From the Plaintiffs’ View: Unintended Consequences of Commercial Auto Law on Georgia Insurance

For decades, Georgia’s insurance industry has sought to eliminate the long-standing provision allowing trucking-accident plaintiffs to sue insurance companies directly. This was the single most important issue the industry wanted to see addressed by lawmakers. Now, with the passage of Senate Bill 426 earlier this year, insurers seem to have achieved their goal.

However, the implications of this legislation are more nuanced than they appear at first glance, and the full effects of the bill are yet to be determined.

Historically, plaintiffs could sue an insurance company without naming the insured motor carrier or driver as a defendant. This provided a pathway for injured parties to seek fair and quick compensation when a trucking company attempted to evade responsibility.

S.B. 426 now restricts these types of lawsuits, permitting plaintiffs to sue an insurance company only if the trucking company has gone bankrupt or is insolvent, or when it is impossible to serve the driver or the motor carrier itself. This sets a significantly higher bar that victims may struggle to clear.

Lawmakers sold this bill to the general public by arguing it would reduce insurance rates for small trucking operations by lowering jury awards, a claim that is questionable. While S.B. 426 could lead to reduced verdicts in a narrow subset of cases, it’s unlikely to result in widespread reductions that are substantial enough to significantly lower insurance rates. For it to lower insurance rates as much as the industry has promised, there must be a widespread lowering of verdicts – to the tune of millions of dollars less in damages, on average, for these cases.

Accidents involving tractor-trailers often result in severe injuries due to the sheer size of the vehicle and the force involved. These are generally massive wrecks, with massive injuries. I expect we will continue seeing substantial verdicts in these cases, meaning that the new law’s impact may not be sufficient to prompt industry-wide rate reductions.

Navigating the New Landscape

What can plaintiffs’ attorneys in Georgia do to navigate the limitations of this bill? One potential approach might be for attorneys to challenge the definition of the word “insolvency.” Typically, in discovery for personal injury cases, we don’t delve into the financial backgrounds of involved parties. This means that if two people get into a car wreck, one person can’t start asking for the other person’s bank account statements, how much they make in a year, or what their hourly wages are. None of that is considered relevant. This is “post-judgment discovery”: A judgment must be issued before a party can claim that, because they are owed money, they now have a right to know how much money is in the other party’s bank account.

Does S.B. 426 give plaintiffs’ attorneys an avenue to claim that a trucking company’s financial health is now relevant to the case? If the company is insolvent, attorneys should then be allowed to bring in the insurance company as a named defendant. There may, therefore, be an uptick in litigation over financial matters and the definition of insolvency as it pertains to bringing an insurance company into a lawsuit.

Is the insurance industry shooting itself in the foot?

Interestingly, the insurance industry’s push for this bill may have other unforeseen and unintended consequences. The conventional wisdom in both plaintiff and defense attorney circles has long been to avoid mentioning “insurance” during trials, believing mention of the word by either side could lead to unfairly inflated awards. This is the common belief, at least.

But recent anecdotal evidence from conversations I’ve had with fellow attorneys suggests this paradigm may be shifting. One defense attorney told me that naming an insurance company in their lawsuit actually resulted in lower verdicts. Typically, no defense attorney wants an insurance company named. Their theory is that, when jurors are explicitly aware of an insurance company’s involvement, they become conscious of how large awards might affect their own insurance rates. They will think, “Wait, insurance is involved? This is exactly the type of thing that could raise my insurance rates!”

The defense lawyer I spoke with may be an outlier – their perspective certainly goes against the common wisdom about the impact of insurance on case valuations – but their theory actually makes sense, at least on the surface. It could be an indicator that tides are shifting, maybe because we’re in an inflationary environment with insurance costs on the rise, and that this awareness might have an entirely opposite effect from what was intended by the industry.

At the end of the day, S.B. 426 was a politically-motivated push by the insurance companies to try and save money on verdicts. While, at first glance, this bill seems like it was designed to save insurance companies money, reduce verdicts and lower insurance rates, its ultimate impact could, in fact, be a potential and costly backfire for the insurance industry.

It’s worth questioning whether any cost savings realized by insurance companies would even be passed on to policyholders. I am personally skeptical that it would. The insurance industry has made a boatload of money since the start of the pandemic. They’re not hurting. And they’re not lowering rates.

As always, the true test of S.B. 426’s impact will come as these cases make their way through the courts in the coming months and years.

Spaulding is the founder of Spaulding Injury Law: Atlanta Personal Injury & Car Accident Lawyer in Atlanta.