While this past year has not seemed as busy as some years preceding, there have still been a few significant developments in the field of uninsured/underinsured motorist (UM/UIM) coverage. In addition to some statutory changes, there have also been a few changes that were the result of state court cases and department of insurance publications. Listed below is an overview of some of the more significant changes that have occurred over the past year.
Wisconsin – 2011 Becomes 2009 Again – Mostly
Back in November of 2009, Wisconsin increased the minimum UM/UIM limits to $100,000/$300,000 and began requiring a written offer of UM/UIM on excess or umbrella policies which could be rejected in writing. This year, Wisconsin rolled back the UM/UIM requirement to $25,000/$50,000 (as well as reducing Medical Payments Coverage from $10,000 to $1,000). UIM coverage is no longer mandatory (though notice of the coverage is required) and the absence of a premium for this coverage is proof that the coverage has been rejected. In addition, the written offer and rejection requirement of UM/UIM coverage for umbrella/excess policies has been removed. Effective November 1, 2011.
Indiana – Changes to Commercial Requirements
Insurance companies are no longer required to offer UM/UIM coverage in connection with a commercial property and casualty insurance described as Class 2 or Class 3 insurance in 27-1-5-1 that covers a loss related to a motor vehicle which is not owned by the insured but is used by the insured or the insured’s agent for a purpose authorized by the insured. Effective July 1, 2011.
New Mexico – The Courts Advise What Constitutes an Offer and Rejection
While there have not been any statutory or regulatory changes here, the New Mexico Supreme Court had been quite busy issuing rulings that affected what comprises a valid offer and rejection of UM/UIM coverage. In Progressive v. Weed Warrior, 194 N.M. 157 (N.M. 2010), the Court held that any choice of the insured to buy a UM/UIM limit lower than the liability limit of the policy constitutes a rejection of the coverage. In Jordan v. Allstate, 149 N.M. 162 (N.M. 2010), the Court went on to define what a proper rejection was, in that it must be knowing and intelligent and must include the premiums for maximums, minimums and all available offered limits. They further held that the rejection must be incorporated into the policy. These holdings likely resulted on changes to UM/UIM selection/rejection forms and how the insureds choice was attached to or indicated on the policy.
Texas – A Clarification of Coverage
On July 11, 2011, the Department of Insurance issued a bulletin (B-0032-11) that clarified its position on the offer of UM/UIM bodily injury and property damage coverage. Specifically they advised that an insurer must offer UM/UIM bodily injury and property damage limits in amounts desired by the insured but not greater than the limit of liability on the policy. They further advise that they view UM/UIM bodily injury and UM/UIM property damage as separate coverages which the insured must be allowed to select only UM/UIM bodily injury, only UM/UIM property damage or both coverages together. Further, the selection/rejection form must allow for the selection or rejection on a separate or combined basis. These changes likely resulted in carriers having to amend either their endorsements, selection/rejection forms or both.
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