2020 Georgia Code
Title 33 - Insurance
Chapter 1 - General Provisions
§ 33-1-2. Definitions

As used in this title, the term:

1. "Commissioner of Insurance" or "Commissioner" means the Commissioner of Insurance of the State of Georgia.
2. "Department of Insurance" or "department" means the Department of Insurance established by Code Section 33-2-1.
3. "Health benefit policy," "health benefit plan," or other similar terms shall not include limited benefit insurance policies designed, advertised, and marketed to supplement major medical insurance such as accident only, CHAMPUS supplement, dental, disability income, fixed indemnity, long-term care, medicare supplement, specified disease, vision, and any other type of accident and sickness insurance other than basic hospital expense, basic medical-surgical expense, or major medical insurance.
4. "Insurance" means a contract which is an integral part of a plan for distributing individual losses whereby one undertakes to indemnify another or to pay a specified amount or benefits upon determinable contingencies.
5. "Insurer" means any person engaged as indemnitor, surety, or contractor who issues insurance, annuity or endowment contracts, subscriber certificates, or other contracts of insurance by whatever name called. Burial associations, health care plans, and health maintenance organizations are insurers within the meaning of this title.
6. "Natural person" means an individual human being and does not include any firm, partnership, association, corporation, or trust.
7. "Person" means an individual, insurer, company, association, trade association, organization, society, reciprocal or interinsurance exchange, partnership, syndicate, business trust, corporation, Lloyd's association, and associations, groups, or department of underwriters, and any other legal entity.
8. "Security," "security deposit," "special deposit," or "deposit," when used to refer to posted deposits required to be placed in the possession of the Commissioner, shall mean the actual physical evidence of a security, such as a certificate, or an entry made through the federal reserve book-entry system. The federal reserve book-entry system shall be limited in meaning to the computerized systems sponsored by the United States Department of Treasury and certain agencies and instrumentalities of the United States for holding and transferring securities of the United States government and such agencies and instrumentalities, respectively, in federal reserve banks through banks which are members of the Federal Reserve System or which otherwise have access to such computerized systems.
9. "Transact," with respect to insurance, includes any of the following:
   1. Solicitation and inducement;
   2. Preliminary negotiations;
   3. Effectuation of a contract of insurance; or
   4. Transaction of matters subsequent to effectuation of the contract and arising out of it.

(Code 1933, §§ 56-102, 56-103, 56-104, 56-105, 56-106, 56-107, enacted by Ga. L. 1960, p. 289, § 1; Ga. L. 1982, p. 3, § 33; Ga. L. 1988, p. 693, § 1; Ga. L. 1989, p. 1119, § 1; Ga. L. 2000, p. 136, § 33; Ga. L. 2003, p. 387, § 1.1; Ga. L. 2003, p. 872, § 1; Ga. L. 2017, p. 164, § 3/HB 127; Ga. L. 2019, p. 337, § 1-1/SB 132.)

The 2019 amendment, effective July 1, 2019, added paragraph (2); deleted former paragraph (3), which read: " 'Insurance Department' or 'department' means the Insurance Department established by Code Section 33-2-1."; redesignated former paragraphs (1.1) through (6) as present paragraphs (3) through (9), respectively; and, in paragraph (3), substituted "terms shall not" for "terms do not", "CHAMPUS" for "Champus", and "medicare" for "Medicare".

- Designation of Comptroller General as Insurance Commissioner, § 33-2-1.

Investigation, adjustment, and litigation of claims as not constituting "transacting of insurance," § 33-3-2(b).

Lending institutions being authorized to underwrite credit life and accident and sickness insurance, § 33-3-23.

- Pursuant to Code Section 28-9-5, in 1989, the definitions of "Insurance" and "Commissioner of Insurance" have been renumbered and "Commissioner of Insurance" has been substituted for "Insurance Commissioner" in two places in paragraph (1).

- For article discussing interpretation in Georgia of insurance policies containing evidentiary conditions, see 12 Ga. L. Rev. 783 (1978). For annual survey article on insurance law, see 49 Mercer L. Rev. 175 (1997).

JUDICIAL DECISIONS

Editor's notes.

- In light of the similarity of the statutory provisions in this title, decisions under former Code 1933, § 56-901, repealed by Ga. L. 1960, p. 289, which, as amended, enacted this title, are included in the annotations for this section.

- Whether a contract is one of insurance is to be determined by its purpose, effect, contents, and import and not necessarily by the terminology used even though it contains declarations to the contrary. Benevolent Burial Ass'n v. Harrison, 181 Ga. 230, 181 S.E. 829 (1935).

