Legal Alerts

Georgia Senate Bill 426: The End to Direct Action Suits Against Motor Carriers’ Insurers

Atlanta, Ga. (May 16, 2024) - On March 18, 2024, the Georgia General Assembly passed Senate Bill 426, amending O.C.G.A. 40-1-112 and 40-2-140. This bill significantly limits the situations in which a plaintiff can name and assert a direct action against the insurer of a motor carrier. After a 172-0 passage in the House and 46-2 passage in the Senate, Georgia Governor Brian Kemp signed the bill into law on May 6, 2024, and it will take effect on July 1, 2024.

Previously, plaintiffs could assert direct actions, arising from tort or contract, and name the primary insurer of a motor carrier when the cause of action occurred in the state. Under the new bill, a plaintiff can only assert a direct action and name the insurer when: (a) one or more motor carriers related to the cause of action are insolvent or bankrupt; or (b) personal service cannot, after reasonable diligence, be effected against the driver of the motor carrier’s vehicle or against the motor carrier. These revisions limit direct action under both O.C.G.A. 40-1—112 and 4-2-140. The law will apply to all causes of action accruing on or after the July 1, 2024 effective date. Therefore, plaintiffs can still assert a “direct action” claim against insurers of motor carriers for all actions in which the cause of action, or motor vehicle collision, occurred before July 1.

Plaintiffs have typically utilized the “direct action” statutes in an effort to increase the value of trucking lawsuits. Senate Bill 426 is intended to decrease unreasonably high verdicts and level the playing field. As Georgia’s Lieutenant Governor Burt Jones stated, “[t]he passage of this legislation was desperately needed in order to get Georgia’s business community the relief it needs.” Further, supporters of the bill argued that limiting direct action lawsuits will lower insurance rates for motor carriers, providing relief for smaller trucking companies to operate in Georgia. As a result, insurers and trucking companies should be aware of the changes effected by the bill.

For more information on this development, contact the author or editors of this alert. Visit Lewis Brisbois' General Liability Practice page to learn more about our capabilities in this area.

Author: 

Andrew Craft, Partner

Editors:

Candis Jones, Partner

Joelle Nelson, Partner and Co-Chair of National General Liability Practice

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