United States: Court Holds That Change Of Policyholder Requires New Offer Of UM Coverage

In Chase v. Horace Mann Ins. Co., 2015 WL 686093 (Fla. February 19, 2015), the Florida Supreme Court addressed the amount of uninsured motorist (UM) coverage available under the auto insurance policy. The policy was initially issued in 2001 to Richard Chase as the sole named insured. At that time, he purchased reduced UM limits of $25,000/$50,000 and executed a written selection. On January 27, 2004, the policy was transferred to his daughter, Allison Chase, and it insured a single vehicle which she owned. Mr. Chase was issued a new policy for his vehicle. Allison was involved in an accident on July 15, 2007 with an uninsured motorist. She challenged the amount of UM coverage that was available to her, arguing that her father's 2001 selection was no longer valid and that she should have been provided her own opportunity to reject/select coverage in 2004.

The trial court ruled in Allison's favor, finding that she is entitled to higher UM limits. The First District Court of Appeal reversed, finding that Mr. Chase's UM selection remained valid and applicable since there had been no change to the policy's bodily injury liability limits over the years. The Florida Supreme Court agreed with the trial court and found higher UM coverage available. The court held that when Allison became the sole policyholder in 2004 she should have been provided the opportunity to reject/select UM coverage as she wanted. The court reasoned that the complete change of policyholders created a "new policy" so that Horace Mann had to comply again with all statutory requirements.    

The court's decision focused on language in section 627.727(1), Florida Statutes. In my view, the decision is inconsistent with the historical development of that statutory language. This statutory language has been amended several times by the Legislature, and each time the language was changed to reduce the circumstances in which a second rejection/selection was necessary. The statute originally provided that a second rejection/selection was necessary in most instances, with the exception of a "renewal policy" issued to the same insured by the same insurer:

Unless the named insured, or lessee having the privilege of rejecting uninsured motorist coverage requests such coverage in writing, the coverage need not be provided in or supplemental to a renewal policy when the named insured had rejected the coverage in connection with a policy previously issued to him by the same insurer.

Section 627.727(1), Florida Statutes (1973)(emphasis added). The language was then significantly broadened in 1980:

Unless the named insured, or lessee having the privilege of rejecting uninsured motorist coverage requests such coverage in writing, the coverage need not be provided in or supplemental to a renewal policy, or any other policy which extends, changes, supersedes, or replaces an existing policy issued to him by the same insurer, when the named insured had rejected the coverage in connection with a policy previously issued to him by the same insurer.

Section 627.727(1), Florida Statutes (1980)(emphasis added). Under this language, the original rejection/selection would apply to a renewal policy or even a new policy – "any other policy" – provided the policy is issued to the same insured by the same insurer.

The language was further broadened in 1982 by dropping the reference to a renewal policy:

Unless the named insured, or lessee having the privilege of rejecting uninsured motorist coverage requests such coverage in writing, the coverage need not be provided in or supplemental to any other policy which renews, extends, changes, supersedes, or replaces an existing policy issued to him by the same insurer, when the named insured or lessee had rejected the coverage in connection with a policy previously issued to him by the same insurer.

Section 627.727(1), Florida Statutes (1982)(emphasis added). Despite that broadening, the language retained the requirement that the new policy ("any other policy") be issued to the same insured by the same insurer.

The language was amended to its current form in 1984 to provide:

Unless an insured, or lessee having the privilege of rejecting uninsured motorist coverage requests such coverage or requests higher uninsured motorist limits in writing, the coverage or such higher uninsured motorist limits need not be provided in or supplemental to any other policy which renews, extends, changes, supersedes, or replaces an existing policy with the same bodily injury liability limits when an insured or lessee had rejected the coverage. When an insured or lessee has initially selected limits of uninsured motorist coverage lower than her or his bodily injury limits, higher limits of uninsured motorist coverage need not be provided in or supplemental to any other policy which renews, extends, changes, supersedes, or replaces an existing policy with the same bodily injury liability limits unless an insured requests higher uninsured motorist coverage in writing.

Section 627.727(1), Florida Statutes (1984)(emphasis added). This change dropped the requirement that the new policy be issued to the same insured by the same insurer. Instead, the statutory standard focused on "an existing policy with the same bodily injury liability limits." 

Based on the statutory changes, the Chase court should not have determined whether there was a "new policy" since the language applies the original rejection/selection to "any other policy" which necessarily includes a new policy. Further, the Chase court's decision turns the standard back to the pre-1984 version of the statute. If the goal of statutory construction is to follow the intent of the Legislature, this decision misses the mark. It is inconsistent to suggest that the Legislature intended to require a new rejection/selection if the "other policy" is not issued to the same insured when such a requirement was removed from the statute in 1984.

Furthermore, the statute recognizes that an insured can always request UM coverage or higher UM limits. Indeed, the statute requires insurers to remind insureds of their UM options on an annual basis, with the expectation that an insured who wants to pay for more UM coverage can purchase it. In this case, Allison was the policyholder from January 27, 2004 until the July 15, 2007 accident. Thus, she had more than three years to review her policy, consult with her agent, evaluate her insurance needs, and purchase higher UM limits if she wanted to pay the additional premiums. She continued to pay premiums for the lower UM limits, but the court rewarded her anyway.

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