How is the UM setoff or credit for the tortfeasor’s payment calculated in Georgia?

· 3 min read

Whether a Georgia UM insurer gets to subtract the at-fault driver’s payment, and how much it can subtract, depends entirely on which form of uninsured motorist coverage the insured carries. The “setoff” or “credit” is the mechanism by which the at-fault driver’s liability payment reduces what the UM insurer must pay, and it operates very differently under reduced-by coverage than under add-on coverage.

Reduced-by coverage: a dollar-for-dollar credit

Under traditional reduced-by coverage, the UM insurer receives a credit against its limit equal to the liability payment from the at-fault driver. The calculation is straightforward subtraction: the UM limit minus the at-fault driver’s payment equals the most the UM insurer pays.

For example, a claimant with 50,000 dollars in reduced-by UM, injured by a driver who pays 25,000 dollars in liability coverage, leaves the UM insurer owing up to 25,000 dollars, because the 25,000 dollar payment is credited against the 50,000 dollar limit. If the liability payment equals or exceeds the UM limit, the credit can consume the entire UM benefit, leaving nothing.

Add-on coverage: no credit for the liability payment

Under add-on coverage, there is no setoff for the at-fault driver’s liability payment against the UM limit. The liability payment and the UM limit stack, so the UM insurer’s exposure is its full limit on top of whatever the liability insurer paid, capped by the claimant’s actual damages. Using the same figures, the claimant could collect 25,000 dollars from the liability insurer and up to the full 50,000 dollars from add-on UM.

What the credit does and does not apply to

A few points sharpen the calculation:

  • The credit, where it applies, is for the at-fault driver’s liability payment, not an automatic reduction for every dollar the claimant receives from any source.
  • The UM payment is always limited by actual damages; UM does not pay beyond the loss even if limits would allow more.
  • The exact reach of any credit comes from the policy language interpreted under O.C.G.A. § 33-7-11, so disputes over setoff often turn on the specific wording and the type of coverage elected.

The bottom line

The UM setoff is a credit for the at-fault driver’s liability payment that exists only under reduced-by coverage, where it is subtracted dollar-for-dollar from the UM limit and can erase the benefit entirely. Add-on coverage allows no such credit, so the UM limit stacks on top of the liability payment, up to the claimant’s actual damages. Which form the insured holds is what drives the calculation.

This article is for general educational and informational purposes only and is not legal advice. It does not create an attorney-client relationship, and Georgia law may change. For advice about a specific situation, consult a licensed Georgia personal injury attorney.

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