A contract to underwrite a hole-in-one give-away by indemnifying the sponsor of a golf tournament for the cost of the prize awarded for a hole-in-one on a particular hole was an "insurance" contract. Golf Mktg., Inc. v. Atlanta Classic Cars, Inc., 245 Ga. App. 720, 538 S.E.2d 809 (2000).

- It is not essential that loss, damage, or expense indemnified against be paid to the contractee. The contract may constitute "insurance" if it is for his benefit and is a contract on which he, in case of breach, may assert a cause of action. Benevolent Burial Ass'n v. Harrison, 181 Ga. 230, 181 S.E. 829 (1935).

- Where the contract is ambiguous on the question of whether it should be treated as having a value commensurate with the amount paid in or as securing to the holder the element of a life insurance policy, it should, under the proper rule of construction, be given a meaning most favorable to the holder and least favorable to the company on this question. Benevolent Burial Ass'n v. Harrison, 181 Ga. 230, 181 S.E. 829 (1935).

- In an action by a former employee to enforce an agreement by his former employer to pay the proceeds of a "key man" life insurance policy to the employee's estate, the trial court did not err in failing to charge on the definition of life insurance since the agreement was not a contract of life insurance and the employer was not an insurer. Primus Pharmaceuticals, Inc. v. Glovier, 215 Ga. App. 411, 450 S.E.2d 832 (1994).

- Mere idea of retroactive insurance coverage defied common sense; according to O.C.G.A. § 33-1-2(2) (now paragraph (4)), insurance was a contract which was an integral part of a plan for distributing individual losses whereby one undertook to indemnify another or to pay a specified amount or benefits upon determinable contingencies. Coverage for an event that already occurred contravened the very definition of insurance; a reasonable person speaking with any insurance agent would not reasonably believe that an insurance agent has the authority to provide retroactive coverage. Rutland v. State Farm Mut. Auto. Ins. Co., 392 Fed. Appx. 721 (11th Cir. 2010)(Unpublished).

- Based on the fact that selling memberships in automobile clubs was considered "insurance" under O.C.G.A. § 33-1-2(2) (now paragraph (4)) and application of the Federal Arbitration Act (FAA), 9 U.S.C. §§ 1-16, would impair O.C.G.A. § 9-9-2(c)(3), the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-1015, preempted the FAA and prohibited enforcement of the parties' arbitration agreement. Love v. Money Tree, Inc., 279 Ga. 476, 614 S.E.2d 47 (2005).

- Under the evidence judge was authorized to find that contracts issued by defendant company amounted in substance and effect to policies of life insurance, and that company, in the issuance of such contracts, was doing a life insurance business contrary to the laws of this state, notwithstanding the contracts issued to the holders were called stock certificates and entitled the holders to stated mortuary service or merchandise on conditions prescribed by the charter and bylaws of the company. Benevolent Burial Ass'n v. Harrison, 181 Ga. 230, 181 S.E. 829 (1935).

Where it was shown that in consideration of the initial and installment payments provided for by each contract the defendants had agreed that so long as the contract remained of force they would render to the person to whom the contract was issued all of the services customarily rendered by undertakers or funeral directors, including hearse service, all necessary embalming, directing, and conducting of funerals, etc., within a radius of 25 road miles, and to sell at wholesale cost price (plus transportation charges only) caskets, burial clothes, etc., to any contract holder for use in the funeral of any member of his or her family or dependents, the evidence authorized the grant of an interlocutory injunction on the ground that the contracts issued by the company constituted policies of life insurance, and that the company, in the issuance of such contracts, was doing a life insurance business contrary to law. Clark v. Harrison, 182 Ga. 56, 184 S.E. 620 (1936); South Ga. Funeral Homes v. Harrison, 182 Ga. 60, 184 S.E. 875, later appeal, 183 Ga. 379, 188 S.E. 529 (1936).

Where undertaking business was executing contracts and issuing certificates to furnish funeral merchandise and funeral services upon death and purchasers were obligated to make installment payments, it was, for a consideration, assuming an obligation to be performed upon the death of the purchaser, namely, to furnish the goods and render the stipulated service, and the business was to be characterized as a life insurance business within the meaning of Ga. L. 1937, p. 702 (now repealed), and was subject to the legal regulatory provisions relating to life insurance generally. Harrison v. Tanner-Poindexter Co., 187 Ga. 678, 1 S.E.2d 646 (1939).

- Former Code 1933, § 56-1206 (see O.C.G.A. § 33-4-6(a)) applies only to an "insurer" as defined by paragraph (4) (see now paragraph (5)) of this section. McGhee v. Kroger Co., 150 Ga. App. 291, 257 S.E.2d 361 (1979).

