Merastar Insurance v. Wheat

Blackburn, Judge. Charlotte K. Wheat filed an action against David Morgan Manior for damages she allegedly sustained when Manior’s vehicle struck the rear of her automobile on April 7, 1993. After Wheat served Merastar Insurance Company (Merastar) as her uninsured motorist (UM) carrier, Merastar claimed (upon opposing motions for summary judgment) that the policy it renewed that covered Wheat at the time of the collision does not provide UM benefits because Wheat rejected such coverage, in writing, when she originally applied for the subject insurance policy in 1988. It is undisputed that Wheat lawfully rejected UM coverage at the time of her initial application for the subject policy; that the original policy was issued by NWNL General Insurance Company (NGIC); that Merastar subsequently assumed liability as the insurance carrier of the subject policy; and that Merastar renewed the subject policy without obtaining a new rejection of UM coverage from Wheat. Wheat contended that she was entitled to obtain UM coverage at the present time, as the renewal of the policy was not by “the same insurer” and therefore a new written rejection of such coverage by the insured was required at the time Merastar renewed the policy. [696] The trial court granted Wheat’s motion for summary judgment and denied Merastar’s motion for summary judgment. This appeal followed. Northwest National Life Insurance Company (NWNL) owned a subsidiary, NGIC. In 1988, NGIC issued an automobile insurance policy to Charlotte K. Wheat, at which time she signed a written rejection of UM coverage. NWNL also owned another subsidiary, Provident General Insurance Company (PGIC). In December 1989, all of NGIC’s obligations, liabilities and rights were transferred to the sister company PGIC. PGIC mailed certificates of assumption and reassurance to all of NGIC’s policyholders including Wheat. In August 1990, PGIC formally changed its name to Merastar. The original policy remained in effect following the transfer and was then renewed by Merastar without obtaining a new written rejection of UM coverage as authorized by OCGA § 33-7-11 (a) (3). Upon the transfer of the policy to Merastar, there had been no change in the terms of the policy and no reissuance of the policy, but rather, a continuation of the existing policy. Merastar fully assumed all of NGIC’s duties and liabilities under the policy. Under the above circumstances, the legislature intended that the assuming insurer stand in the place of the original insurer for the purposes of OCGA § 33-7-11 (a) (3), and the trial court erred in holding otherwise. 1. OCGA § 33-7-11 (a) (1) outlines the general rule that “[n]o automobile liability policy or motor vehicle liability policy shall be issued or delivered in this state” unless it makes provision for UM coverage. OCGA § 33-7-11 (a) (3) provides such coverage “shall not be applicable where any insured named in the policy shall reject the minimum coverage in writing.” OCGA § 33-7-11 (a) (3) further provides that the required “coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with a policy previously issued to him by the same insurer.” (Emphasis supplied.) According to the general rule of OCGA § 33-7-11 (a) (1), no automobile liability policy “shall be issued or delivered” unless it contains UM coverage. The term “issued or delivered” relates to the creation of the contract of insurance and requires an insurer to provide UM coverage at the time a policy of insurance is created. OCGA § 33-7-11 (a) (3) provides an exception to relieve an insurance company from the administrative burden of offering UM coverage at each renewal of a previously issued policy when the insured has already made a written rejection of UM coverage. Once an insured has exercised the option to reject the coverage, the insurer is under no further duty or obligation to offer the coverage, absent a request, for the life of the policy. [697] When the two Code sections are read together, the statutory scheme is evident, and it contains two primary precepts. First, an insurer must provide UM coverage to the insured upon creation of the insurance contract. Second, once an insured rejects UM coverage in writing, the insurer is under no continuing duty to offer UM coverage each time the same policy is renewed. Where, as here, there is an assumption of the policy, it is the same policy that is being renewed and no new UM application is required, just as no new original application is required. See Smith v. Commercial Union Assurance Co., 246 Ga. 50, 52 (268 SE2d 632) (1980). Accordingly, the insurance company who has fully stepped into the shoes of the predecessor insurer and who then renews the policy issued by the original insurer is “the same insurer” for purposes of OCGA § 33-7-11 (a) (3) and may rely on the written rejection of UM coverage obtained at the time of the original application. To hold otherwise would simply create a potential windfall for insureds who have previously executed a written rejection of the optional UM coverage at the origination of the policy, upon renewal of the policy where there has been an assumption of the policy by another insurer. It would also force the assuming insurer to incur great expense in obtaining new UM coverage rejection forms in the event of a major transfer of policies. No benefit or protection would inure to the insureds under such a requirement as they would have already made their UM coverage choice after having been informed of their options. A negative impact would be felt by the insureds by such a requirement as the additional cost would be passed through to them in the form of increased premiums. 2. Wheat’s motion to dismiss Merastar’s direct appeal is denied. The trial court’s order granting summary judgment in favor of Wheat was directly appealable pursuant to OCGA § 9-11-56 (h). Judgment reversed. Beasley, C. J., Birdsong, P. J., Pope, P. J., Andrews, Johnson, Smith and Ruffin, JJ., concur. McMurray, P. J., dissents.