69 The Alabama Lawyer 203 (2008). Uninsured/Underinsured Motorist Coverage - A Desk Reference for Alabama Lawyers.

• Author: BY WALTER J. PRICE, III and DAVID M. FLEMING

The Alabama Lawyer

2008.

69 The Alabama Lawyer 203 (2008).

Uninsured/Underinsured Motorist Coverage - A Desk Reference for Alabama Lawyers

Uninsured/Underinsured Motorist Coverage - A Desk Reference for Alabama Lawyers BY WALTER J. PRICE, III and DAVID M. FLEMINGIntroduction

Alabama statutory law requires that any automobile liability insurance policy issues for delivery in this state must include uninsured and underinsured motorist coverage. At its heart, this statute provides that coverage is available to individuals, under their own automobile policies, for damages incurred as a result of an accident involving an uninsured motorist.

Further, if the adverse motorist has insurance coverage, but the limits of that coverage are not sufficient so as to cover the damages incurred, the insured may obtain underinsured motorist benefits.

Further, if the adverse motorist has insurance coverage, but the limits of that coverage are not sufficient so as to cover the damages incurred, the insured may obtain underinsured motorist benefits. Although the statute requiring this coverage is rather short, the coverage created by the statute has been the subject of much litigation. In any case, it is important for counsel faced with such a claim to be familiar with the coverage and associated procedures.

Statutory Provision §§32-7-23

§§32-7-23. Uninsured motorist coverage; "uninsured motorist" defined; limitation on recovery

(a) No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless injury or death set forth in subsection (c) of section 32-7-6, under provisions approved by the commissioner of insurance for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, that the named insured shall have the right to reject such coverage; and provided further, that unless the named insured request such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy with a named insured had rejected the coverage in connection with the policy previously issued to him by the same insurer. (b) The term "uninsured motor vehicle" shall include, but is not limited to, motor vehicles with respect to which:

(1) Neither the owner nor the operator carries bodily injury liability insurance;

(2) Any applicable policy limits for bodily injury or below the minimum required under section 32-7-6;

(3) The insurer becomes insolvent after the policy is issued so there is no insurance applicable to, or at the time of, the accident; and

(4) The sum of the limits of liability under all bodily injury liability bonds and insurance policies available to an injured party after an accident is less than the damages which the injured person is legally entitled to recover.

(c) The recovery by an injured person under the uninsured provisions of any one contract of automobile insurance shall be limited to the primary coverage plus such additional coverage as may be provided for additional vehicles, but not to exceed two additional coverages within such contract.

Note that the provisions of this statute are implied in any automobile insurance policy delivered in Alabama. Safeco Ins. Co. of Am. v. Jones, 286 Ala. 606, 243 So. 2d 736 (1970).

Policy Considerations

In considering whether UM or UIM coverage applies to a given claim, one must recognize that Alabama courts have consistently rejected efforts to limit the statutory coverage obligation:

The principle is, the uninsured motorist statute is to be construed so as to assure a person injured by an uninsured motorist that he will able to recover, from whatever source available, up to the total amount of his damages. The insurer will not be permitted to insert any provision in its policy limiting such recovery by the insured.

Alabama Farm Bureau Mutual Casualty Insurance Company v. Humphrey, 54 Ala. App. 343, 346, 308 So. 2d 255, 258 (Ala. Civ. App. 1975).

For examples, an exclusion rejecting UM and UIM coverage for vehicles of less than four wheels was found to be more restrictive than the statute and, therefore, unenforceable. Peachtree Casualty Insurance Company, Inc. v. Sharpton, 768 So. 2d 368 (Ala. 2000). While riding a motorcycle, the Sharptons were injured in an accident. The motorcycle was not insured by Peachtree; however, the two automobiles owned by the Sharptons were insured by separate Peachtree policies. In a declaratory judgment action, Peachtree asserted that a motorcycle is not a "vehicle" as defined by the Uninsured Motorist Statute. In response to a certified question from the United States District Court for the Middle District of Alabama, the Supreme Court of Alabama stated that motorcycles are included in the definition of "motor vehicle" in the Uninsured Motorist Statute (Ala. Code§§32-7-2(4)).

The court also confirmed that the Sharptons were not barred from claiming UIM benefits since they were not injured while occupying the vehicles listed in the Peachtree policies. Moreover, the court noted that approval of the Peachtree policy by the Department of Insurance did not permit Peachtree to issue a policy more restrictive than the Uninsured Motorist Statute. As noted above, the Supreme Court of Alabama has previously held that any policy exclusion that is more restrictive than the Uninsured Motorist Statute is void and unenforceable.

Rejection

Uninsured motorist coverage (and underinsured motorist coverage) can be rejected by the named insured; however, oral rejection is not sufficient. The rejection of coverage must be in writing. Insurance Company of North America v. Thomas, 337 So. 2d 365 (Ala...