Supreme Court of Louisiana.
Merril J. DAIGLE
v.
Michael J. AUTHEMENT, National Automotive Insurance Company and Louisiana
Indemnity Insurance Company.
No. 96-C-1662.
April 8, 1997.
Insured brought action to recover uninsured motorist (UM) benefits. The
Thirty-Second Judicial District Court, Parish of Terrebonne, No. 106,492,
John T. Pettigrew, J., entered summary judgment in favor of insured. Insurer
appealed. The Court of Appeal, Kline, J. pro tem.,
676 So.2d 650, reversed. Certiorari was granted. The Supreme Court,
Marcus, J., held that rejection form was valid and enforceable for insured who
purchased bodily injury coverage in minimum available limits.
Affirmed.
West Headnotes
[1] Insurance 2778
217k2778
Most Cited Cases
(Formerly 217k130.5(4))
Form for rejecting uninsured motorist (UM) coverage was valid and enforceable
for insured who purchased bodily injury coverage in minimum available
limits and did not have option of selecting lower UM limits.
LSA-R.S. 22:1406,
22:1406, subd. D(1)(a)(i), 32:900, subd. B(2).
[2] Insurance 2813
217k2813
Most Cited Cases
(Formerly 217k145.1)
Automobile insurer bears burden of proof that rejection of uninsured motorist
(UM) coverage or selection of lower limits has been legally perfected.
LSA-R.S. 22:1406, subd. D.
[3] Insurance 2778
217k2778
Most Cited Cases
(Formerly 217k130.5(4))
Valid rejection of uninsured motorist (UM) coverage must be expressly set
forth in writing signed by insured or authorized representative.
LSA-R.S. 22:1406, subd. D.
[4] Insurance 2778
217k2778
Most Cited Cases
(Formerly 217k130.5(4))
Form for rejecting uninsured motorist (UM) coverage was not rendered ambiguous
by label that it was for coverage selection; since UM coverage was mandatory
unless rejected, insured would select UM coverage by not signing form.
LSA-R.S. 22:1406, subd. D.
[5] Insurance 2778
217k2778
Most Cited Cases
(Formerly 217k130.5(4))
It is not job of courts to draft insurance forms or to dictate exact form
or wording which must be used for valid rejection of uninsured motorist
(UM) coverage.
LSA-R.S. 22:1406, subd. D.
[6] Insurance 2775
217k2775
Most Cited Cases
(Formerly 217k130.5(2))
[6] Insurance 2778
217k2778
Most Cited Cases
(Formerly 217k130.5(4))
Automobile insurer need not provide written definition of uninsured motorist
(UM) coverage in order to satisfy responsibility to inform insured of
available options and for UM coverage and choice between them.
LSA-R.S. 22:1406, subd. D.
*1213
Herbert William Barnes, Jr.,
Kentley Robert Fairchild, Samaine, Barnes & Allen, Houma, for applicant.
James Luke, Mathieu & Dagate, Houma, for respondent.
Michael H. Hogg, Metairie,
PeirceAldridge Hammond,II, New Orleans, for amicus curiae Southern United Fire Insurance.
MARCUS, Justice.
[FN*]
FN* Victory, J., not on panel. Rule IV, Part 2, § 3.
Merril Daigle was injured in an intersectional collision when her vehicle
was struck by a vehicle being operated by Michael Authement. Daigle sued
Authement and his liability insurance carrier, National Automotive Insurance
Company. She also sued her own automobile liability insurer, Louisiana
Indemnity Insurance Company, asserting uninsured/underinsured motorist coverage.
Louisiana Indemnity answered denying coverage. It claimed that Daigle had
executed a valid written rejection of uninsured motorist coverage as permitted by
La.R.S. 22:1406.[FN1] Plaintiff filed a motion for summary*1214 judgment seeking a ruling that the rejection form used by Louisiana Indemnity
was invalid and that coverage was therefore available to her in an amount
equal to the bodily injury coverage afforded by her liability policy.
The trial judge granted Daigle’s motion for summary judgment. After a
trial on the merits, judgment was rendered in favor of Daigle and against
Louisiana Indemnity in the amount of $10,000 (policy limits), together
with legal interest and costs.[FN2]
FN1. References in this opinion to “uninsured motorist coverage”
or “UM coverage” should be deemed to read: “uninsured or
underinsured motorist coverage.”
FN2. Plaintiff settled her claims against the driver of the other vehicle and
his insurer for $10,000 (policy limits) and executed a release in favor
of those parties. At trial the parties stipulated that Daigle was not
at fault and that the total amount of her damages was $20,000. The only
issue before the court was whether UM coverage was available to her under
her own policy.
The court of appeal reversed the judgment of the trial court, holding that
the rejection form used by Louisiana Indemnity sufficiently informed the
insured of her available options with respect to uninsured motorist coverage
and allowed her to choose between them.[FN3] Upon the application of Merril Daigle, we granted certiorari to review
the correctness of that decision.[FN4]
FN3. 95-1465 (La.App. 1st Cir. 5/31/96);
676 So.2d 650.
FN4.
96-1662 (La.11/15/96); 682 So.2d 746.
[1] The sole issue presented for our review is whether the execution by Daigle
of the form designed and used by Louisiana Indemnity constituted a valid
rejection of the uninsured motorist coverage that would otherwise be provided
to her by operation of law pursuant to
La.R.S. 22:1406.
