The 11th Circuit held in Coker v. American Guarantee and Liability Insurance Co., 825 F.3d 1287 (11th Cir. 2016), interpreting Georgia law, that Georgia’s UIM statute did not transform excess UIM policies into primary UIM policies.
The court found that Georgia’s insurance laws required every auto policy to provide UM limits equal to the liability limits of the policy unless the insured expressly rejected such coverage in writing. In this case, the insurers failed to obtain waivers of UM coverage and therefore were required to afford excess UM (including UIM) coverage up to their respective limits.
In this case, the insured settled for less than the underlying UIM policy limits. The insured then sought to collect the differential to satisfy the judgment he had received against the tortfeasor driver. The excess policies in question attached at $15 million and because the insured settled for less than $15 million, the 11th Circuit held, under Georgia law, that the excess insurer’s policies did not drop down to pay a loss falling within the underlying limits that was below the excess layers. The court noted this was not a case in which the excess insurers were unfairly refusing to pay, but rather a case where the insured was willing to settle with the primary and first umbrella insurers for less than their limits. In essence, the insured was under compensated by his own volition. Because of this, the exhaustion requirement in the excess policies did not contravene Georgia’s legislative intent, but rather the insured’s own settlement negotiations did that.