Who Can Reject Uninsured Motorist and Personal Injury Protection Coverage?
August 2005
Insured individuals are granted statutory
options to reject uninsured motorist (UM) or personal injury protection (PIP)
coverage in a majority of states. There have been a number of issues that the
courts have addressed with respect to the rejection of UM/PIP coverage such
as whether the rejection must be in writing or can be oral, whether a rejection
applies to renewal policies, and whether there can be a partial rejection by
contracting for coverage in less than the statutorily required amounts.
by R. Brent
Cooper & Dana Harbin
Cooper & Scully
Several courts have addressed the issue of who has statutory right to reject
UM coverage and to which insured persons does the rejection apply. The majority
of statutes mandating UM/PIP coverage typically specify that the "named insured"
and "any insured named in the policy" has the right to reject the coverage.
These terms are usually not defined in the statutes. The term "insured" is typically
defined in the policy itself to include not only the insured named on the automobile
policy, but also certain others having a designated relationship with that person.
Recently, the Texas Supreme Court held that the statutory terms "named insured"
and "any insured named in the policy" are indistinguishable. Old American County Mut. Fire Ins. Co. v. Sanchez,
149 S.W.3d 111, 117 (Tex. 2004), citing Whitten v. Progressive
Cas. Ins. Co., 410 So. 2d 501, 503 (Fla. 1982), (rejection of coverage
by father, who was named insured on the policy, was binding on son, who was
principal operator, as well as on any additional insureds named on the policy); Miller v. State Farm Mut. Auto Ins. Co., 155
Ga. App. 487, 271 S.E.2d 14, 15 (1980); Oncale v. Aetna
Cas. & Sur. Co., 417 So. 2d 471, 474 (La. App. 1982, cited with approval inBullock
v. Homestead Ins. Co., 697 So. 2d 712, 715 (La. App. 1997).
Having determined that the phrase "named insured" is synonymous with "insured
named in the policy, the Texas Supreme Court in Old
Am. Cty. Mut. Fire Ins. Co. v. Sanchez, supra, held that the wife of
the named insured was qualified statutorily to reject the UM and PIP coverages.
Because the statutory category of persons entitled to reject such coverage included
"any insured named in the policy," the court
looked to the standard automobile insurance policy form in use when the Legislature
enacted articles 5.06-1 (UM statute) and 5.06-3 (PIP statute) of the Texas Insurance
Code. The court found that the Texas Family Automobile Policy form was applicable
at that time and defined "named insured" to include both the individual named
on the declarations page of the policy "and … [that individual’s] spouse, if
a resident of the same household." Id. at
118. Thus, the court concluded that when the Legislature used the phrase "named
insured," the Legislature understood that phrase to include the named insured’s
resident spouse, even if he or she was not specifically identified on the declarations
page of the policy. Id.
Other courts have interpreted the UM statutes broadly to recognize sufficient
rejection by any person that qualifies as a "named insured" and that the rejection
by one applies to all insureds. See St. Paul Mercury
Inc. Co. v. MacDonald, 509 So. 2d 1139 (Fla. App. 1987) (named insured’s
wife effectively rejected increased limits of UM coverage and such rejection
was binding on named insured husband); Farrior v. State
Farm Mut. Auto. Ins. Co., 595 S.E.2d 790 (N.C. App. 2004) (rejection
of UM coverage by named insured was binding on all insureds under policy); Hall v. Allstate Ins. Co., 53 Wash. App. 865,
770 P.2d 1082 (1989) (husband who purchased automobile policy had right to waive
UM coverage on behalf of both himself and his wife, both of whom were designated
as named insureds on the policy).
On the other hand, the Alabama Supreme Court has interpreted its statute,
which limits the right of rejection to the "named insured," to apply only to
the person actually named on the policy and not the wife/spouse of the named
insured. See State Farm Mut. Auto. Ins. Co. v. Martin,
292 Ala. 103, 289 So. 2d 606 (1974) (commissioner of insurance issued directive
requiring that rejection be in writing and signed by named insured). In fact,
the Alabama courts have interpreted their UM statute so strictly that rejection
of UM coverage by one named insured is not effective as a rejection by other
named insureds on the same policy. Nationwide
Ins. Co. v. Nicholas, 868 So. 2d 457 (Ala. App. 2003).
Other courts have taken this same literal approach to interpretation of the
UM statute, limiting the validity of the rejection to the named insured. See Nationwide Mut. Ins. Co. v. Pasion, 219 Conn.
764, 594 A.2d 468 (1991) (under statute required written waiver signed by "insured"
in order to reduce UM coverage below level of liability coverage, term "insured"
referred to all named insured on policy so that written request to reduce coverage
was required to be signed by all insureds to effectuate reduction); State Farm Fire & Cas. Co. v. Garrett, 783 N.E.2d
329 (Ind. App. 2003) (personal liability umbrella policy did not create agency
relationship between named insured who rejected UM coverage and other named
insured, who did not personally execute rejection, and thus named insured’s
rejection did not serve as rejection of UM coverage on behalf of other named
insured, where policy did not contain provision stating that named insured was
authorized to act for each additional named insured); Plaster v. State Farm Mut. Auto. Ins. Co., 791
P.2d 813 (Okla. 1989) (when policy of insurance with more than one individual
as "named insured," written rejection of UM coverage executed by one named insured
was ineffective rejection of said coverage on behalf of all named insureds).
To be sure, practitioners should secure a rejection of UM/PIP coverage by
every insured named on the policy, unless it is clear in the subject jurisdiction,
like Texas, that anyone that qualifies as a insured named on the policy has
the authority to reject UM/PIP coverage.
Dana Harbin is an attorney in the Dallas office of Cooper & Scully, P.C. where she specializes
in insurance coverage and bad faith involving all types of insurance policies,
both first and third party. Ms. Harbin earned her BA degree from the University
of Texas in Arlington and her JD degree from the University of Texas at Austin.
She can be reached at dana.harbin@cooperscully.com.
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