American Home Assurance Co. v. McCladdie

McMurray, Presiding Judge. American Home Assurance Company (“American Home”) filed a declaratory judgment action against Alvin McCladdie, seeking to absolve itself of liability for additional optional personal injury protection (“PIP”) benefits under an automobile liability insurance policy issued to McCladdie’s mother, America Luke (“the insured”). American Home alleged that McCladdie sustained personal injuries on October 26, 1986, when he wrecked a vehicle covered under the insured’s “renewal” policy; that McCladdie was paid maximum policy PIP benefits in the amount of $2,500 and that defendant has demanded an additional $45,000 in coverage “by virtue of letters written by his counsel to the adjusting company handling this claim. . . .” McCladdie admitted that his mother’s policy is a “renewal” policy and that he wrecked an insured vehicle during the “renewal” period. He also admitted that American Home paid him $2,500 in benefits and that his attorney made a demand for additional coverage and an offer to pay premiums for the additional coverage. McCladdie then counterclaimed for optional benefits, claiming that American Home’s “application for insurance does not comply with O.C.G.A. Section 33-34-5 . . . inasmuch as the application does not contain the required language in bold face print.” The parties filed opposing motions for summary judgment and the undisputed evidence shows that the insurance application contains a statement indicating that the optional coverage was explained to the insured, but that the statement is not in boldface type. The insured deposed that she applied for the American Home insurance policy through an insurance agency; that “all of the blanks contained on the application for insurance were filled in by the agent . . . who sold her the insurance” and that “[t]he agent who completed the application for insurance did not explain optional no-fault insurance coverage. . . .” The insured further deposed that she “accepts American Home Assurance Company’s continuing offer for optional PIP coverage, makes demand upon American Home Insurance Company for optional PIP coverage and stands ready to pay the premium for such coverage.” The trial court entered summary judgment for McCladdie and against American Home, finding that McCladdie is entitled to additional PIP benefits because the insurance application failed to contain a “boldfaced type” statement indicating that the optional coverage was explained to the insured. This appeal followed. Held: 1. American Home contends the trial court erred in granting summary judgment to McCladdie because the application for insur [799] anee is in substantial compliance with the requirements of OCGA § 33-34-5 (b). This contention is without merit. In Southern Guaranty Ins. &c. v. Goddard, 259 Ga. 257 (379 SE2d 778), the Supreme Court of Georgia held that insurers are required to strictly comply with the standards of OCGA § 33-34-5 (b) and that this Code section “mandates that for there to be an effective rejection of additional coverage, the application must (1) contain a statement that the optional coverage required by the statute to be offered has been explained to the applicant, (2) that the statement be in boldface, and (3) that the statement be signed by the applicant.” Id. at 258. Consequently, since the insurance application did not include a boldface typed statement that the optional coverage has been explained to the applicant, we affirm the trial court’s finding that additional benefits are available under the policy. Southern Guaranty Ins. &c. v. Goddard, 259 Ga. 257, 258, supra. 2. American Home contends the trial court erred in granting summary judgment to McCladdie, arguing that the “renewal” policy is not subject to the requirements of OCGA § 33-34-5 (b). OCGA § 33-34-5 (d) provides that “[t]he provisions of subsection (b) of this Code section requiring explanation of the optional coverages shall not apply upon the renewal, replacement, reinstatement, transfer, or substitute of any policy or the addition or substitution of a motor vehicle covered by such policy.” However, this Code subsection does not cure noncompliance with the mandatory application requirements of OCGA § 33-34-5 (b). To say otherwise would allow abrogation of the “boldface type” requirement of OCGA § 33-34-5 (b) by the mere issuance of a “renewal” policy. Consequently, American Home is not relieved of liability for additional benefits simply because McCladdie was covered under a “renewal” policy. This enumeration is without merit. 3. American Home contends McCladdie has no standing to recover additional benefits, arguing that the insured never made a demand for increased coverage and never offered to pay premiums for the additional coverage. This enumeration is not supported by the record. The insured filed an affidavit and therein ratified McCladdie’s attorney’s demand for additional coverage and offer to pay additional premiums. Compare Maryland Cas. Ins. Co. v. Johnson, 198 Ga. App. 328 (401 SE2d 75). Judgment affirmed. Banke, P. J., Carley, Pope and Cooper, JJ., concur. Sognier, C. J., Birdsong, P. J., Beasley and Andrews, JJ., dissent.