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Official Opinion 94-5

Official Opinion 94-5

January 20, 1994
To: 

Joint Secretary
State Examining Boards

Re: 

The State Board of Registration of Used Car Dealers may not accept surplus line insurance in lieu of the surety bond required by O.C.G.A. § 43-47-8(h).

You have asked this office for an official opinion as to whether the State Board of Registration of Used Car Dealers may accept surplus line insurance in lieu of the surety bond required by O.C.G.A. § 43-47-8(h). For the reasons discussed below, it is my official opinion that the Board may not accept surplus line insurance in lieu of the required surety bond.

Each applicant for a license from the State Board of Registration of Used Car Dealers is required to obtain a bond "executed with a surety company duly authorized to do business in this state." O.C.G.A. § 43-47-8(h). This requirement has been in effect since 1974. 1974 Ga. Laws 1240.

Pursuant to the Surplus Line Insurance Law, O.C.G.A. § 33-5-20 et seq., a person can obtain insurance in Georgia from insurers who are not authorized to do business in this state if certain conditions are met. This insurance is called surplus line insurance. O.C.G.A. § 33-5-21.

Official Code of Georgia Annotated § 33-5-30 provides as follows:

Insurance contracts procured as surplus line coverage from unauthorized insurers in accordance with this chapter shall be fully valid and enforceable as to all parties and shall be given recognition in all matters and respects to the same effect as like contracts issued by authorized insurers.

This provision was first enacted as Ga. Code Ann. § 56-617 in 1960. 1960 Ga. Laws 289.

It appears that the requirement that the bond be obtained from a surety company "duly authorized to do business in this state" is mandatory. See 1969 Op. Att'y Gen. 69-498. Where a statute is clear and unambiguous, it must be given the meaning that is clearly expressed. Although O.C.G.A. § 33-5-30 gives validity to surplus line insurance, it does not transform an unauthorized insurer into an authorized insurer. 1969 Op. Att'y Gen. 69-498. Further, had the legislature intended that surplus line insurance be acceptable for licensure as a used car dealer, it would have been a simple matter to have so stated, particularly since the surplus line insurance law had been in effect for years before the bonding requirement for used car dealers was adopted.

For the reasons stated above, it is my official opinion that the State Board of Registration of Used Car Dealers may not accept surplus line insurance in lieu of the surety bond required by O.C.G.A. § 43-47-8(h).

Prepared by:

THOMAS K. BOND
Assistant Attorney General