Opinion ID: 2509465
Heading Depth: 2
Heading Rank: 1

Heading: What Constitutes a Meaningful Offer Under AS 21.89.020(c)?

Text: The majority of jurisdictions that have considered comparable statutes have concluded that insurance companies are required to mention pricing when offering UIM coverage. [2] In the first of these decisions, the Minnesota Supreme Court held in a case similar to this one that insurance companies must notify policyholders that optional UIM coverage is available for only a small additional charge. [3] A number of other jurisdictions followed suit. [4] This trend is grounded in the conclusion of a number of courts that statutory language mandating an offer requires insurance companies to make meaningful offers so that consumers can make informed choices about their preferred level of coverage. [5] The approach of the majority of the states that have examined this question  requiring some discussion of the cost of UIM coverage as part of a mandatory offer  comports with the Alaska Legislature's purpose in enacting AS 21.89.020(c). The provision reflects a broader effort on the part of the legislature to ensure that victims of automobile accidents are compensated for their injuries. In Peter, we observed that [t]he legislature has concerned itself since 1984 with making UM/UIM coverages available to the public, [6] and looked to the legislature's preamble to the Motor Vehicle Safety Responsibility Act, which states: The legislature is concerned over the rising toll of motor vehicle accidents and the suffering and loss inflicted by them. The legislature determines that it is a matter of grave concern that motorists be financially responsible for their negligent acts so that innocent victims of motor vehicle accidents may be recompensed for the injury and financial loss inflicted upon them.[ [7] ] In light of this statement of purpose, and other provisions in the Alaska Statutes mandating that drivers possess motor vehicle liability insurance, [8] AS 21.89.020(c) reflects an intent on the part of the legislature to facilitate the purchase of UIM coverage by policyholders. To this end, the legislature required that insurance companies offer UIM coverage. To be meaningful, the offer must be sufficiently detailed to allow policyholders to make informed decisions about their desired level of coverage. Alaska Statute 21.89.020(e), which requires a written waiver of UIM insurance, illustrates that the legislature intended to do more than merely require insurers to inform consumers that optional UIM coverage existed. The written-waiver language indicates that the legislature recognized that most informed consumers would want UIM coverage; for this reason, the legislature decided to treat all consumers as though they did want the coverage unless insurers took the affirmative step of avoiding the possibility of an uninformed waiver by securing an express waiver in writing. As Judge Sanders reasoned in Graham-Gonzalez v. GEICO, the offer of UIM coverage must be presented in a manner reasonably calculated to permit the customer to make an informed decision of whether to purchase [the additional] coverage at the mandated levels, and this includes the cost of the coverage. [9] The court relies in part on minutes from a 1990 committee meeting where legislators rejected a proposal to change the language in AS 21.89.020(c) mandating that insurance companies shall offer UIM coverage to shall make available. The court concludes that the decision to keep the shall offer language indicates that the legislature intended to require companies to notify insured parties about the availability of the coverage, but not to inform them about the price. I find Judge Sanders's interpretation of this legislative history in Graham-Gonzalez [10] to be more persuasive. Judge Sanders astutely observed that litigation in other states formed the backdrop to the Alaska Legislature's decision to keep the shall offer language in the statute. In the years preceding the Alaska Legislature's decision, courts in other states examined the meaning of shall offer in comparable statutes. Several states concluded that shall offer indicated an obligation on the part of insurers to include pricing options as part of the offer. [11] As Judge Sanders concluded, it is likely that the Alaska Legislature was aware of these decisions when it decided to retain the shall offer language in the statute. Because Judge Sanders was correct in his conclusion that the offer of UM/UIM coverage in Graham-Gonzalez was defective, this aspect of his decision should be affirmed. But because State Farm's notice in Bozinoff informed Bozinoff that UIM coverage was available for a relatively modest increase in premium, its offer was adequate.