Opinion ID: 2659283
Heading Depth: 1
Heading Rank: 4

Heading: Claim Against Liberty Mutual

Text: Liberty Mutual challenges the district court’s award of partial summary judgment to the heirs, contending that they were not entitled to any UIM coverage. According to 8 Liberty Mutual, the policy did not include UIM coverage because: (1) it was validly rejected under subsection (g), or (2) the policy was “existing” on January 1, 2001, and subsection (h) was satisfied. We conclude that UIM coverage was rejected in compliance with subsection (g), and this rejection would have sufficed regardless of whether the policy were considered “new” or “existing.”
Subsection (g) allows a named insured to reject UIM coverage by “express writing . . . on a form provided by the insurer that includes a reasonable explanation of the purpose of [UIM] coverage and when it would be applicable.” Utah Code Ann. § 31A22-305.3(2)(g) (2007 supp.). The heirs argue that: (1) subsection (g) does not apply, and (2) UPS’s purported rejection was ineffective because Liberty Mutual’s form failed to reasonably explain the purpose of UIM coverage and when it applies. We reject both arguments. The threshold issue is whether subsection (g) applies, for the heirs argue that subsection (g) applies only to “existing” policies and that the policy is “new.” For the sake of argument, we can assume that the policy is new. But there is nothing in subsection (g) that suggests its application is limited to existing policies. Thus, even if the policy were new, subsection (g) would apply. See Am. Nat’l Prop. & Cas. Co. v. Checketts, No. 2:11-CV-250-BSJ, 2012 WL 1835866, at  (D. Utah May 21, 2012) (explaining that “[c]ustomers purchasing new policies [can] still reject UIM coverage 9 altogether” under subsection (g)), rev’d on other grounds, 528 F. App’x 851 (10th Cir. 2013). Under subsection (g), we must decide whether the form reasonably explained the purpose of UIM coverage and when it applied. The extent of the required explanation was addressed in Lopez v. United Automobile Insurance Co., 274 P.3d 897 (Utah 2012). There, the court concluded that insurers must “provide sufficient information to allow consumers to make informed decisions regarding the selection of UIM coverage.” Id. at 901. Applying this standard, the court held that the insurer’s explanation was insufficient because it: (1) used the term “underinsured” without defining its meaning, (2) used the term “uninsured/underinsured” without differentiating between the two types of coverage, and (3) “lump[ed] the benefits of UIM coverage and uninsured motorist coverage together, making it difficult to understand when the respective benefits of each coverage apply.” Id. at 903. Under Lopez, Liberty Mutual’s disclosure form provided sufficient information to allow a consumer to make an informed decision about UIM coverage. The form reasonably explained that the purpose of UIM coverage was to provide “additional insurance benefits” to insureds or their passengers injured in a car accident caused by someone without enough liability insurance. Appellant’s App. vol. 3, at 686-92. The form does not contain any of the three deficiencies identified in Lopez. 10 First, the form did not fail to define the word “underinsured.” Rather, the form identified an “underinsured” motorist as someone who “does not have enough insurance to compensate [the insured or his passenger] for [his] injuries.” Id. Second, the form differentiated between UM and UIM coverage, explaining that “UIM coverage is not the same as the Uninsured Motorist (UM) coverage [the policyholder] may currently have.” Id. Third, the form did not lump together the benefits of UIM coverage and UM coverage, “making it difficult to understand when the respective benefits of each coverage apply.” Lopez v. United Auto. Ins. Co., 274 P.3d 897, 903 (Utah 2012). Indeed, the form’s sole reference to UM benefits served to clarify that they were distinct from UIM benefits. The heirs raise three complaints regarding Liberty Mutual’s disclosure form: (1) it referred to the wrong statute, citing Section 31A-22-305 rather than Section 31A-22305.3; (2) it referred to “additional insurance benefits” without identifying them or stating when they would apply; and (3) it did not provide the insured with an option to purchase UIM coverage up to the policy’s liability limits or the maximum UIM coverage available under the policy. These complaints do not undermine the validity of the form in light of subsection (g)’s minimal statutory requirements. 