WI Supreme Court rules UIM notice requirements apply to umbrella policies.

• Author: Ziemer, David

Byline: David Ziemer

Section 632.32(4m) requires an insurer offering an umbrella policy to notify the insured of the availability of underinsured motorist (UIM) coverage, if the policy includes automobile liability coverage.

However, the Supreme Court also held on Mar. 30 that, where the insured had actual notice of its availability, but did not purchase coverage, the insured is not entitled to reformation of the policy to include it.

Dale Rebernick was seriously and permanently injured when the lawn mower he was riding was hit by a car. The driver of the car had $25,000 in liability insurance, which was paid to Rebernick.

Rebernick also collected the $100,000 limits of UIM coverage under his automobile insurance policy with American Family.

In addition, Rebernick had a $1 million umbrella policy through American Family that required him to maintain the underlying automobile policy as primary insurance.

The umbrella policy expressly excluded UIM coverage. American Family did not give Rebernick a notice with the policy stating that UIM coverage is available.

However, such a notice did accompany the primary automobile policy, which was purchased a week before the umbrella policy.

Rebernick sued American Family for additional funds under the umbrella policy. Milwaukee County Circuit Court Judge Daniel A. Noonan granted summary judgment to American Family, finding that Rebernick was aware of its availability.

Rebernick appealed, but the court of appeals affirmed in a published decision. Rebernick v. Wausau General Ins. Co., 2005 WI App 15, 278 Wis.2d 461, 692 N.W.2d 348.

The Supreme Court granted review, but affirmed in a decision by Justice Ann Walsh Bradley. Justice Louis B. Butler dissented, in an opinion joined by Chief Justice Shirley S. Abrahamson.

Scope

The court first held that American Family was required to notify Rebernick of the availability of UIM coverage under the umbrella policy pursuant to sec. 632.32(4m).

Subsection (1) provides, "Except as otherwise provided, this section applies to every policy of insurance issued or delivered in this state against the insured's liability for loss or damage resulting from accident caused by any motor vehicle..."

Subsection (4m) requires that insureds be given notice of UIM coverage with every policy that insures "with respect to a motor vehicle."

The issue hinged on whether an umbrella policy is a policy that insures "with respect to a motor vehicle."

American Family argued that an umbrella...