Section only applies if policy permits insurer to settle without insured's consent.

- Subsection (a) of this section predicates the entire section upon the basis of there being a provision in a liability policy of insurance permitting the insurer to settle with third persons without the consent of the insured. Accordingly, subsection (b) of this section has no application unless the policy of insurance pursuant to which such payment was made by the insurer contained the required provisions. Scarbrough v. Andrews Motor Co., 121 Ga. App. 29, 172 S.E.2d 451 (1970).

This section only applies to a covenant not to sue where the insurance policy contains a provision permitting the insurer to settle without the consent of the insured. Spearman v. Southeastern Hwy. Contracting Co., 125 Ga. App. 85, 186 S.E.2d 484 (1971).

Insurer has no right of subrogation for payments made without insured's consent.

- Where an insurer made payments to a third party without the consent of the insured, it acted as an independent contractor and had no right of subrogation; thus, the insured's action seeking contribution from other alleged tortfeasors was not merited because it amounted to a subrogation claim made for the insurer, as to which the insurer had no right since its payment to the third party was not made as insurer or agent of the insured under the policy. Carden v. Burckhalter, 214 Ga. App. 487, 448 S.E.2d 251 (1994).

Under O.C.G.A. § 33-7-12(a), a general contractor's insurer had no right to indemnification as a subrogee with regard to settlements paid to certain plaintiffs in an underlying personal injury suit; because the settlement payments had been made without the general contractor's consent, the insurer had made the settlement payments not as an insurer but as an independent contractor. BBL-McCarthy, LLC v. Baldwin Paving Co., 285 Ga. App. 494, 646 S.E.2d 682 (2007), cert. denied, 2007 Ga. LEXIS 621, 631, 661 (Ga. 2007).

Pursuant to O.C.G.A. § 33-7-12(a), subcontractors were not liable to an insurer for their share of funds paid in settlement of a homeowner's faulty construction claim against the insurer, a contractor, because the insurer settled the homeowner's claim without obtaining the insured's singed consent to the settlement. Mandato & Assocs., Inc. v. Masonry, 303 Ga. App. 438, 693 S.E.2d 620 (2010).

Insurer may not subordinate interests of insured to its own interest.

- The rule that an insurance company must give equal consideration to the interests of the insured in making decisions concerning the litigation and settlement of a claim under the policy forbids an insurer from subordinating the interests of its insured to its own interest. National Serv. Indus., Inc. v. Hartford Accident & Indem. Co., 661 F.2d 458 (5th Cir. 1981).

Covenant not to sue is equivalent to release under section.

- A covenant not to sue without giving prior notice of settlement as required by this section is equivalent to a release. Black v. Cotton States Ins. Co., 149 Ga. App. 71, 253 S.E.2d 565 (1979).

Limitation of scope of covenant not to sue.

- The phrase "such claims" in the last sentence is defined as referring only to claims which were the subject of the settlement with the insurer and does not discharge the remaining tortfeasors, overruling Jackson v. Kight, 117 Ga. App. 385, 160 S.E.2d 668 (1968) and cases following it. Milline v. American Can Co., 160 Ga. App. 752, 288 S.E.2d 71 (1981), aff'd, 249 Ga. 486, 292 S.E.2d 75 (1982).

Insured may plead settlement without barring own claim against third person.

- When the insured pleads a settlement between his insurer and a third person made in accordance with the terms of this section, the insured is only taking advantage of the controlling statutory provision that the settlement "shall be deemed and construed as a bar to the further assertion by such third persons of such claims against all persons whomsoever"; and to construe the insured's pleading and reliance on the settlement as a ratification of it as a settlement and bar of his claim against the third person would be contrary to the expressed statutory purpose. Roberts v. Goodwin, 113 Ga. App. 656, 149 S.E.2d 420 (1966).

Third person cannot plead settlement pleaded by insured.

- When the insured has introduced the settlement into the pleadings to give effect to this section, and the third person then pleads that the settlement is a bar or accord and satisfaction of the insured's claim, the third person acts contrary to the provision that he "shall not plead such . . . settlement in bar of any action or claim of the insured"; and to uphold such a position taken by the third person would be to place a severe penalty on the insured - the destruction of the insured's claim - for taking advantage of the statute. This obviously would be contrary to this section. Roberts v. Goodwin, 113 Ga. App. 656, 149 S.E.2d 420 (1966).

Third person may plead release although insured does not plead section.

- This section does not say the insured shall not be precluded from asserting a claim against third persons provided the insured does not plead the section in bar to the claim of third persons, nor does it say third persons shall not plead such release in bar of any action or claim asserted by such insured unless the insured pleads the section in bar to a claim of third persons. Roberts v. Goodwin, 113 Ga. App. 656, 149 S.E.2d 420 (1966).

Dismissal with prejudice barred claim.

- Insureds' dismissal with prejudice claim against the defendant driver, rather than merely executing a limited liability release against the defendant, defeated their ability to recover damages from their underinsured motorist carrier. Kent v. State Farm Mut. Auto. Ins. Co., 233 Ga. App. 564, 504 S.E.2d 710 (1998).

Insurer must give notice of lack of insured's consent.