11 First, the alleged error in the citation2 is immaterial because subsection (g) does not require citation of the statute. See Utah Code Ann. § 31A-22-305.3(2)(g) (2007 supp.). Instead, subsection (g) requires only that the form reasonably explain the purpose of UIM coverage and when it applies. Id. These requirements would not be implicated by the error in the statutory citation. In arriving at this conclusion, we do not rule out the possibility that a mistake in the citation could make the disclosure so confusing that it failed to reasonably explain the purpose of UIM coverage or when it applied. Though this possibility could exist in the abstract, it does not apply here. The error is an obvious typographical error, with “.3” omitted at the end of the citation. The cited section pertains to coverage for those that are uninsured, not underinsured. Notwithstanding the typographical error, the content of Liberty Mutual’s explanation was accurate. Though the wrong section was cited, the heirs do not state how the error would confuse readers on the required elements: an explanation of the purpose of UIM coverage and when it applies. Thus, the typographical error does not create a factual dispute on a material issue. Second, the form’s reference to “additional insurance benefits” does not invalidate the disclosure. The disclosure begins with the phrase “additional insurance benefits,” but goes on to explain precisely what these benefits are, telling the reader that the “additional 2 The heirs did not make this argument in their summary-judgment briefs. See Appellant’s App. vol. 3, at 582-87. But the heirs’ attorney presented this claim in oral argument. Id. vol. 4, at 912; id. vol. 5, at 1121. 12 insurance benefits” are paid “if [he or she] or someone in [his or her] automobile suffers bodily injury, sickness, disease, or death because of an automobile accident caused by another party who is primarily at fault, but who does not have enough insurance to compensate for the injuries.” Appellant’s App. vol. 2, at 477-86. Any reasonable factfinder would conclude that this statement tells the reader the purpose of UIM coverage and when it applies. The heirs liken the term “additional insurance benefits” to the phrase “certain benefits,” which appeared on the form struck down in Lopez. The reliance on Lopez is misplaced. There, the relevant portion of the form stated that “Uninsured/Underinsured Motorists . . . Coverage provide[d] for payment of certain benefits for damages caused by the owner or operator of uninsured/underinsured motor vehicles.” Lopez v. United Auto. Ins. Co., 274 P.3d 897, 903 (Utah 2012). But the problem in Lopez was not the vagueness of the term “certain benefits.” Instead, the problem was the lumping together of UIM coverage and UM coverage. By failing to distinguish between the two, the Lopez court found “it difficult to understand when the respective benefits of each coverage apply.” Id. Because Liberty Mutual’s form does not lump UIM and UM benefits together, the problem discussed in Lopez is absent. Third, we reject the heirs’ complaint that the form failed to give UPS the option of buying greater UIM coverage. Under subsection (g), no such disclosure is required. 13 Instead, this subsection requires only that the form reasonably explain the purpose of UIM coverage and when it applies. In sum, Liberty Mutual’s disclosure form provided sufficient information to allow a policyholder to make an informed decision about UIM coverage. Thus, the form satisfied Lopez’s “reasonable explanation” standard and UPS validly rejected UIM coverage. With this rejection, UPS obtained a policy without UIM coverage; as a result, the heirs’ claim against Liberty Mutual fails as a matter of law.
The heirs argue that even if the disclosure sufficed under subsection (g), we would need to determine whether the disclosure satisfied subsection (b). This argument is rejected. To assess the logic of the heirs’ reading, we must consider the respective functions of subsections (g) and (b). Subsection (g) addresses the validity of an insured’s decision to decline all UIM coverage; subsection (b) establishes a presumptive amount of UIM coverage and addresses an insured’s decision to buy some, but not all, of that amount. We have concluded that UPS validly rejected all UIM coverage. But the heirs argue that even if UPS rejected all UIM coverage, we must decide if UPS had enough information to decline the presumptive amount of UIM coverage for “new” policies. This reading would create an absurdity. An insured could knowingly reject all UIM coverage, but nonetheless be duped into buying the presumptive amount for “new” 14 policies. As a result, a subsection (g) rejection would be valid only if the insurer’s form satisfied both subsections (b) and (g). This anomaly would render subsection (g) meaningless. Regardless of whether subsection (g) were satisfied, the availability of UIM coverage would turn on the sufficiency of the disclosure under subsection (b). To give subsection (g) any meaning, we cannot accept the heirs’ argument that the rejection must satisfy both subsection (b) and subsection (g).
If the policy were considered “existing,” subsection (h) would apply. Under this subsection, disclosure is necessary only if the policyholder carried at least some UIM coverage when the insurer sent the first two renewal notices after January 1, 2001. See Utah Code Ann. § 31A-22-305.3(2)(h) (2007 supp.). But UPS does not fall within this category because it validly rejected UIM coverage under subsection (g). Thus, if the UPS policies had been “existing” as of January 1, 2001, no disclosures would have been required.
As a result, we conclude that the disclosure under subsection (g) was sufficient as a matter of law. With that disclosure, UPS validly rejected UIM coverage. Thus, the district court should not have granted judgment in any amount to the heirs. Instead, the court should have granted summary judgment (in full) to Liberty Mutual. 15