The South Carolina Supreme Court recently weighed in on the issue of underinsured motorist coverage with regard auto insurer responsibilities in extending underinsured motorist coverage to potential customers.
Underinsured motorist coverage (UIM) offers additional coverage to those injured by the actions of a driver who lacked enough insurance to adequately cover the full cost of compensation following a car accident. It is not required for drivers to carry UIM coverage in South Carolina (though it’s a very smart idea), but it is required for auto insurance companies to offer it motorists. And the language and means used to extend that offer was what was at issue in the recent case of Traynum v. Scavens and Progressive. The question before the state high court was whether the insurance company offered adequate information to a driver who rejected underinsured motorist coverage.
Plaintiff argued the auto insurance company failed to extend a meaningful offer of UIM coverage via its website. The state supreme court, however, disagreed.
According to court records, this all started back in April 2007. It was at that time plaintiff purchased an auto insurance policy from defendant insurer through its website. The company offered a number of preset auto insurance packages, all of which contained UIM coverage as a default. Plaintiff chose to create a custom auto insurance package. The package she built did not include UIM coverage, had higher preset deductibles for collision coverage and it was cheaper than the preset packages the company offered. Plaintiff electronically signed a form indicating she understood the company had offered UIM coverage and that she was turning down that coverage.
Six months later, plaintiff was involved in a car accident in Aiken County in which she was struck by another vehicle.
Plaintiff alleged she had suffered more than $175,000 in damages. She filed a claim against at-fault driver to recover these damages. She settled claims of negligence (and her husband for loss of consortium) for $100,000, which was the full extent of at-fault driver’s policy limits.
Still, this amount did not satisfy recovery of all plaintiff’s losses. But she didn’t have UIM coverage, per her own auto insurance policy. Or did she?
She filed a lawsuit seeking a declaratory judgment against her own insurance company indicating the insurer never made a meaningful offer of UIM coverage to her – as is required by South Carolina law – and as a result, the court should reform her auto insurance policy to include UIM coverage in the amount of her regular liability limits.
Trial court granted the insurer’s motion for summary judgment, concluding the insurer’s offer of UIM coverage to plaintiff had been meaningful.
Plaintiff appealed. She argued that her rejection of the UIM coverage was a mistake and asked the state supreme court to reverse the trial court. It declined to do so.
The court noted the claim was entirely predicated on the assertion that the auto insurance company’s UIM offer was not adequate based on the way it was delivered. However, the court looked at case law to ascertain the definition of the word “meaningful” in this context (as it pertains to S.C. Code Ann. 38-77-350(A)-(B) ). A meaningful offer has to:
- Briefly, concisely explain the coverage;
- Offer a list of available limits and range of premiums;
- Indicate whether the insurer chooses to accept or reject the coverage;
- Allow space for insurer to sign in acknowledgement of the fact that he or she has been offered optional coverage;
- Mailing address and phone number of the department within the insurance company to contact if there are further questions.
The firm must also be signed.
The fact that this transaction occurred online meant that it was subject to the South Carolina Uniform Electronic Transaction Act (UETA), and despite plaintiff’s objections, the high court concurred with the lower court that the agreement extended met the act’s guidelines.
Contact the Carolina injury lawyers at the Lee Law Offices by calling 800-887-1965.
Traynum v. Scavens and Progressive., April 20, 2016, South Carolina Supreme Court
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