Uninsured Motorist Coverage Rejected Remains in Effect with Insurance Renewal

blur-car-cars-163945-1024x683Is uninsured/underinsured (“UM”) coverage an automatic component of commercial auto insurance policies?  Are there instances when an insured can reject UM coverage in its entirety or select lower limits of UM coverage for a commercial auto insurance policy?  Although La. R.S. 22:1295(1)(a)(i) indicates that all auto insurance policies issued within Louisiana must include UM coverage, subsection 1295(1)(a)(iii) allows for a named insured to either reject UM coverage in its entirety or select UM coverage with lower limits.  In a recent case out of Calctsieu Parish, Louisiana, an employee learned that while his employer carried a valid commercial auto insurance policy with at the time of his accident, the employer executed a valid UM rejection form prior to the accident that remained in full effect.  

On June 21, 2013, Lonny Hayes, an employee of O’Neal’s Feeder Supply, Inc., sustained severe injuries in an automobile accident after Diana Gonzales failed to adhere to a traffic sign and collided with Mr. Hayes’ work vehicle.  Following insufficient recovery for damages from Ms. Gonzales’ insurer, State Farm Mutual Automobile Insurance Company, Mr. Hayes and his wife, Melissa Hayes sued their insurer, Progressive Security Insurance Company, and O’Neal’s insurer, Penn Millers Insurance Company.  Mr. and Mrs. Hayes claimed that both policies from Progressive and Penn Millers provided UM coverage from which they could secure additional funds from to cover their damages. Penn Millers denied Mr. and Mrs. Hayes’ claims, indicating that O’Neal’s executed a UM rejection form for the commercial auto insurance policy that was in full effect on the date of Mr. Hayes’ accident.  Therefore, Penn Millers argued that there was no UM coverage available for recovery. Shortly thereafter, Mr. and Mrs. Hayes filed a Motion for Summary Judgment on the issue of whether Penn Millers’ commercial auto insurance policy provided UM coverage. On January 21, 2016, the trial court granted Mr. and Mrs. Hayes’ Motion for Partial Summary Judgment, finding no valid UM rejection form existed for O’Neal’s commercial auto insurance policy in full effect on the date of Mr. Hayes’ accident and therefore, UM coverage was available for recovery.  

On appeal, Penn Millers asserted that the trial court erred in finding no valid UM rejection form existed for O’Neal’s commercial auto insurance policy in full effect on the date of Mr. Hayes’ accident.  Penn Millers argued that the UM rejection form executed by O’Neal’s on June 5, 2007, remained in full effect on June 21, 2013, because the same policy had been renewed annually from 2007 thru to 2013. Pursuant to La. R. S. 22:1295(1)(a)(ii), a UM rejection form that is executed by the insured or the insured’s legal representative and initially rejects UM coverage in its entirety or selects UM coverage with lower limits remains in full effective for the life of a policy, regardless of whether the policy is renewed, reinstated, substituted, or amended.  In support of this argument, Penn Millers produced seven declaration pages that corresponded to the commercial auto insurance policy initially issued to O’Neal’s in 2007 and subsequently renewed thru to 2013. Specifically, each declaration page after 2007 included the same identification number with an exception of changing the last two digits to signify the year the policy was in effect.    

Additionally, Penn Millers argued that the UM rejection form executed by O’Neal’s on June 5, 2007, was valid because it included the six requirements prescribed by the commissioner of insurance.  Pursuant to the commissioner of insurance, a UM rejection form is deemed valid when it includes the following components: (1) the insured’s of insured’s legal representative’s initials next to the selection or rejection of the coverage chosen; (2) the amounts of coverage selected for each person and each accident, if lower limits of UM coverage are chosen; (3) the insured’s or insured’s legal representative’s printed name; (4) the insured’s or insured’s legal representative’s signature; (5) the policy number; and (6) the date.  Duncan v. USAA Ins. Co., 950 So.2d 544 (La. 2006).  Failure to comply with one of the above six requirements, usually results in a UM rejection form being deemed as invalid.  However, in limited circumstances, an omission of a policy number from a UM rejection form does not deem the form invalid. Carter v. State Farm Mut. Auto. Ins Co., 964 So.2d 375 (La. 2007).  Although Mr. and Mrs. Hayes asserted that the UM rejection form executed on June 5, 2007, was invalid because it failed to include a policy number, Penn Millers produced an affidavit indicating that the policy number was not available at the time O’Neal’s legal representative executed the UM rejection form.       

Subsequent to analysis of applicable law and documentary evidence produced by Penn Millers, the appellate court reversed the trial court’s judgment, finding the UM rejection form executed by O’Neal’s on June 5, 2007, was in full effect on the date of Mr. Hayes’ accident.  Consequently, in deciding whether or not to reject UM coverage in its entirety or select lower limits of UM coverage, it is important to identify and evaluate the effects of doing such. Because insurance coverage can be complex, it is advised that a knowledgeable and experienced personal injury attorney is consulted to assist.  

Additional Sources: Lonny Hayes v. Viviana Trevino de Barton, et al.

Written by Berniard Law Firm Blog Writer: Ashley Werdann

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