 57 (Ga. Ct. App. 2003).
• An insured may accept payment from its own insurer and assign its claims against third parties, but the language of the assignment must demonstrate an intent to transfer the right of action. Bowen v. Waters, 316 S.E.2d 497 (Ga. Ct. App. 1984).
• Where the insured assigns any and all causes of action against the tortfeasor, the insurer is the proper party. Parker Plumbing & Heating Co. v. Kurtz, 165 S.E.2d 729 (Ga. 1969).

• Repair cost or actual cash value. The measure of damages for injury to personal property in Georgia is the difference between its market value before and after the tortious act.
• Loss of use. Measured by the rental value of a substitute. Georgia requires an actual loss, so a hypothetical rental figure where no substitute was needed will not carry the element.
• Diminished value. Georgia recognizes that a properly repaired vehicle can still be worth less than one that was never wrecked. State Farm Mutual Automobile Insurance Co. v. Mabry, 274 Ga. 498, 556 S.E.2d 114 (2001), decided in the first-party context, required insurers to assess diminution in value on physical damage claims.
• The insured’s deductible. Carriers routinely pursue the deductible alongside their own payment and return it to the insured on recovery, which is both sound practice and good for policyholder retention.

Where the at-fault party is insured by a carrier that participates in inter-company arbitration, liability and damages are decided by an arbitrator rather than a Georgia court.

Litigation remains the right path when the responsible party is uninsured, when the opposing carrier is not a signatory, when the amount at issue exceeds the forum’s limits, or when a coverage question needs a judicial answer. We handle both: see our services.

We keep collecting after the judgment. Under O.C.G.A. § 40-9-61, on receipt of a certified copy of an unsatisfied judgment arising from a motor vehicle accident, the Department suspends the driver’s license or operating privilege of the person the judgment was entered against, and it stays suspended until the judgment is satisfied or stayed. The statute also allows the judgment creditor to consent in writing to let the debtor keep the license, a consent that can later be revoked.

A debtor who needs to drive will usually agree to a payment plan and keep to it. Our services page describes the post-judgment tools we use: property liens (FIFAs), bank and wage garnishments, income deduction orders, and license suspension.