- Defendant could not be considered an "insurer" where defendant was allegedly acting falsely as an individual insurance agent, not as an entity issuing contracts of insurance to insureds, and in any event, no insurance contract was ever consummated. Gilbert v. Van Ord, 203 Ga. App. 660, 417 S.E.2d 390, cert. denied, 203 Ga. App. 906, 417 S.E.2d 390 (1992), cert. denied, 203 Ga. App. 906, 417 S.E.2d 390 (1992).

- O.C.G.A. § 9-9-2(c)(3) invalidates arbitration agreements in insurance contracts as defined in O.C.G.A. § 33-1-2, with the exception that it does not prohibit enforcement of arbitration agreements in contracts between insurance companies; simply stated, in Georgia a contract of insurance is not subject to arbitration unless the contract is between insurance companies. Davis v. Zurich Am. Ins. Co. (In re TFI Enters.), Bankr. (Bankr. M.D. Ga. Apr. 9, 2008).

- Where an employer is not an "insurer" as defined by paragraph (4) of this section, it cannot be held liable for penalty and attorney fees provided for under former Code 1933, § 56-1206 (see O.C.G.A. § 33-4-6(a)), covering workers' compensation insurer's initial failure to pay employee's indebtedness to a hospital. McGhee v. Kroger Co., 150 Ga. App. 291, 257 S.E.2d 361 (1979).

- The United States is a "person" within the meaning of O.C.G.A. § 33-36-3(2)(F) (see O.C.G.A. § 33-36-3(10)). United States v. Rutland, Inc., 849 F. Supp. 806 (S.D. Ga. 1994), aff'd, 46 F.3d 71 (11th Cir. 1995).

- Since the definition of "person" in paragraph (5) of this Code section does not specifically include the state or its agencies, the Insurance Code does not apply to the board of regents. Board of Regents v. Tyson, 261 Ga. 368, 404 S.E.2d 557 (1991).

- A county is a "legal entity" within the meaning of paragraph (5) (now paragraph (7)) of this Code section and is, therefore, a "person" within the meaning of this Code section and of O.C.G.A. § 33-36-3(2)(F) (see O.C.G.A. § 33-36-3(10)). As a "person," if its stipulated net worth is more than $1 (now $3) million, its claim is not covered by the Georgia Insurers Insolvency Pool Act. Georgia Insurers Insolvency Pool v. Elbert County, 258 Ga. 317, 368 S.E.2d 500 (1988).

- When an insured was in a car crash after an insurer canceled the policy for failing to pay the premium and an insurance employee allegedly told the insured that the insurer would provide retroactive coverage for the crash if the insured paid the past-due amount, the insurer had no duty to defend the insured because, inter alia, the insurance employee did not have the actual or apparent authority to bind the insurer to retroactive coverage of the crash. Rutland v. State Farm Mut. Auto. Ins. Co., 426 Fed. Appx. 771 (11th Cir. 2011)(Unpublished).

- Where money contracts are valid in the state where they are made and to be performed, the laws of that state shall govern the obligation, even though it is a usurious one under Georgia law. Commercial Credit Plan, Inc. v. Parker, 152 Ga. App. 409, 263 S.E.2d 220 (1979).

- Insurance is a matter of contract, the applicable statute of limitations on a simple contract being six years. Smith v. State Farm Mut. Auto. Ins. Co., 152 Ga. App. 825, 264 S.E.2d 296 (1979), rev'd on other grounds, 245 Ga. 654, 266 S.E.2d 505 (1980).

- Insurance law was not applicable in a case involving liability under a suretyship contract. American Mfg. Mut. Ins. Co. v. Tison Hog Mkt., Inc., 182 F.3d 1284 (11th Cir. 1999), cert. denied, 531 U.S. 819, 121 S. Ct. 59, 148 L. Ed. 2d 26 (2000).

Cited in Bentley v. Allstate Ins. Co., 227 Ga. 708, 182 S.E.2d 770 (1971); Sollek v. Laseter, 126 Ga. App. 137, 190 S.E.2d 148 (1972); Olukoya v. American Ass'n of Cab Cos., 219 Ga. App. 508, 465 S.E.2d 715 (1995); Villa Sonoma at Perimeter Summit Condo. Ass'n v. Commercial Indus. Bldg. Owners Alliance, Inc., 349 Ga. App. 666, 824 S.E.2d 738 (2019).

OPINIONS OF THE ATTORNEY GENERAL

Assumption or distribution of risk is essential of "insurance."

- The assumption of or the actuarial distribution of a loss risk is an essential ingredient in any contract of "insurance." 1972 Op. Att'y Gen. No. 72-62.

- Where a private company engaged in the business of maintaining a cemetery and selling cemetery lots gives to each purchaser a supplemental written agreement to the effect that if any one or more of purchaser's unmarried children between the ages of one and 19 die, then the cemetery company will furnish without cost such space or spaces for interment of the deceased child or children, provided that at that time no installment payments on the lot purchase agreement are in arrears, the contract is a contract of insurance, and such a contract may not be lawfully made by a concern which is not licensed to engage in the life insurance business, in view of former Code 1933, § 56-9901 (see O.C.G.A. § 33-24-43). 1963-65 Op. Att'y Gen. p. 367.

