Previously on our network of blogs, we have discussed uninsured/underinsured motorist (“UM”) coverage in auto policies. The statutory requirement for UM insurance “embodies a strong public policy to give full recovery for automobile accident victims.” Duncan v. U.S.A.A. Insurance Co. So strong is this public policy preference, in fact, that “the requirement of UM coverage is an implied amendment to any automobile liability policy, even when not expressly addressed, as UM coverage will be read into the policy unless validly rejected.” If a policyholder wishes to reject UM coverage, he must do so by filling out a form that is issued by the state commissioner of insurance. The Louisiana Supreme Court has explained that completing the form is no simple, routine matter; the insurance company must see that the insured: (1) initials the line in the form that sets out the rejection of UM coverage; (2) prints his name; (3) signs his name; (4) fills in the policy number; and (5) fills in the date. (The same requirements for declining UM coverage would apply to an official representative of a corporate entity that owns a vehicle.) Moreover,
“in order for the form to be valid, [the information] must be completed before the UM selection form is signed by the insured, such that the signature of the insured … signifies an acceptance of and agreement with all of the information contained on the form. An insurer who is unable to prove that the UM selection form was completed before it was signed by the insured simply cannot meet its burden of proving … that the UM selection form is valid.” Gray v. American National Property & Casualty Co.
Indeed, even when an insurance company uses the official form and confirms that it is properly completed, it will only “receive a presumption that the insured’s waiver of coverage was knowing” (emphasis supplied), which can be rebutted.
The effectiveness of a UM waiver was at the center of a recent decision by the Third Circuit Court of Appeal in Melder v. State Farm. On March 1, 2007, Naddia Melder was driving a 2006 Nissan pickup truck that belonged to her employer, Grimes Industrial Supply, LLC (“GIS”), in Alexandria. She was involved in a collision with another vehicle in which she sustained serious injuries. After the accident, Melder filed a suit against State Farm seeking to recover under the UM coverage provision of the policy which GIS maintained on the vehicle. State Farm filed a motion for summary judgment asserting that when Floyd Grimes, the owner of GIS, obtained the insurance policy on the Nissan, he rejected UM coverage. After a hearing, the trial court granted the motion and dismissed the action against State Farm. Melder appealed, alleging that genuine issues of material fact about the validity of the UM waiver existed. The Third Circuit agreed with Melder. It cited the inconsistent evidence in the record about Mr. Grimes’s authority to execute the UM waiver. The policy indicated that the Nissan was owned by Floyd Grimes and his brother, Frank Grimes. But other evidence pointed to the corporate entity, GIS, as the owner of the truck. The court concluded, “the record contains no evidence of the authority by which Mr. Grimes executed the UM rejection, either on behalf of the … company or the apparently non-existent partnership between himself and Frank Grimes.” Thus, the court held that a genuine, material issue existed about whether the waiver, though properly completed, was valid. It reversed the trial court’s granting of summary judgment for State Farm and remanded the case for trial.
The Melder case shows Louisiana’s strong policy toward including UM coverage in all auto policies. The significant steps required to waive UM coverage are intended to prevent unintentional or mistaken waivers by policyholders. Even though State Farm followed the requirements diligently, it failed to verify something even more fundamental–whether the person signing the form possessed the legal authority to make a decision about waiving coverage.
If you are facing a dispute over coverage with an insurance company, call the Berniard Law Firm at 1-866-574-8005 and speak with a lawyer who can help.