The Georgia Supreme Court held that an insurer had no obligation to indemnify an insured that had not been cast in judgment when the policy required that the insured be “held legally liable to pay,” distinguishing that phrase from the phrase “legally liable to pay.” Lloyd’s Syndicate 5820 v. Agco Corp., 2014 WL 998700 (Ga. Mar. 17, 2014). 

An insured had an extended protection plan to cover its customers for defective products. Underwriters had paid a number of claims on a defective wheel motor after the insured declared there to have been an epidemic failure, but at some point refused to pay more. The insured sued, and the trial court and appellate courts held coverage was owed. Underwriters appealed. 

On appeal to the Georgia Supreme Court, the insured argued that Underwriters’ duty to indemnify is triggered if the insured’s liability would be recognized if it were sued. The Georgia Supreme Court disagreed, holding based on the policy wording that Underwriters were required to pay only when there is an actual holding of legal liability by a court.