Court Opinion

ID: 9564059
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:53:50.261092+00
Date Added: 2024-06-11T09:18:12.354191
License: Public Domain

On Motion for Rehearing.
Appellant Smith argues that our holding in Division 2 does not sufficiently answer the question of whether the bad faith penalties set out in OCGA § 33-34-6 (c) may be sought in a situation where a third party brings an action directly against an insurance company to recover proceeds of a liability policy. Smith argues that the Georgia Motor Vehicle Accident Reparations Act (the Act), OCGA Ch. 33-34, created mandatory liability insurance, and that such liability insurance is a benefit under the Act which would bring it within the language of OCGA § 33-34-6 (c): “In addition to all other penalties provided for in this Code section, in the event that an insurer fails or refuses to pay a person the benefits which the person is entitled to under this chapter within 60 days after proper proof of loss has been *656filed, [the person may be entitled to punitive damages.]” Thus, the question presented is whether the penalties mentioned in OCGA § 33-34-6 (c) apply to the mandatory liability insurance specified in the Act.
Decided June 2, 1986
Rehearings denied July 7, 1986
Robert M. Ray, Jr., for appellant.
Richard Rominger, Mason White, for appellee.
We hold that they do not apply and the principle announced in Allstate Ins. Co. v. Harris, supra, still applies even in the face of the Act. Policies written pursuant to the Act must contain two basic coverages, one for liability and one for no-fault. Standard Guaranty Ins. Co. v. Davis, 145 Ga. App. 147 (243 SE2d 531) (1978). Compare OCGA § 33-34-4 (a) (1) and OCGA § 33-34-4 (a) (2). This dichotomy was again recognized in Fox v. Stanish, 150 Ga. App. 537 (2) (258 SE2d 190) (1979), overruled on other grounds, Samuel v. Baitcher, 247 Ga. 71 (274 SE2d 327) (1981). The language of OCGA § 33-34-6 logically applies only to the no-fault portion of the Act. The section is written in terms of benefits to be paid, as in subsection (a): “periodically ... as expenses are incurred or ... as disability continues.” Clearly, the benefits to which the language refers are no-fault benefits. This conclusion is supported by the Supreme Court’s holding that the fact that “in all insurance matters other than automobile no-fault, the burden is upon the insured to show bad faith by the insurance company in order to recover penalties” does not violate equal protection. Cotton States Mut. Ins. Co. v. McFather, 251 Ga. 739, 741 (309 SE2d 799) (1983). The holding in McFather implicitly stands for the proposition that the benefits to be paid under OCGA § 33-34-6 for which an insurer may be liable for late refusal or failure to pay are only no-fault benefits. Therefore, these statutory penalties may not be invoked against an insurer who has failed to meet a demand by a third party for liability proceeds of a policy issued under the Act.

Judgment adhered to.