In 2012, the Georgia Supreme Court stated, in a third-party coverage matter, “an insurer cannot both deny a claim outright and attempt to reserve the right to assert a different defense in the future.” Hoover v. Maxum Indem. Co., 730 S.E.2d 413, 416, 291 Ga. 402, 405 (Ga. June 18, 2010) (recon. denied, July 26, 2012) (emphasis added). Subsequently, many policyholders and even certain federal courts in Georgia adulterated this statement. Specifically, they contended that, due to Hoover, an insurer in a coverage lawsuit could rely only upon the basis articulated in its declination letter, as all other bases were waived. See e.g., Payne v. State Farm Fire & Cas. Co., No. 1:11-CV-309-AT, 2012 WL 13006060, at *1 (N.D. Ga. Aug. 28, 2012); Moon v. Cincinnati Ins. Co., 920 F. Supp. 2d 1301 (N.D. Ga. 2013). Recently, the United States Court of Appeals for the Eleventh Circuit righted the ship.

In Century Communities of Georgia, LLC (“Century”) v. Selective Way Insurance Company (“Selective”), Century argued that because Selective failed to assert the policy’s Pollution Exclusion in its declination letter, Selective waived that exclusion in the succeeding coverage litigation. Id., No. 19-14697, 2023 WL 2237303, at *1-2 (Feb. 27, 2023). The Eleventh Circuit disagreed. According to the court, which applied Georgia law, Hoover stands for the proposition that an insurer may waive policy defenses – such as other insurance provisions, the providing of timely notice, and production of a proof of loss. Id., 2023 WL 2237303, at *3. However, an insurer cannot waive coverage defenses – such as policy exclusions and limitations – even when excluding them from a denial letter. Id. Thus, the Eleventh Circuit ruled that Selective, in the coverage litigation, could rely upon the Pollution Exclusion to preclude coverage and affirmed the district court’s granting of summary judgment in favor of Selective.

The Eleventh Circuit’s reasoning is axiomatic. A court should not compel an insurer to bear a risk it never agreed to assume or for which it never received a premium. Nor should a court bestow coverage upon an insured for something it never requested or paid. Simply, in the United States, parties are free to contract, and courts should enforce those contracts as they are written. Although the Century Communities’ decision is not binding but only persuasive authority for Georgia state courts, hopefully, it will help steer Georgia state courts in the right direction.