Opinion ID: 1860316
Heading Depth: 1
Heading Rank: 7

Heading: Rejection of UM Coverage

Text: This court in Roger, 513 So.2d at 1132, stated for a rejection to be valid under LA.REV.STAT. § 22:1406(D)(1)(a), the insured or his authorized representative must expressly state in a document that UM coverage is rejected in Louisiana as to a particular policy. The insured in this case appears to have expressly rejected UM coverage pursuant to Roger. However, the lower courts have also interpreted the statute to require that the form give the insured the option of selecting limits lower than the full liability limits. This court has not yet passed on the legitimacy of this interpretation. [3] Illustrative of this approach is Uhrich v. National Fire Insurance Co., 569 So.2d 1062 (La.App. 3d Cir.1990), writ denied, 572 So.2d 96 (1991). In Uhrich, the third circuit held a rejection was invalid where the form did not allow the option of selecting lower limits. The court stated: This court has repeatedly reaffirmed the rule that a document, which fails to offer UM coverage in amounts lower than the liability coverage, does not satisfy the requirements mandated by the UM statute. This meaningful selection rule is well-reasoned, since an insured must be given a meaningful selection from which to choose if the UM statute is to be followed. Otherwise, an insured who desires lower limits of UM coverage would be forced to reject UM coverage simply because the UM insurance form fails to comply with the statute. .... ... If an insurer is going to avail itself of the statutory exception, it must show that the insured initially had the option of selecting lower UM limits. Anything less fails to satisfy the requirements of LSA-R.S. 22:1406(D). Uhrich, 569 So.2d at 1064-65 (citations omitted). The court went on to find a rejection was invalid where the application form offered only two options, full UM coverage, or a rejection of UM coverage, and did not contain a blank wherein the insured could have requested limits lower than the full liability coverage. We agree with the Uhrich interpretation of the statute. The UM statute provides that UM coverage in an amount equal to the liability limits is automatic unless such coverage is completely rejected or the lower limits are selected. The statute thus provides the insured with three options: UM coverage equal to bodily injury limits in the policy, UM coverage lower than those limits, or no UM coverage. A rejection on a form that prohibits the insured from choosing limits below liability coverage or which automatically chooses a certain lower amount for the insured, does not meet the statutory requirements because it forecloses options available to the insured by law. In this case, the Umbrella Liability Policy application form only provided a space for the insured to reject coverage completely. There was no space provided in which he could choose limits lower than the liability coverage. Therefore, it fails to meet the requirements of the statute. [4] We would note that although we agree with the third circuit's interpretation of the statute in Uhrich, we disagree with its approach in Bertrand v. Shelter General Insurance Co., 571 So.2d 861 (La.App. 3d Cir.1990). In that case, the rejection seemed valid because it was clear and unequivocal and because the application provided blank spaces in which the insured could choose limits of UM coverage, thus meeting the requirement of Uhrich. However, plaintiffs argued that the rejection was nevertheless invalid because the insured was never informed of the option of UM limits in any amount other than an amount equal to bodily injury limits. The court rejected the argument, stating, We can find nothing in the statute or the jurisprudence which would require that for a rejection of UM coverage to be valid, an insured must be informed of his option to select lower limits. [5] Bertrand, 571 So.2d at 866. Implicit in the statute's requirement that the insurer make available to the insured the option of selecting lower limits is the idea that the insured be made aware of that option. Uhrich's requirement that the insured be given the option of selecting lower limits would be empty protection indeed if the insurer were not also required to make sure the insured is informed of such an option. An insured cannot exercise an option he does not know exists. This can be accomplished in several ways. For example, the insurer can require the insured to acknowledge in writing he has been informed of the options; or, the application itself can be set up in such a way through the use of blanks and boxes that it is apparent to the reasonable person that he has the option of selecting any lower limit he chooses. [6]