Accord: Jones v. Georgia Cas. c. Co., 89 Ga. App. 181 ( 78 S.E.2d 861); State Farm Mut. Ins. Co. v. Anderson, 107 Ga. App. 348, 351 (2) ( 130 S.E.2d 144)." Gant v. State Farm Mut. Auto. Ins. Co., 109 Ga. App. 41, 43 ( 134 S.E.2d 886). If an insurer enters a defense without knowledge of the facts of noncoverage, estoppel will not necessarily arise.

In the same category of the wills cases is Holcomb v. Bivens, 103 Ga. App. 86 ( 118 S.E.2d 840), where two attorneys sought a determination as to the priority of liens — which is controlled by statute. Nor do we find conflict in Gant v. State Farm Mut. Auto Ins. Co., 109 Ga. App. 41 ( 134 S.E.2d 886), where there was a claim of no coverage because the operator of the vehicle and the injured had been fellow servants, or Travelers Indem. Co. v. Hood, 110 Ga. App. 855 ( 140 S.E.2d 68, 20 ALR3d 314) and Lumbermen's Mut. Cas. Co. v. Moody, 116 Ga. App. 2 ( 156 S.E.2d 117), where a judgment had already been obtained against the insured in a negligence action. There may be others in which it has appeared that the rights of the parties had already accrued.

See St. Paul Fire c. Ins. Co. v. Johnson, 216 Ga. 437 ( 117 S.E.2d 459); LaSalle Nat. Ins. Co. v. Popham, 125 Ga. App. 724 ( 188 S.E.2d 870); Ditmyer v. Am. Liberty Ins. Co., 117 Ga. App. 512 ( 160 S.E.2d 844); Pa. Threshermen c. Ins. Co. v. Wilkins, 106 Ga. App. 570 ( 127 S.E.2d 693). A proper and safe course of action for an insurer in this position is to enter upon a defense under a reservation of rights and then proceed to seek a declaratory judgment in its favor. See Southern Trust Ins. Co. v. Eason, 134 Ga. App. 827 ( 216 S.E.2d 667); Gant v. State Farm Mut. Auto. Ins. Co., 109 Ga. App. 41, 43 ( 134 S.E.2d 886); Ga. Cas. c. Co. v. Turner, 86 Ga. App. 418 ( 71 S.E.2d 773). In State Farm Mut. Auto. Ins. Co. v. Anderson, 104 Ga. App. 815 ( 123 S.E.2d 191) this court held the general rule in Georgia is that a liability insurer who assumes and conducts a defense of an action brought against the insured with knowledge of facts which would constitute noncoverage under the policy without disclaiming liability and giving notice of its reservation of rights is estopped from thereafter setting up such facts of noncoverage.

State Farm Mut. c. Co. v. Anderson, 107 Ga. App. 348, 351 ( 130 S.E.2d 144), but, as stated there and in the former appearance of the case ( 104 Ga. App. 815 ( 123 S.E.2d 191)), the notice must be "timely and sufficient." A different situation obtained in Gant v. State Farm c. Co., 109 Ga. App. 41 ( 134 S.E.2d 886), but there are relevant rulings to the effect that an insurer who assumes and conducts a defense with knowledge of a ground of forfeiture and without "proper notice" of a reservation of rights estops itself. In that case, as in this one, the tort action had not gone to judgment, and the time between the insurer's taking over the defense and filing the declaratory judgment was about five months.

Good faith in such a case is not an issue, and prejudice to the insured by the assumption and the conduct of the defense is conclusively presumed. In Gant v. State Farm Mutual Automobile Insurance Company, 1964, 109 Ga. App. 41, 134 S.E.2d 886, the court reiterated the estoppel rule, supra, but pointed out that where the fact or facts giving rise to the forfeiture or noncoverage come to light only after the insurer enters upon a defense of a suit, the estoppel would not arise since knowledge of such facts on the part of the insurance company before it enters upon the defense is essential to any estoppel. Where the "* * * insurer has knowledge of the facts but does not feel safe in making a determination as to a proper course of action it may enter upon a defense under a reservation of rights and then seek a declaratory judgment. The reservation may be effected by an agreement between the insurer and the insured or by the giving to the insured of proper notice of its position by the insurer".

