Named Insured’s Decision to Reject Higher UM Limits Was Not Binding on an Additional Insured

The Florida Supreme Court recently considered whether the original policyholder’s signed rejection form, rejecting higher limits of UM coverage, applied to the original insured’s daughter who later became the sole named insured under the policy. In Chase v. Horace Mann Ins. Co., 158 So.3d 514 (Fla. 2015), the Florida Supreme Court held that the original policyholder’s original rejection of higher UM limits on the policy that named him as an insured, and listed his daughter as a driver, was not binding on the daughter, individually, nor in her capacity as personal representative of her father’s estate. The facts indicated that the original insured, Richard Chase, insured his vehicle in 2001 with a policy through Horace Mann, providing liability limits of $100,000/$300,000. The vehicle insured under the policy was a 1992 Chevrolet Geo. Richard Chase who was the only named insured at that time, and the titled owner of the Geo, signed a form in which he selected reduced UM limits of $25,000/$50,000. Allison Chase, his daughter, was listed as a driver on the policy but was not a named insured on the policy and, therefore, had no right to select UM limits.

In 2004, Horace Mann removed Richard Chase as the sole named insured on the policy and made his daughter, Allison Chase, the sole named insured. Horace Mann also changed the insured vehicle to a 1997 Ford Escort that had been acquired by Allison three days earlier which was titled in her own name. Horace Mann then issued a new policy with Richard Chase as the sole named insured, insuring a 2004 Jeep that was owned by Richard. When the new policy was sold to Richard Chase he was presented with another written rejection form to sign. Allison Chase, who had never previously had the opportunity to select lower UM limits, was not provided the opportunity to reject the coverage or select lower limits when she was designated as the named insured on the policy issued in 2001.

Eighteen months after Horace Mann re-issued the policy to Allison Chase (August 2005) Allison moved out of her father’s home at which time Richard Chase was removed as a listed driver on the policy. On February 10, 2007, the insured vehicle was changed from the 1997 Ford Escort to a 2004 Jeep Rangler. Four months later, Allison moved back into her father’s home and added her father as a listed driver on her policy. One month later, Richard and Allison were involved in a car crash that killed Richard and injured Allison. Under the factual sequence presented, Allison Chase never rejected UM coverage in writing, or selected lower limits.

Following the accident, Allison Chase asserted that she, individually, and as personal representative of her father’s estate, was entitled to UM coverage in the amount equal to the policy’s bodily injury limits because she never accepted lower UM limits in writing, as required by Florida statute. The issue of whether Horace Mann was required to provide UM limits up to the liability limits of the policy came before the Florida Supreme Court. The Court found that although Allison’s policy retained the same liability limits as her father’s previous policy, Allison Chase was not given the opportunity to choose the UM limit amount. She was not a named insured on her father’s policy prior to Horace Mann’s unilateral decision to give her the same policy number that previously belonged to her father and, therefore, she previously had no authority to make any coverage waivers.

Under Florida’s UM statute, § 627.727(1) (2008), which allowed a named insured to elect “lower limits on behalf of all insureds,” the Court found that the dispositive language concerning the statute was the requirement that “a named insured” has to be given the opportunity to waive the coverages. When Allison Chase became listed as the named insured on the original policy, it created a new policy for purposes of the Florida statute. Horace Mann did not obtain a valid waiver of UM coverage under Allison Chase’s policy.

At the time of the accident, Allison Chase was the named insured on the original policy, with her father only as a listed driver. There was no dispute on the factual record that Allison Chase, as the sole named insured on that policy, never signed a waiver of higher UM coverage. Because of this, Richard Chase’s waivers made under his policy, albeit with the same policy number, did not apply to Allison as the sole named insured on her policy, or as the personal representative of her father’s estate under the policy.

It is unclear why Horace Mann chose to re-order the insuring relationships under the policies issued to Richard Chase and Allison Chase. The moral of the story, however, is that whenever an insurance company significantly modifies an auto liability policy with UM and UIM coverage involved, the insurance company should go through the policy limit selection/rejection process associated with new UM/UIM coverages.