- Where a college, in consideration of monthly payments pursuant to an agreement with a student and a sponsor, assumes the obligation of furnishing a 100 percent tuition grant and refunding all moneys paid, to be performed upon the death of the sponsor, the contract constitutes a contract of life insurance. Such an obligation is one to pay a sum of money as well as to furnish a thing of value, and it is immaterial whether the cost or value of such an undertaking on the part of the college is more or less than the consideration flowing to it. 1963-65 Op. Att'y Gen. p. 367.

- An agreement to cancel a debt in the event of the death of the debtor is insurance. 1967 Op. Att'y Gen. No. 67-170.

- A contract between a borrower and a lender to waive installment payments upon the borrower's loss of employment would amount to the conducting of the business of insurance under Georgia law if there is a distribution of risk among the various borrowers. 1990 Op. Att'y Gen. No. 90-28.

- A national bank operating in Georgia may not enter into a debt cancellation contract providing that the debt will be automatically cancelled in the event of the borrower's death without complying with this title. 1963-65 Op. Att'y Gen. p. 457.

- Although there is no cost to the insureds, an agreement by a credit union to indemnify or pay to another a certain sum in the event of certain determinable contingencies would constitute a contract of insurance; a credit union has no power or authority to legally act as a guarantor or insurer of loans and deposits of the credit union. 1967 Op. Att'y Gen. No. 67-170.

- An eyeglass agreement which provides that the issuer will make any repairs to damaged or broken glasses, provided that the patient pays a small replacement fee, amounts to a contract of "insurance" within the meaning of this section; moreover, the stipulation of an unreasonably low replacement fee in the eyeglass agreement could result in a contract of "insurance." 1972 Op. Att'y Gen. No. 72-62.

- Where a prepaid legal service plan, which has been brought to the attention of the Insurance Department, has been submitted by an institution which is apparently operated on a profit-making basis and which has prior experience in the insurance industry and includes a proposed "policy" which incorporates a schedule of benefits providing for such services as will drafting, general counseling, defense representation in criminal and certain civil cases, and representation in adoption, divorce, and bankruptcy proceedings and does not appear to contemplate contractual relations between the offering company and attorneys but rather, attorneys would be retained by the "policy holders" and would be in no way answerable to or subject to any instructions of the "issuer," except instructions with regard to procedure to be followed in filing claims, and under the terms of the "policy" the "insured" could receive maximum benefits many times greater than the sum of his monthly premiums, it constitutes "insurance." 1974 Op. Att'y Gen. No. 74-48. (See O.C.G.A. §§ 33-35-1 through33-35-23).

- An automobile or motor club whose members are entitled to benefits including, but not limited to, emergency road service, reimbursement for attorney's fees, arrest and bail bonds, reimbursement for personal expenses such as food, lodging, car rental, etc., is offering a contract of indemnity against expenses resulting from a member's ownership, maintenance, or use of an automobile and hence is offering "insurance" within the definition of this section. 1976 Op. Att'y Gen. No. 76-59.

Contract whereby tire dealer and sponsoring company agree with tire purchaser to replace tire under certain conditions constitutes offering of insurance. 1982 Op. Att'y Gen. No. 82-75.

- A dental discount plan offered as part of a membership package made available to employers, which does not involve the distribution of risks, is not within the definition of "insurance," as where payments by plan members at least approximate the dentists' actual costs in providing the specific services performed. 1989 Op. Att'y Gen. No. 89-12.

- Issuance by a parent corporation of a guarantee for its subsidiary's liability for hazardous waste treatment, storage or disposal facilities would not constitute engaging in the business of insurance. 1986 Op. Att'y Gen. No. 86-35.

RESEARCH REFERENCES

Am. Jur. 2d.

- 43 Am. Jur. 2d, Insurance, §§ 1 et seq., 250.

- 44 C.J.S., Insurance, § 1 et seq.

- Full faith and credit provision as affecting insurance contracts, 41 A.L.R. 1386; 114 A.L.R. 250; 119 A.L.R. 483; 173 A.L.R. 1138.

Meaning of term "solicit" in statute relating to insurance agents, 48 A.L.R. 1173.

What constitutes insurance, 63 A.L.R. 711; 100 A.L.R. 1449; 119 A.L.R. 1241.

Undertaking to defend suit or furnish legal services in certain future contingencies as insurance, 71 A.L.R. 695.

Construction and application of "key man" life insurance, 12 A.L.R.7th 6.