This week the Georgia Supreme Court defined the term "accident" in an auto insurance policy so as to possibly limit the recovery where there are multiple injuries. While insurance companies are obviously pleased with the verdict, what happens to you if you are involved in an accident where several people in different vehicles are killed or injured by the actions of the same at-fault driver? If your policy already defines the term, then the case may not affect you, but if it doesn't define the term, then this case may limit your coverage in a car accident where more than one person is injured.
The insurance policy at issue provided coverage of "$100,000 each accident," but did not define the term. The policy also indicated this was the most the insurance company would pay for any one auto accident regardless of the number of claims. In the 2008 multi-million dollar wrongful death case before the court, a teenage driver in Harris County veered onto the shoulder of the road and struck two bicycle club members. The car struck the first bicycle rider and, then within 1-2 seconds, struck the second bicyclist. The first bicyclist died and the second was seriously injured. The families each sued for the $100,000 limits of the policy and the driver supported their claim as being two accidents under the policy.
The auto insurance company filed a declaratory action in federal court in Columbus, Georgia, asking the court to rule the incident was one accident under the terms of the policy limiting the total amount available for the two claims to $100,000. The federal court certified the question to the Georgia Supreme Court which, instead of applying contract rules of construction to the policy, ruled on the definition of "accident."
This is significant, because Georgia law is clear that an insurance policy is a contract and any ambiguity in its terms is determined in favor of the insured. The Supreme Court went outside this well-established legal precedent and adopted the "cause" theory where the number of causes determine the number of accidents.
Importantly, the Supreme Court left the application of the law to the lower court whereby the lower court must apply the definition to the facts of the case and determine if based on the timing of the events or whether the driver regained control between the two events there were in fact two separate accidents. In the meantime, the $3.4 million judgment against the driver hangs in the balance.