Id. at 185-186, 78 S.E.2d at 864. See also, State Farm Mutual Automobile Insurance Co. v. Anderson, 104 Ga. App. 815, 123 S.E.2d 191 (1961); Gant v. State Farm Mutual Automobile Insurance Co., 109 Ga. App. 41, 134 S.E.2d 886 (1964); Hembree v. Cotton States Mutual Insurance Co., 132 Ga. App. 556, 208 S.E.2d 568 (1974). A liability carrier may avoid the estoppel that arises from the carrier's conduct in defending the insured only if it properly reserves its rights to later contest or deny coverage.

First, the insurer can defend the claim, thereby waiving its policy defenses and claims of non-coverage. Gant v. State Farm Mut. Auto. Ins. Co., 109 Ga.App. 41, 43–44, 134 S.E.2d 886 (1964). Second, the insurer can deny coverage and refuse to defend, leaving policy defenses open for future litigation.

hat although policy conditions and limitations may be waived, the defense of noncoverage can never be waived. Instead, we find that risks not covered by the terms of an insurance policy, or risks excluded therefrom, while normally not subject to the doctrine of waiver and estoppel, e.g., Quillian v. Equitable Life Assurance Society, 61 Ga. App. 138 ( 6 S.E.2d 108) (1939) (disability insurer not estopped by sending notice of and accepting premium, from limiting liability to payments for 200 weeks as provided by policy); Allstate Ins. Co. v. Walker, 114 Ga. App. 732 ( 152 S.E.2d 895) (1966) (insurer not estopped by agent's representation that house trailer was covered by homeowner's policy on insured dwelling), may be subject to the doctrine where the insurer, without reserving its rights, assumes the defense of an action or continues such defense with knowledge, actual or constructive, of noncoverage, e.g., Jones v. Ga. Casualty c. Co., 89 Ga. App. 181, 185-186 ( 78 S.E.2d 861) (1953); Gant v. State Farm Mut. Auto. Ins. Co., 109 Ga. App. 41, 43 ( 134 S.E.2d 886) (1964); State Farm Mut. Auto. Ins. Co. v. Wheeler, 160 Ga. App. 523, 525 ( 287 S.E.2d 281) (1981). This distinction based upon a liability insurer's undertaking the defense of a suit against the insured was noted in Southeastern c. Inc. v. Graphic Arts c. Co., 164 Ga. App. 70, 72-73 ( 296 S.E.2d 378) (1982).

Morgan, supra, 268 Ga. at 344 (citation omitted).Shield Insurance Co. v. Hutchins, 149 Ga. App. 742, 744 (2) ( 256 S.E.2d 108) (1979) (citation omitted); see Morgan, supra, 268 Ga. at 345-346 (refusal to provide defense eliminates need for declaration as to future action); State Farm Mutual Automobile Insurance Co. v. Hillhouse, 131 Ga. App. 524, 526 (2) ( 206 S.E.2d 627) (1974) (failure to provide defense in damage action is fatal to declaratory judgment action); Gant v. State Farm Mutual Auto Insurance Co., 109 Ga. App. 41, 43 ( 134 S.E.2d 886) (1964) ("if State Farm has failed or refused to afford a defense to the damage action because it has made the determination that no coverage was afforded under its policy the rights, if any, of the parties had accrued before the declaratory judgment action was filed and the insurer needs no declaration to guide it as to any future action"). Without citing any evidence, Empire claims that after the damage action was filed it provided Metro a defense in that it promised to reimburse Metro for its defense costs if coverage were found. Not only is such a promise meaningless, as Empire was already obligated to reimburse Metro if coverage were found, but there is no evidence of such a promise.

(Emphasis supplied.) Gant v. State Farm Mut. Auto. Ins. Co., 109 Ga. App. 41, 43-44 ( 134 S.E.2d 886) (1964). "A proper and safe course of action for an insurer in this position is to enter upon a defense under a reservation of rights and then proceed to seek a declaratory judgment in its favor.