Make it Meaningful – 4th Circuit Court Rules on Underinsured Motorist Coverage

We handle a fair amount of litigation involving Undersinsured Motorist Coverage (UIM).  Occasionally, we see the “buyer’s remorse” theme.  A motorist is injured due to fault of another, and the motorist’s loss is not adequately compensated by the at-fault party’s bodily injury liability policy.  The motorist, having remorse over his failure to buy Underinsured Motorist Coverage from his own liability insurer, then claims that UIM coverage should be afforded anyway, because allegedly there was not a “meaningful offer” of UIM coverage by the insurer.

Such was the situation in a case recently decided by the United States Fourth Circuit Court of Appeals in Richmond.  I love Richmond and its history.  My grandfather practiced law there, which had a lot to do with my being an attorney – but, alas, I digress …

In the January 6, 2012 decision of Bagnal v. Foremost Insurance Group, the Court of Appeals affirmed the decision of the U.S. District Court of South Carolina, which granted summary judgment to Foremost, the purported UIM insurer.   The District Court ruled that, as a matter of law, Foremost was entitled to judgment in its favor, as Foremost had made a “meaningful offer” of UIM coverage to its liability insurance policyholder, consistent with South Carolina Code Annotated Section 38-77-160, and the well-known case of State Farm Mut. Auto. Ins. Co. v. Wannamaker, 354 S.E.2d 555 (S.C. 1987).  For the offer of UIM coverage to be meaningful, “(1) the insurer’s notification process must be commercially reasonable, whether oral or in writing; (2) the insurer must specify the limits of optional coverage and not merely offer additional coverage in general terms; (3) the insurer must intelligibly advise the insured of the nature of the optional coverage; and (4) the insured must be told that optional coverages are available for an additional premium.”  Id.

The District Court found that Foremost complied with the law by mailing certain information to the policyholder. Further, when the policyholder sought to create an issue of fact (for trial) as to the policyholder’s contrary view of what offer of coverage had been made, the District Court found such alleged evidence was not enough to create a triable issue. The Court of Appeals took a fresh look at everything and affirmed the District Court’s ruling:  ” [W]e find no merit in Bagnal’s contention that the District Court was required to consider the documents before it in isolation from each other when examining the propriety of Foremost’s offer of UIM coverage. Moreover, there is no evidence to support Bagnal’s speculation that Adams may not have received a complete copy of the forms that Foremost sent to him, or that Adams’ wife may have executed the forms in question without the proper authority. Accordingly, we affirm the District Court’s grant of summary judgment in favor of Foremost.”

Game, set, match … By the way, speaking of courts, did you know that tennis great Arthur Ashe was born and raised in Richmond?  I’ve seen the court where he learned to play.  But, alas, I digress …

About Collins & Lacy, P.C.

Collins & Lacy is a statewide business defense firm in South Carolina that delivers legal representation for our clients through solid preparation, execution, and client-oriented service aimed at success. Located in the State’s capital city of Columbia, the firm represents local, regional and national clients in the areas of construction; hospitality/retail and entertainment law; insurance/bad faith; products liability; professional liability; commercial transportation; privacy, data management, and cybersecurity; mediation; criminal defense; and governmental affairs/issue advocacy.