Georgia insurance brokers and agents are sounding the alarm–and perhaps checking their own errors and omissions coverage–after a recent state appeals court ruling opened the door for third parties to sue when “adequate” coverage is not secured.
“This ruling fails to understand the insurance buying process and is disastrous for agents and the industry,” said Michael Iverson, a commercial agent and former president of the Independent Insurance Agents of Georgia.
Iverson was speaking of a May 13 decision from the Court of Appeals of Georgia, which, for the first time, allows insureds to assign claims to people who are not on the policy but who may have been injured at the insured property.
The opinion in Plummer vs. Commercial Insurance Agency, if it’s not overturned by the state Supreme Court, essentially means that a carrier could correctly deny coverage, but a broker or agent could still be held liable, said attorney Kayla McCallum, of Atlanta, with the Swift Currie law firm, which was not involved in the litigation.
“Agents need to continue to make sure they are communicating with potential clients about coverage, and documenting the requests,” McCallum said.
Attorneys for the defendant insurance agency have already asked the state Supreme Court to review the ruling.
The unprecedented decision stems from a shooting at a neighborhood store in East Atlanta, DeKalb County, in 2019. Stephanie Plummer’s husband, Ja’Marcus Holloway, was killed, and Plummer filed a premises liability suit against the store owner, Henry Properties Inc., or HPI.
Commercial Insurance Agency Inc. had acted as the insurance broker for the store, obtaining a commercial liability policy through Colony Insurance, the appeals court explained.
Colony denied coverage for the fatal encounter. In 2021, the carrier secured a judgment from the federal court in north Georgia declaring that a policy exclusion barred coverage for injuries resulting from assault, battery or firearms. So, the store owner sued the insurance broker, known as CIA, charging that the agency should have known it was not recommending adequate coverage for the situation.
The widow settled with HPI. As part of that settlement, HPI assigned its claims against the insurance broker to Plummer. Plummer’s attorneys, from the national firm of Morgan & Morgan, argued that CIA was guilty of negligence and breach of fiduciary duty by failing to obtain a policy or endorsement that would have covered shooting injuries at the store.
A lower court in DeKalb County sided with the insurance broker, finding that the claim was a personal tort, and personal torts are not assignable under Georgia law. The widow appealed, and the appellate judges agreed with her, deciding for the first time that the assigned claim was, in fact, a property claim.
“Here, the complaint does not allege that CIA injured HPI personally,” the appeals court wrote in the opinion. “Instead, the complaint alleges that HPI suffered pecuniary loss due to CIA’s failure to secure an appropriate insurance policy for HPI. Thus, the claims for negligence and breach of fiduciary duty were assignable to Plummer.”
Agents are now hoping the Georgia Supreme Court will overturn the Court of Appeals’ decision. If it doesn’t, insurance interests could find themselves in uncharted waters–with little or no lifeline, agents said.
“This will create a much more litigious environment for agents and create more pressure on agents’ E&O insurance,” said John Barbour, CEO of the Independent Insurance Agents of Georgia. “At the heart of the Plummer case is the simple fact that an agent sold a commercial GL policy with a firearm exclusion. This type of exclusion has become commonplace in the market and is not an anomaly.”
The firearms exclusion did not arise in a vacuum, and it is informed by other high-profile Georgia premises liability suits, one of which resulted in a $43 million verdict against drugstore giant CVS in 2021. In that case, Georgia CVS vs. James Carmichael, the state appeals court found the pharmacy corporation knew of the risks in a high-crime area but did not install extra lighting and security guards before a man was shot in the parking lot in 2012.
The Georgia Supreme Court upheld that decision in 2023.
The Carmichael and similar rulings triggered panic among insurance carriers in Georgia, and led more insurers to introduce firearms exclusions for businesses in and around Atlanta, a city with multiple neighborhoods that have been ranked as high in property and violent crimes.
Topics Legislation Agencies Georgia Liability
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