Is Your Insurance Agency Telling You the Truth?

What is UM Coverage, and why do you need it?

Uninsured and Underinsured Motorist Coverage, often referred to as “UM coverage,” protects you if you are injured in an automobile collision caused by a driver who has no insurance or too little insurance to cover your damages. The insurance industry estimates that approximately 13 percent of drivers in Louisiana are uninsured. In some states, more than a quarter of all drivers are estimated to be uninsured. All too often we see clients severely injured in car crashes by irresponsible drivers who have little or no insurance to pay for the damages they cause. In Louisiana, Revised Statute § 22:1295 requires insurance companies to offer UM coverage with insurance policies that provide automobile liability coverage. However, you have the option to sign a form issued by the Louisiana Commissioner of Insurance rejecting UM coverage in exchange for lower premiums. Ask your agent “What is the amount of my coverage?” Too often insurance agents tell people they have “full coverage” that is in fact only $25,000.00.

Because there is such a strong public policy in favor of UM coverage in the state of Louisiana, the Louisiana Supreme Court has held that “the insurer must place the insured in a position to make an informed rejection of UM coverage.” Tugwell v. State Farm Ins. Co., 609 So.2d 195, 197 (La.1992).

 

To make an informed rejection, the insurer is required to give its insured “the opportunity to make a ‘meaningful selection’ from his options provided by the statute:

• UM coverage equal to bodily injury limits in the policy,
• UM coverage lower than bodily injury limits in the policy, or
• no UM coverage.” Id.

Make sure your insurance company is being transparent.

What happens if an insurance company does not give you the opportunity to make a “meaningful selection” of UM coverage in its insurance policies? This is the question that we successfully litigated on behalf of one of our clients in Federal Court. The insurance company issued two insurance policies to our client:

• an underlying automobile liability policy of $250,000
• and an excess liability policy of $1,000,000.

The insurer offered UM coverage with the underlying auto liability policy, and our client chose to maintain this UM coverage for the full limit of $250,000. However, the insurer’s excess policy contained an express exclusion of UM coverage. The insurer gave our client a UM rejection form, and our client signed it because the insurance policy stated that there was no UM coverage available. Our client explained to the Court that had the excess policy allowed UM coverage, he would have selected UM coverage with the same limits as the excess liability policy. In other words, because the insurance company told our client that he could not have UM coverage in the terms of the insurance policy, our client reasonably believed he had no choice but to sign the form rejecting UM coverage.

What did the court have to say?

The United States District Court for the Western District of Louisiana held that, on these facts, the insurer failed to provide our client with the opportunity to make a meaningful selection of UM coverage on the excess policy.

The Court found that the excess policy’s exclusion of UM coverage was an invalid exclusion. When an insured signs a UM rejection form, a presumption arises that the insured knowingly rejected UM coverage. However, the Court held that “these undisputed facts are ample evidence for Plaintiffs to have successfully rebutted the presumption that the plantiff knowingly rejected coverage.” Id. Consequently, the Court granted summary judgment in our favor establishing that the excess policy provided UM coverage to our client up to the $1,000,000 limits of that policy.

The Court’s ruling was correct under Louisiana law. The Louisiana Supreme Court has directed courts to interpret the law in favor of coverage “to promote recovery of damages for innocent automobile accident victims by making UM coverage available for their benefit as primary protection when the tortfeasor is without insurance, and as additional or excess coverage when he is inadequately insured.” Roger v. Estate of Moulton, 513 So. 2d 1126, 1130 (La. 1987).

The Court properly followed this guidance, and we succeeded in protecting our client’s right to make a meaningful selection of UM coverage.

If you have questions about whether your insurance company is in the wrong, contact our attorneys today.