The Supreme Court of Wisconsin ruled that an insurer was required to notify its insureds of the availability of underinsured motorists coverage (UIM) under an umbrella policy in Rebernick v. Wausau Gen. Ins. Co., No. 2004AP487, 2006 WL 798041 (Wis. Mar. 30, 2006).
Dale Rebernick was riding a lawn mower when he was struck by a car, which caused serious and permanent injury. He collected the driver's liability limits and $100,000 limits from his own auto policy issued by American Family Insurance. The Rebernicks also had a $1 million umbrella policy issued by American Family, which required them to maintain an underlying auto policy as primary insurance. They sought additional indemnity from the umbrella policy and, although the policy excluded UIM coverage, they claimed “they were entitled to reformation of the policy because American Family had failed to provide them with notice of the availability of UIM coverage for that policy” as required by Wisconsin statutes.
American Family argued that the statutory notice applied only to primary auto policies. The court, however, said that the Rebernicks' policy fell within the scope of the statute. American Family asserted that the umbrella policy did not meet the statutory requirement that the policy must insure a particular motor vehicle. The court said that “it is something of fiction to suggest that an umbrella policy does not insure with respect to a particular motor vehicle when the policy requires underlying insurance that does.”
Therefore, the court determined that American Family was required to provide notification of the availability of UIM coverage under the umbrella policy.
The Rebernicks said that American Family failed to provide such notice, and they should then be allowed to retroactively purchase UIM coverage under the umbrella policy. The court, though, determined that the Rebernicks were aware of the availability of such coverage. They requested UIM coverage for their primary policy, for which they did receive the required notice. The umbrella policy was issued a week after the primary policy, a short period of time after they were notified by the same company of the availability of UIM coverage.
The umbrella policy also contained an exclusion for UIM coverage that contained this phrase: “unless the policy is endorsed to provide such coverage.” The Rebernicks were thus alerted to the availability of UIM coverage. The court said, “This clause alone would not be enough to constitute notice of the availability of UIM coverage in an umbrella policy pursuant to” Wisconsin statutes.
However, the court considered all of the circumstances in addition to the clause to conclude that proper notice was given.
The court added this caveat:
We caution, however, that the only way for insurance companies to be certain that they have provided proper notice pursuant to §632.32(4m) is to separately provide in each policy for which notice is required the type of notice American Family provided to the Rebernicks in their primary automobile policy. Absent the provision of such notice (or notices, as the situation may be), insurers will have no guarantee in future cases presenting different facts that they have properly notified insureds of the availability of UIM coverage pursuant to §632.32(4m).