S.C. Supreme Court Upholds Insurers Use Of UIM Selection Form

January 13, 2005

The South Carolina Supreme Court on Jan. 11 issued its decision in the case of Progressive Casualty Ins. V. Leachman, holding that Progressive’s UIM selection form constituted a “meaningful offer,” and that in making that offer, it is sufficient for an insurer to offer an insured all of the coverage amounts an insurer is authorized to sell.

“By rendering this decision, insurers doing business in South Carolina have a clear template for what constitutes a meaningful offer of UIM coverage, and can tailor their practices accordingly” said Robert J. Hurns, legislative database manager and counsel for the Property Casualty Insurers Association of America, which filed an amicus brief in the case. “The High Court has removed an area of ambiguity and insurers can move forward knowing what the guidelines for an offer of UIM are.”

Leachman purchased a $300,000 combined single limits liability automobile insurance policy from Progressive and selected UIM coverage by marking a line designated $100,000/$300,000/$50,000 on the offer form. He also signed the form at the bottom, noting the UIM coverage was lower than his liability coverage. After Leachman signed an acknowledgement of his selection, Progressive issued Leachman the policy. Available amounts of UIM coverage were described on the first page of Progressive’s form. Furthermore, the form explained that increased coverage was available, and instructed insureds to select the amount of coverage they desired. Insureds were also instructed to acknowledge they had selected or rejected UIM coverage.

Leachman was seriously injured when he was hit by an automobile while taking a walk and sought UIM coverage for which Progressive paid $100,000. Leachman also sought additional coverage up to the amount of his liability coverage.

Progressive filed a declaratory judgment motion in federal district court, and the court certified the following questions to the S.C. Supreme Court: (1) In attempting to make an insured a “meaningful offer” of UIM coverage, is it sufficient for an insurer to offer all of the options of UIM coverage that the insurer is authorized to sell, up to the limits of the insured’s liability policy, or must an insurer provide a blank line, or some equivalent, that allows the insured to select any increment of UIM coverage up to the insured’s liability limits? (2) Does the form used in this case constitute a meaningful offer?

Answering the second question first, the court held that since Progressive’s form allowed Leachman to choose from 11 different amounts of UIM coverage up to the amount of liability coverage, including $300,000, it gave the insured the opportunity to make an intelligent and informed decision on whether to purchase UIM coverage, and thus Progressive made a meaningful offer.

As to the first question, the court held that when an insurer offers all amounts of coverage authorized by the Department of Insurance, insurers have provided insureds with the opportunity to make an intelligent decision as to whether to accept or reject UIM coverage, and the insurer does not need to include a blank line.

The court reasoned that the governing statute does not require a blank line, and if the legislature had intended for insurers to provide a blank line allowing insureds to choose any amount of coverage, the blank-line mandate would have been included in the statute. In conclusion, the court stated that insurers should not be required to offer every possible numerical combination of coverage for UIM.

PCI is composed of more than 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write $173.6 billion in annual premium, 39.1 percent of the nation’s property/casualty insurance. Member companies write 49.1 percent of the U.S. automobile insurance market, 37.8 percent of the homeowners market, 31.8 percent of the commercial property and liability market, and 38.5 percent of the private workers compensation market.

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