More Uninsured/underinsured Motorist Coverage—an Addition to the Lawyers' Desk Reference
| Publication year | 2013 |
| Pages | 0107 |
Introduction
The following is a complement to "Uninsured/Underinsured Motorist Coverage-A Desk Reference for Alabama Lawyers," 69 Alabama Lawyer 203 (2008). Many of the issues faced in handling uninsured and underinsured motorist claims require a more detailed review and this article is an effort to address several of the more common, and complicated, uninsured and underinsured motorist questions.
In the opinion of Bailey v. Progressive Specialty Ins. Co., 72 So. 3d 587 (Ala. 2011), in the opening paragraph of the court's written analysis, Justice Glenn Murdock expressed a viewpoint shared by many practicing attorneys and judges in this state:
In one sense, the parties' arguments on appeal are straightforward ... [However,] actions for UM benefits are anything but straightforward, ... so evaluating the parties' arguments involves an exacting analysis.
Id. at 592-593. Keeping in mind Justice Murdock's instruction, we begin our own analysis.
Whose Rejection Is Effective?
Of course, it is well established that for rejection of uninsured motorist coverage to be effective, the rejection must be made by all named insureds and in writing. A rejection form signed by one spouse where both are named insureds is not effective as to the one who did not sign, nor is a waiver signed by the agent on behalf of the named insured. State Farm Mut. Auto. Ins. Co. v. Martin, 292 Ala. 103, 289 So. 2d 606 (1974); Progressive Cas. Ins. Co. v. Blythe, 350 So. 2d 1062 (Ala. Civ. App. 1977). Consistent with general contract law, failure of the named insured to read the rejection language before signing the waiver will not void that rejection. Nance v. Southerland, 79 So.3d 612 (Ala. Civ. App. 2010). Note, however, that the named insured can reject for some, but not all, additional insureds. Federal Mut. Ins. Co., Inc. v. Vaughn, 961 So. 2d 816 (Ala. 2007) (employer allowed to retain UM coverage for directors, officers, owners and family members who qualified as insureds, though it effectively rejected coverage for any other person qualifying as an insured).
Frequently, insureds have sought to equate spouses or other applicants to named insureds to avoid prior rejection and invoke UM coverage. For example, a plaintiff unsuccessfully asserted that the definition of "you" and "your," which included the "named insured . . . and that person's spouse," gave the spouse the same policy rights as the named insured including the power to reject uninsured motorist coverage. Progressive Speciality Ins. Co. v. Green, 934 So. 2d 364 (Ala. 2006). Similarly, another argued that multiple policy references to "your application" combined with the same definition of "you" and "your" found in Green entitled both applicants to be treated equally though only one was identified as a named insured. This argument was also rejected. Progressive Specialty Ins. Co. v. Naramore, 950 So. 2d 1138 (Ala. 2006). Though not defined, the "named insured" is exactly that-the person or entity in whose name the policy was issued. Rimas v. Progressive Ins. Co., 292 Fed. Appx. 833 (11th Cir. 2008).
Identification of one as a named excluded driver under a policy has been interpreted as rejection of uninsured motorist coverage as to that person. Funderburg v. Black's Ins. Agency, 743 So. 2d 472 (Ala. Civ. App. 1999). However, rejection of the coverage on one policy does not prevent recovery of UM benefits under another policy covering the claimant even if the accident involved a vehicle covered by the policy for which uninsured motorist coverage had been waived. Peachtree Cas. Ins. Co. v. Sharpton, 768 So. 2d 368 (Ala. 2007). Naturally this is because UM coverage is said to follow the person instead of the vehicle.
Is the Tortfeasor an Uninsured Motorist?
It doesn't take a lawyer to determine that a motor vehicle, in which neither the owner nor operator carries liability insurance, is considered an "uninsured vehicle." This common-sense approach was established as early as 1973 in the case of Higgins v. Nationwide Mutual Ins. Co., 282 So. 2d. 301, 305 (Ala. 1973); see also Wilbourn v. Allstate Ins. Co., 305 So. 2d 372, 373 (Ala. 1974) ("It is well-settled and common knowledge that a motorist or a vehicle carrying no liability insurance is 'uninsured'"). Therefore, the operator of such a vehicle is clearly an "uninsured motorist."
In Alabama, a motorist may be declared to be "uninsured" for a myriad of reasons. For example, the particular insurance policy involved may fail to cover the injury involved, applicable policy limits may be set below the statutory minimum or the motorist's insurer may have become insolvent after the particular insurance policy has been issued. Wilbourn at 373. Moreover, other vehicle operators have been deemed uninsured when the particular owner or operator of the vehicle is unknown (i.e., hit-and-run cases)1 or when the offending vehicle or operator is under-insured with respect to the claimant's injuries.2
In 1984, the Alabama legislature amended the "Uninsured Motorist Act"3 and codified the above-referenced case law at Ala. Code § 32-7-23 (1975):
(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 coverage is provided therein or supplemental thereto, in limits for bodily 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 ffrom 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 requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the 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:
(2) Any applicable policy liability limits for bodily injury are 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 person 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.
Ala. Code § 32-7-23 (emphasis added).
In Higgins, supra, an insured brought suit under the uninsured motorist provision of her father's insurance policy. Prior to the implementation of the Alabama Rules of Civil Procedure in 1973, the trial court granted a pre-trial motion in the defendant's favor. The plaintiff appealed on the grounds that the applicable insurance policy contained an express exclusion of "an automobile which is owned by the United States of America, Canada, a state, a political subdivision of any such government or agency of any of the foregoing" from the definition of the term "uninsured automobile." Both the Alabama Court of Civil Appeals and the Alabama Supreme Court held that the provision was more restrictive than the Uninsured Motorist Act and was therefore void as being contrary to public policy. This holding was a catalyst for Alabama's appellate courts ensuring that policy provisions did not degrade or run afoul of the obvious legislative purpose in mandating a minimum level of insurance coverage offered to drivers who are deemed financially and ethically responsible enough to obtain automobile liability insurance from those who are not so responsible.
Motor vehicle accidents caused by unknown owners or operators, more commonly known as "hit-and-run" cases, are also classified as uninsured motorist cases. Wilbourn v. Allstate Ins. Co., 305 So. 2d. 372, 373-74 (Ala. 1974); Criterion Ins. Co. v Anderson, 347 So. 2d 384, 386 (Ala. 1977). In these cases (as with all UM and UIM cases), "[a] ny policy exclusion that is 'more restrictive than the uninsured motorist statute... is void and unenforceable.'" Peachtree Casualty Ins. Co. v. Sharpton, 768 So. 2d. 368, 370 (Ala. 2000) (quoting Watts v. Preferred Risk Mutual Ins. Co., 423 So. 2d. 171, 175 (Ala. 1982)). Clearly, unknown phantom drivers are included within the definition of an "uninsured motorist." Criterion Ins. Co., supra.
In the case of Walker v. GuideOne Specialty Mutual Ins. Co., 834 So. 2d. 769 (Ala. 2002), the supreme court held as a matter of first impression that any corroborative evidence requirement stating that an insurer would only accept competent testimony of a person other than a claimant if the accident involved no physical contact with an uninsured motorist was void. This case overruled Hannon v. Scottsdale Ins. Co., 736 So. 2d 616 (Ala. Civ. App. 1999). Specifically, the GuideOne court concluded that GuideOne's corroborative evidence requirement was "more restrictive" than the language...
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