On May 6, 2024, Governor Brian Kemp signed into law Senate Bill 426 for the purpose of repealing conflicting laws related to the identification of insurers as parties in civil suits for personal injuries caused by motor vehicle collisions. The Bill, which went into effect on July 1, 2024, amends certain portions of O.C.G.A. §§ 40-1-112 and 40-2-140.

O.C.G.A. §§ 40-1-112 and 40-2-140 previously permitted direct actions against insurance companies insuring “motor carriers,” defined in O.C.G.A. § 40-1-100 as

Every person owning, controlling, operating, or managing any motor vehicle, including the lessees, receivers, or trustees of such persons or receivers appointed by any court, used in the business of transporting for hire persons, household goods, or property or engaged in the activity of nonconsensual towing pursuant to Code Section 44-1-13 for hire over any public highway in this state.

In large part, these statutes permitted plaintiffs to name the alleged tortfeasor’s commercial auto insurance carrier as a defendant to the suit in a direct action against that insurer. In the realm of personal automobile policies, this is strictly forbidden, as even mentioning the insurance carrier during a trial can immediately cause a mistrial. Senate Bill 426 resolves this conflict.

The new revised O.C.G.A. §§ 40-1-112 and 40-2-140 now limits a direct action against a commercial insurance carrier to circumstances where either (1) the motor carrier is insolvent or bankrupt, or (2) service cannot be obtained against the driver or motor carrier. Barring the existence of one of the foregoing criteria, direct actions are no longer permitted.

Notably, direct actions under this new law are permitted as a matter of right, so a plaintiff is not required to seek the court’s permission. Plaintiffs need only amend the complaint joining the insurance carrier, which will relate back to the original filing date of the complaint.

While this leaves open an avenue for plaintiffs to potentially continue engaging in direct actions, this can be avoided somewhat if insureds and/or insurers permit counsel to accept service on behalf of a difficult-to-serve motor carrier. Of course, if the motor carrier is insolvent, preventing a direct action will be more difficult.

These amendments went into effect for all causes of action arising after July 1, 2024. For those causes of action arising prior to July 1, 2024, direct actions will still be permitted. As a result, we can expect to continue defending direct actions allowed under the previous version of the statutes for at least two more years.  That time frame could be even longer considering the tolling of the statute of limitations for citations or criminal charges related to any motor vehicle accident. However, for any new motor carrier accidents after July 1, 2024, we should see far fewer direct actions against the motor carrier insurers.

Insurers and the defense bar should see these revisions as a victory, as the positive effect is potentially significant. While some jurors will continue to assume that an insurance carrier is “on the hook” for any adverse judgment, the removal of the insurer in nearly every case involving a motor carrier will eliminate the blatant inclusion of the insurer as the party responsible for the judgment. Judgments against corporate clients are, generally speaking, larger than those against individual defendants, but it is believed that the judgments are even higher where an insurer is a named party to the suit. Therefore, it is anticipated that in the world of commercial trucking, adverse judgments against commercial defendants could be reduced with the removal of the insurer from the caption.

If you have any questions about the new law, contact the authors of this update.

Authors:
David A. Olson, Partner
Meg E. Olson, Partner and Member of QPWB’s Trucking & Transportation Division
Christopher A. Brookhart, Associate