Guessing Not Included

In the case Michael Tillman v. USAgencies Casualty Insurance Co. No. 46,173-CA (La.App. Cir.2 03/02/2011), the plaintiff, Michael Tillman (Tillman), appealed a summary judgment dismissing his claim against the defendant, USAgencies Casualty Insuarance Co. (USAgencies) for uninsured/underinsured motorist bodily injury (UMBI) coverage. His appeal failed.

Tillman, age 21, was injured in an automobile accident on May 27, 2008, when his 1995 Dodge Ram pickup truck was struck from the rear by a vehicle driven by Tommy J. Pritchard. After Pritchard's insurer paid its policy limits, Tillman sought additional recovery from USAgencies. Tillman's mother, Paris Carter (Carter), had a policy from USAgencies providing coverage from Feb. 7, 2008 to Aug. 8, 2008. The Dodge Ram had been added to the policy on May 16, 2008, shortly before Tillman's accident. However, Carter rejected UMBI coverage on Feb. 6, 2008, when she completed an application for the policy.

Based on Carter's rejection of UMBI coverage, USAgencies asserted that no UMBI coverage was available for Tillman and sought summary judgment dismissing his claim. Tillman countered that Carter's rejection of UMBI coverage was not valid to his vehicle. He asserted that the insurance agent should have issued a new policy covering the Dodge Ram instead of merely adding it to his mother's policy.

Related: Read Zalma's previous column “No Lie”.

The trial court granted summary judgment dismissing Tillman's claim against USAgencies. The trial court found that Carter, who had purchased the insurance and was the named insured under the policy, executed the waiver of UMBI coverage as required by statute. When she added the Dodge Ram to her policy, a new policy was not created. Carter remained the named insured and was not required to execute another UMBI selection form

Carter's application showed that she obtained the statutory minimum of liability coverage for two vehicles, namely, a Jeep Wagoneer and a Ford Focus, for the policy period from Feb. 7, 2008, to Aug. 8, 2008. Carter was the named insured on the policy. Tillman was listed as a member of Carter's household and a covered person under the policy, except as to use of the Ford Focus for which he was designated an excluded driver. In connection with her application, Carter executed a UMBI coverage form. Her initials are in the blank next to the statement “I do not want UMBI Coverage.” She also signed the document below the following statement:

The choice I made by my initials on this form will apply to all persons insured under my policy. My choice shall apply to the motor vehicles described in the policy and to any replacement vehicles, to all renewals of my policy, and to all reinstatement or substitute policies until I make a written request for a change in my Bodily Injury Liability Coverage or UMBI Coverage.

Related: Read Zalma's article “Don't Change a Policy: You Can't Serve Two Masters”.

By statute, a form signed by the insured to reject UMBI coverage “shall remain valid for the life of the policy” and completion of a new form is not required “when a renewal, reinstatement, substitute, or amended policy is issued to the same named insured by the same insurer or any of its affiliates.” Therefore, the addition of the Dodge Ram to Carter's policy did not require the execution of a new UMBI coverage form. By its submissions in support of its motion for summary judgment, USAgencies rejected UMBI coverage by the named insured, Paris Carter.

In Louisiana, a properly completed and signed form creates a rebuttable presumption that the insured knowingly rejected UMBI coverage. The law is clear in Louisiana that one who signs a document is presumed to have done so with knowledge of its contents, regardless of whether he or she actually read it.

The court found Carter's rejection of UMBI coverage valid. The plaintiff then asserted that the insurance agent, Michelle West (West), erroneously added the Dodge Ram to Carter's policy when she knew that he was not a member of Carter's household and that he, not Carter, owned the vehicle. The court presumed, by the claim, that Tillman was seeking reformation of the policy to provide UMBI coverage for his Dodge Ram.

An insurance policy may be reformed, when due to mutual error or mistake, the policy fails to reflect the true intent of the parties. If the insurance agent knows the true intention of the policyholder as to the coverage desired, the insurance company is bound by the agent's knowledge and the erroneously issued policy will be reformed to conform to the original intention.

Related: Read “Saying No” by Barry Zalma.

The court noted that regardless of what the insurance agent knew about Tillman's living arrangements or ownership of the vehicle, the depositions of Tillman and Carter showed that neither expressed to West the intent to obtain a new policy covering the Dodge Ram with Tillman as the named insured. Rather, Tillman explained in his deposition that his mother took care of his insurance needs. She did not consult with him about what coverages he wanted, and he was not even aware of what coverages he had. He merely paid his mother a monthly amount for his insurance.

Tillman seeks to place the blame for his lack of UMBI coverage on West, the agent, whom he believed should have written a separate policy for the Dodge Ram. What Tillman could not overcome was the fact that what he wants was not what Carter requested or even what he directed Carter to obtain. Insurance agents have no independent duty to identify their clients' needs. It is the client who has the duty and responsibility to determine the coverage needed, advise the agent of those needs, and then to review the policy to determine whether it meets his needs.

We find that Tillman has not come forth with evidence to show there is a genuine issue of fact for trial. It is clear from his and Carter's depositions that neither intended to get a separate policy covering his Dodge Ram. Lastly, the court found no merit to Tillman's argument that Carter's UMBI waiver is invalid as to him because he did not give her written authority to reject UMBI coverage on his behalf. In this case the court was faced with the fact that the named insured, Carter, waived UMBI coverage for her policy. Carter did not waive UMBI coverage on behalf of Tillman under his own policy.

The case stands for a long-held and important rule of the law of insurance: Insurance agents have no independent duty to identify their clients' needs. They cannot be clairvoyant and determine what the insured really wanted. Rather, it is the insured who has the duty and responsibility to determine the coverage needed, advise the agent of those needs, and then to review the policy to determine whether it meets his needs. Insurance agents and brokers like those at USAgencies should make it a practice to properly document all files. It will not avoid all litigation but, as in the claim of Michael Tillman, it will make it possible for the agent's counsel to defeat the suit quickly. Lack of documentation turns a dispute like this one into a liars contest where a trier of fact, either a judge or jury, will lean toward believing the poor insured rather than the insurance agent, broker or insurer.