What Is the “Tender” Requirement in a Georgia UM/UIM Case?

In Georgia underinsured motorist claims, a procedural step called “tender”, and the related exhaustion of the at-fault driver’s coverage, can determine whether you can reach your own UIM coverage at all. Getting it wrong can forfeit a valid claim. This guide explains what tender means, the role of the limits demand, how tender triggers UIM, and the consequences for the insurer.

What Tender Means

In insurance terms, a “tender” is an offer by an insurer to pay, typically an offer of the policy limits. Two related concepts go by similar names in Georgia auto cases, and it helps to separate them. First, a liability insurer may tender its policy limits to settle the claim against its insured. Second, the injured person’s pursuit of their own underinsured motorist (UIM) coverage depends on how that liability coverage is handled, in particular, whether it is exhausted.

The reason tender matters so much in UIM cases is a Georgia rule about the order of recovery. Underinsured motorist coverage exists to cover the gap when the at-fault driver’s liability coverage is not enough. But before reaching that UIM coverage, the injured person generally must deal properly with the at-fault driver’s available liability limits. How that is done is where tender and exhaustion come in.

The Role of the Limits Demand

A common feature of serious auto claims is a demand that the at-fault driver’s liability insurer pay, or tender, its policy limits. In clear-liability cases where the damages exceed the available limits, the injured person’s attorney may send a time-limited demand for the policy limits. This serves two purposes: it seeks to recover the available liability coverage, and it can set up consequences for an insurer that unreasonably refuses, discussed below.

For UIM purposes, the key principle is that Georgia treats exhausting the at-fault driver’s available liability coverage as a condition precedent to a UIM claim, under O.C.G.A. § 33-24-41.1. In practical terms, the injured person generally must recover (or be offered and accept) the full liability policy limits from the at-fault driver before turning to their own UIM coverage. A claimant cannot simply skip the at-fault driver’s coverage and demand UIM benefits.

How Tender Triggers UIM

Putting these together: when the at-fault driver’s liability insurer tenders its limits, and the claimant accepts and properly exhausts that coverage, the path to UIM opens. Georgia law allows the liability carrier to tender the limits and the claimant to accept them, and once the available liability coverage is exhausted, the claimant may pursue UIM benefits to the extent their damages exceed those limits.

The exhaustion requirement is strict, and how a settlement is structured matters. Georgia courts have held that a claimant who settles with the at-fault driver’s insurer in a way that does not properly exhaust the available limits, for example, by giving a broad general release without satisfying the statutory exhaustion condition, can lose the ability to recover from their own UIM carrier. In one case, a claimant who failed to exhaust a trucking company’s liability limits as required was barred from recovering UIM benefits. So the mechanics of accepting the liability tender, and preserving UIM rights in the settlement documents, are critical. This is why these settlements are handled carefully, often with specific language to satisfy the exhaustion requirement while preserving the UIM claim.

Consequences for the Insurer

Tender also carries consequences on the liability side. Under Georgia law shaped by the Holt line of cases, a liability insurer that, through negligence or bad faith, fails to accept a reasonable time-limited demand to settle within its policy limits can be exposed to liability for a judgment that exceeds those limits. In other words, if the insurer could have settled within limits and unreasonably did not, it may have to pay the excess.

This creates a strong incentive for liability insurers to tender their limits in clear cases of serious injury. Georgia courts have also addressed related wrinkles, such as how an insurer can protect itself when a demand is conditioned on matters outside its control (like the satisfaction of hospital liens) or when multiple insurers are involved, recognizing ways an insurer can create a “safe harbor” by doing what is within its power to settle. For the injured person, the upshot is that the tender and demand process is both a gateway to UIM coverage and a mechanism that pressures liability insurers to pay fair value; for the insurer, mishandling a limits demand can convert a capped claim into open-ended exposure. Because these rules are technical and the stakes are high, the tender and exhaustion steps are typically handled with great care.

Key Takeaways

• “Tender” usually refers to an insurer’s offer of its policy limits; in UIM cases, how the at-fault driver’s limits are handled determines access to your own UIM coverage.
• Georgia treats exhausting the at-fault driver’s available liability coverage as a condition precedent to a UIM claim (O.C.G.A. § 33-24-41.1).
• When the liability insurer tenders its limits and the claimant properly exhausts that coverage, the claimant can pursue UIM benefits for damages exceeding those limits; improper settlement can forfeit UIM rights.
• Under the Holt line of cases, a liability insurer that unreasonably refuses a reasonable limits demand can be liable for a judgment exceeding its policy limits.

This article provides general information about Georgia law and is not legal advice. Statutes and court decisions change, and how the law applies depends on the specific facts of a situation. For advice about a particular matter, consult a licensed Georgia attorney.