At the request of another one of our readers, this week we are going to take a look at Assignment of Benefits (“AOBs”) in Georgia and how they are handled there.
In Georgia, the contract is king and its terms will be upheld. “It is axiomatic that parties are bound by the terms of their insurance contracts.  Contractual limitations are valid and will be enforced by the courts.  Most significantly, Georgia law expressly provides that insurers may limit the assignability of rights under polices through the use of non-assignability clauses.”1
The statute governing non-assignability clauses is Georgia is Ga. Code Ann., § 33-24-17, and it states as follows:
A policy may be assignable or not assignable, as provided by its terms. Subject to its terms relating to assignability, any life or accident and sickness policy issued under the terms of which the beneficiary may be changed upon the sole request of the policy owner may be assigned either by pledge or by transfer of title by an assignment executed by the policy owner alone and delivered to the insurer, whether or not the pledgee or assignee is the insurer. Any assignment shall entitle the insurer to deal with the assignee as the owner or pledgee of the policy in accordance with the terms of the assignment until the insurer has received at its home office written notice of termination of the assignment or pledge or written notice by or on behalf of some other person claiming some interest in the policy in conflict with the assignment.
However, as we have seen in some other states, so long as the assignment takes place after a loss, the claim can be assigned without the consent of the insurer. Back in 1905, the Supreme Court of Georgia addressed this issue and held:
The assignment of a fire insurance policy without the consent of the insurer, after a loss has occurred thereunder, does not render the policy void, but the assignee has the right to bring an action thereon.
Such assignment is valid without the consent of the insurer, although the written transfer of the policy purports, by its terms, to be subject to the consent of the insurer. . . .
An assignment of a fire insurance policy, after a loss has occurred, does not violate a provision against assignment.2
Georgia law also provides to the assignee, the right to bring suit against the carrier. Georgia Code § 44-12-22, states, “all choses in action arising upon contract may be assigned so as to vest the title in the assignee. . . .” Further, Georgia Code § 44-12-24, notes that, “a right of action is assignable if it involves, directly or indirectly, a right of property,” but does not permit assignment of actions for, “personal torts, for legal malpractice, or for injuries arising from fraud to the assignor.”
If you have any specific questions on AOBs or would like to see your state come up sooner, please comment below, or send me an email at firstname.lastname@example.org.
As always, I’ll leave you with a (mildly) related tune, here’s Georgia’s own R.E.M. with one of their many hits, It’s the End of the World as We Know It (And I Feel Fine):
1Williams v. Mayflower Ins. Co., Ltd., 238 Ga.App. 581, 583 (1999) (internal citations omitted).
2Georgia Co-op. Fire Ass’n v. Borchardt & Co., 123 Ga. 181, 181 (1905).
The contractor’s name listed on the AOB should be the exact name as the name that is registered with the State. The insurance companies have picked up on the fact that many contractors are loose with their paperwork. Often the AOB will have a name that is different than the name registered with the state; such as “ABC Contractors” and the state registration is “ABC Construction.” Also, the AOB may incorrectly have the corporate designation listed as “Inc.” when it is registered with the state as “LLC.”
In Georgia, as long as the assignment takes place after the loss, the claim can be assigned to a contractor. See Santiago v. Safeway Ins. Co., 196, Ga. App. 480 (1990) (citing Georgia Co-
op. Fire Ass’n v. Borchardt & Co., 123 Ga. 181, 181 (1905). Insurance policy provisions requiring the insurer’s prior consent to the assignment are void and unenforceable under Georgia case law. Id. Under O.C.G.A. § 44-12-22, the contractor can bring suit against the insurer when the insurer has failed to comply with the terms and conditions of the policy. This is where it becomes very important that the name listed on the AOB be the exact name registered with the state.
Should the contractor have to sue to enforce the policy, the contractor, and the public adjuster, has to be sure that it can in fact sustain a lawsuit. Insurers have begun to claim that an unregistered name lacks standing to bring an action against an insurer based on an AOB to an unregistered entity. Insurers make the claim that the one bringing the suit, the contractor, is not an entity because it has failed to register with the state and therefore, the court lacks jurisdiction over that entity; it is a non-existent entity. A non-entity cannot claim a breach of contract so the Plaintiff’s Complaint will fail to state a breach of contract cause of action against the insurer and otherwise lack standing to sue.
Georgia’s law is very clear. Any person or business doing business in the state under any name other than its legal name (a “fictitious name”) must register the fictitious name with the Clerk of the Superior Court as required under Georgia’s fictitious name statute, O.C.G.A. § 10-1-490. A contract entered into under an unregistered fictitious name is valid and enforceable by both parties to the contract despite the failure to register the fictitious name. O.C.G.A. § 10-1-491. However, a party “shall be cast with court costs” if a the fictitious name is not appropriately registered prior to the filing of an action arising out of a contract entered into under the unregistered fictitious name. O.C.G.A. § 10-1-493. Furthermore, carrying on a trade or business under an unregistered fictitious name constitutes a criminal act and is punishable as a misdemeanor in Georgia. O.C.G.A. § 10-1-493.
So what does all of this mean? Every contractor and public adjuster should take the time to ensure that the fictitious name being used in their contracts/AOBs is properly registered. Extreme care should be taken to confirm that the fictitious name appearing in the contract is an exact match to the registered fictitious name. What should you do if your fictitious name is unregistered or does not match? First and foremost, you should contact an attorney to have them review your contract, state registration, and other relevant documentation to determine the best course of action for you to take. Generally speaking, the following options will be available:
(i) if the fictitious name being used has never been registered, then you should promptly see that the appropriate steps are taken to register it and otherwise come into compliance with the requirements of O.C.G.A. § 10-1-490;
(ii) if you have already registered a fictitious name but you subsequently discover that the fictitious name on your contract does not exactly match (for example, “ABC Construction” has been appropriately registered but “ABC Contractors” appears on your contracts) then you should promptly register the name on the contract with the state. You will then need to make the decision of whether you wish to modify the name on the contract to match the originally filed fictitious name for use going forward or if you wish to continue conducting business under the newly registered fictitious name. Both are viable options, however it is highly advisable that you stay consistent with the fictitious name you decide to use going forward.
Every person reading this article who conducts business under a fictitious name should take a few minutes of their time to verify that it is appropriately registered and correctly written on your business documents. Don’t forget to check your letterhead and websites! Our attorneys at The Bush Law Group, LLC are experienced in these matters, in both Georgia and Florida, and would be more than happy to assist you with any issues that you may discover.
J. Remington Huggins, Esq. , Lawrenceville, GA Office, (678) 916-1600
Dale S. Shelton, Esq. , Tallahassee, FL Office , (850) 270-2224