Except as provided by statute or by the terms of the liability policy, a third party seeking recovery for the liability of an insured is without standing to file a direct action against the insurer until a judgement is obtained against the insured. The rationale underlying this rule is that the injured party is not in privity of contract with the liability insurer until a judgement fixing the liability of an insured is obtained and remains unsatisfied.
The same rule applies to direct actions and self insurers as applies to direct actions against insurers under a contract of liability insurance. Therefore, absent a judgment yet unsatisfied or statutory authorization, the third-party claimant may not sue directly a self-insurer based solely on the claim that insurance coverage is provided by the self-insured until a judgement has been obtained against the insured.
Where the injured party has obtained a judgment against the insured and hereby fixes the liability of the insured, the general rule is no longer applicable, and the injured party may suethe liability insurer directly to recover the proceeds available under the liability coverage of the insured's policy. A party suing an insurer to collect an unsatisfied judgment entered against its insured must first establish its right to recover under the contract between the insurer and the insured. Rights of a judgment creditor to recover on an insurance contract depend on the terms of the insurance contract and are no greater than those rights granted by the contract as intended by the parties. The judgment creditor's right to pursue recovery under a liability policy is derived from the rights of the insured against whom judgment is returned. Thus, right to recover depends on the insured's compliance with all the conditions precedent required under the applicable liability policy. Another direct action which may be pursued against the liability insurer is a garnishment action. But this is only available after the injured plaintiff has reduced his claim to judgment. As a judgment creditor the injured plaintiff may file a garnishment action against liability insurer on the premise that the insurer as garnishee is liable for payment of the judgment. But the garnishing plaintiff is in no better position against the insurer than the judgment debtor. If the liability insurer denied coverage under the policy, the garnishingh plaintiff must prove coverage while the insurer must defeat the garnishment action if it can show no coverage under the policy. Contact an Atlanta dui and personal injury lawyer today.Read More