Negligence Claim Against Insurance Agent
November 9, 2015
The insureds' son was injured in an auto accident. After discovering that the auto policy did not include underinsured motorists (UIM) coverage, the insureds sued their insurance agent alleging negligence. This case is Watson v. Elswick, 2015 WL 5896995.
Elswick was the insurance for the Watsons for twenty-six years. According to Watson, he asked Elswick on several occasions if they had full coverage auto insurance and was assured that they had the best insurance money can buy. Neither of the Watsons ever specifically asked about or requested UIM coverage.
At the time of the accident, the Watsons had two insurance policies covering three vehicles; neither policy included UIM coverage. Dustin, the son, lived with his parents but was not a named insured on either policy. Dustin was a passenger in a pickup truck belonging to a third party when the truck went off the road and down the hill. Dustin sustained severe injuries.
When the Watsons inquired about UIM coverage, Elswick informed them that there was no coverage. The Watsons then sued Elswick seeking damages of $75,000, the amount of UIM coverage they believed they should have had. The trial court ruled in favor of Elswick and this appeal followed.
The Court of Appeals of Kentucky noted that based on Kentucky law, UIM coverage is optional and not mandatory. So the question before the court was whether a request for full coverage constitutes a request for UIM coverage. The court said that it could not conceive that a request for full coverage would include all or even any optional coverages unless specifically requested. The court noted that full coverage as used in relation to auto insurance means insurance in such amount and for such coverage as is mandatory by statute.
An examination of the auto policies led the court to find that the policies complied fully with statutory requirements. Moreover, the record showed that the Watsons did not pay Elswick any consideration beyond the policy premiums and there was no evidence that the Watsons sought out and relied on Elswick's advice beyond the general request for full coverage. The evidence also showed that the Watsons never spoke with Elswick about any specific aspects of their insurance coverage and never made a clear request for advice regarding their insurance coverage.
Under the circumstances, the appeals court ruled that the trial court correctly found in favor of Elswick. The court said that Elswick did not breach statutory or common law duties to advise. The ruling of the trial court was affirmed.
Editor's Note: The Court of Appeals of Kentucky rules that a request by the insured for full coverage does not include a request for all or even any optional coverages. The insurance agent in this instance did not breach any statutory or common law duty to the insureds by not advising them to buy UIM insurance since UIM coverage is optional. The insureds should have specifically asked about UIM coverage and their failure to do so did not translate into negligence on the part of the insurance agent.