- If the insurance company did not obtain the written consent of its insured, it was obligatory that it notify the plaintiff of such lack of consent in order to effectuate a binding release. Garrett v. Heisler, 149 Ga. App. 240, 253 S.E.2d 863 (1979).

Without consent settlement is void.

- A settlement is not binding on the insured unless the insured consents thereto in writing. If the insured does not consent then the settlement is "of no effect, null, and void," unless the third party is informed in writing of the insured's lack of consent. Garrett v. Heisler, 149 Ga. App. 240, 253 S.E.2d 863 (1979).

If consent given, settlement bars further assertion of third person's claims.

- This section concerns the manner in which liability insurers settle claims when the policy provides that the insurer has the right to compromise or settle claims of third persons against the insured without the consent of the insured and provides that if third persons are informed in writing by the insurer that the insured has not consented to any compromise or settlement and executes a release, covenant not to sue, or other instrument in settlement of their claims, the same shall be a bar to further assertion of their claims by the third persons against all parties. Harden v. Clarke, 123 Ga. App. 142, 179 S.E.2d 667 (1970).

Insured's claims are not barred.

- If a third person is given notice of the insured's lack of consent and nevertheless executes a settlement, release, or covenant not to sue, such instrument will be a bar to the assertion of further claims by the third person even though in the reverse situation the instrument is not a bar to claims which might be pressed by the insured. Watson v. Hamil, 122 Ga. App. 120, 176 S.E.2d 276 (1970).

Settlement does not bar all defenses by third person.

- When, in a settlement with an insurer, a person gives a general release of all claims against the insured arising out of an occurrence and the insured has not consented to the settlement, then this section does not bar that person from raising matters surrounding the occurrence as defenses to a later action by the insured, even though he could not assert them as affirmative claims. Jefferson Mills, Inc. v. Gregson, 124 Ga. App. 96, 183 S.E.2d 529 (1971).

The language of subsection (b) of this section which states that the release will bar further assertion of "the claims against all persons" can only refer to affirmative claims based on the occurrence and will not be construed to include a waiver of all defenses. Jefferson Mills, Inc. v. Gregson, 124 Ga. App. 96, 183 S.E.2d 529 (1971).

Settlement inures to benefit of joint tortfeasor.

- Where the plaintiff, a guest passenger in an automobile driven by the insured, gives the insurer a covenant not to sue in payment of $600.00 by the insurer without insured's consent, the settlement will inure to the benefit of an alleged joint tortfeasor. Fillingame v. Cook, 119 Ga. App. 140, 166 S.E.2d 440 (1969).

Attempted rescission is ineffective as to other defendants.

- Where plaintiff executes a covenant not to sue one of three defendants and the covenant is made with the defendant's insurer without defendant's knowledge or consent, the subsequent attempted rescission of the covenant is ineffectual as to the other two defendants. By operation of the law they acquire a vested right to claim the incidental beneficial consequences flowing to them as result of plaintiff's execution of the covenant not to sue with knowledge that the one defendant has not consented thereto. The plaintiff cannot avoid these consequences and divest the remaining defendants of the benefit granted them by statute by the attempted rescission of the covenant not to sue. Spearman v. Southeastern Hwy. Contracting Co., 125 Ga. App. 85, 186 S.E.2d 484 (1971).

Settlement valid.

- Plaintiff failed to point to specific evidence giving rise to a triable issue and supporting the plaintiff's claim that settlement was null and void. Wade v. Crannis, 209 Ga. App. 501, 433 S.E.2d 669 (1993).

Cited in Ericson v. Hill, 109 Ga. App. 759, 137 S.E.2d 374 (1964); Brown v. Seaboard Lumber & Supply Co., 221 Ga. 35, 142 S.E.2d 842 (1965); Georgia Power Co. v. McElmurray, 113 Ga. App. 789, 149 S.E.2d 740 (1966); Fisher v. Pirtle, 119 Ga. App. 556, 167 S.E.2d 613 (1969); Henderson v. Garbutt, 121 Ga. App. 291, 173 S.E.2d 445 (1970); Green v. Fagan, 124 Ga. App. 426, 184 S.E.2d 53 (1971); Foundry Sys. & Supply, Inc. v. Industry Dev. Corp., 124 Ga. App. 589, 185 S.E.2d 94 (1971); Spearman v. Southeastern Hwy. Contracting Co., 126 Ga. App. 549, 191 S.E.2d 351 (1972); American Can Co. v. Milline, 249 Ga. 486, 292 S.E.2d 75 (1982); Henry v. Anderson, 164 Ga. App. 110, 296 S.E.2d 410 (1982); Vann v. Williams, 165 Ga. App. 457, 299 S.E.2d 908 (1983); Weaver v. Reed, 282 Ga. App. 831, 640 S.E.2d 351 (2006).

Am. Jur. 2d.

- 44 Am. Jur. 2d, Insurance, § 1642.

14A Am. Jur. Pleading and Practice Forms, Insurance, § 211.

C.J.S.

- 46A C.J.S., Insurance, § 1872 et seq.

ALR.

- Liability of insurer to insured for settling third-party claim within policy limits resulting in detriment to insured, 18 A.L.R.5th 474.

Conduct or inaction by insurer constituting waiver of, or creating estoppel to assert, right of subrogation, 125 A.L.R.5th 1.