The disputed rejection form appeared at the bottom of Daigle’s application
for insurance and provided:
UNINSURED MOTORISTS PROTECTION–COVERAGE SELECTION
Louisiana law requires that all automobile liability policies issued or
delivered in this state shall afford Uninsured Motorist Coverage unless
the insured shall reject such coverage.
I HAVE BEEN OFFERED and I hereby REJECT Uninsured Motorists Bodily Injury coverage.
SIGNATURE OF APPLICANT _______________
[FN5]
FN5. There is no dispute that the insured properly executed the document at
the time and on the date the original application for insurance was completed.
Uninsured motorist coverage is provided for by statute and embodies a strong
public policy.
Roger v. Estate of Moulton,513 So.2d 1126 (La.1987);
A.I.U. Insurance Company v. Roberts,404 So.2d 948 (La.1981). The object of such coverage is to provide full recovery for automobile
accident victims who suffer damages caused by a tortfeasor who is not
covered by adequate liability insurance.
Henson v. Safeco Insurance Companies,585 So.2d 534 (La.1991).
La.R.S. 22:1406 D(1)(a)(i) mandates that every automobile liability insurance policy issued
or delivered in this state shall include coverage, in not less than the
limits of bodily injury liability provided by the policy, for the protection
of insureds who are legally entitled to recover from owners or operators
of uninsured or underinsured motor vehicles. Statutory coverage will be
read into a policy as if it were in the policy itself.
Henson,585 So.2d at 537. However, the statute also provides that the insured may reject in writing
the statutorily mandated coverage or select lower limits.
[2][3] We have held that the UM statute is to be liberally construed and that
a rejection of the coverage provided by law must be clear and unmistakable.
Roger,513 So.2d at 1131. The insurer bears the burden of proof that a rejection of coverage or
a selection of lower limits has been legally perfected.
Henson,585 So.2d at 539. A valid rejection must be expressly set forth in writing and signed by
the insured or his authorized representative.
Tugwell v. State Farm Ins. Co.,609 So.2d 195 (La.1992);
Henson,585 So.2d at 538.
In
1987, La.R.S. 22:1406 D was amended to require that any rejection or selection of lower limits
shall be made only “on a form designed by each insurer.” Implicit in the
*1215 legislature’s direction to insurers to design a form, was the responsibility
to design a form that would fairly effectuate the intent of the law. The
legislature did not mandate that the form be designed in any particular
way, nor did it indicate that any particular language was sacrosanct.
The legislature had to have anticipated that various insurers might go
about the design of the necessary form in different ways. Moreover, as
in any case where the same type of document is drafted separately by multiple
authors, it is to be expected that some forms will be better than others.
Had the legislature believed that only one format was acceptable or that
only certain words or phrases could be used, it would have included the
required format in the statute. It did not do so. Thus, the question before
us is not whether the form used by Louisiana Indemnity was the best form
that anyone could possibly devise. Rather, the question before us is whether
the form designed and used by Louisiana Indemnity was adequate for the
purpose intended by the legislature. We believe that it was.
In
Tugwell, we held that a rejection form used by an insurance company must inform
the applicant of the available options regarding UM coverage so that the
applicant can make a meaningful selection from among the options provided
by the statute. A form does not meet the statutory requirements if it
fails to inform the applicant of an available option or forecloses an
available option. We recognized in
Tugwell that the statute normally provides three options: UM coverage equal to
bodily injury limits in the policy, UM coverage lower that those limits,
or no UM coverage. However, when an applicant elects to purchase only
the minimum bodily injury limits allowable, the option of selecting UM
coverage at limits lower that those in the policy is foreclosed by law
pursuant to
La.R.S. 22:1406 D(1)(a)(i)
[FN6] and
La.R.S. 32:900(B)(2). Because Daigle purchased bodily injury coverage in the minimum available
limits, she could not lawfully opt to have UM coverage at lower limits.
Accordingly, the form used by Louisiana Indemnity did not have to inform
her of an unavailable option.[FN7]
FN6. This provision was enacted by Act 980 of the Regular Session of the legislature
and became effective on August 21, 1992. The policy in dispute in this
case was issued in October, 1992 and is therefore governed by the new
version of the statute.
FN7.
See Morgan v. Sanchez, 94-0090 (La.App. 1st Cir. 4/15/94);
635 So.2d 786.
Daigle had only two options open to her under
La.R.S. 22:1406, the statutorily mandated UM coverage or none at all. Louisiana Indemnity
had to inform her of those two options and give her the opportunity to
select between them. In our view, the form designed by Louisiana Indemnity
did so in a manner sufficient to permit a valid rejection of UM coverage.
The Louisiana Indemnity form advised Daigle in plain and unambiguous language
that Louisiana law requires all automobile liability policies issued or
delivered in the state to afford uninsured motorist coverage “unless
the insured shall reject such coverage.” Thus, Daigle was advised
that if she did nothing, she would have UM coverage. The form then provided
a mechanism for the insured to exercise her other statutory option, rejection
of coverage. By executing the form, she made a choice between having UM
coverage and not having it. None of the options available were foreclosed
by the Louisiana Indemnity form. In this case, Daigle placed her signature
immediately below the line which read, “I HAVE BEEN OFFERED and I
hereby REJECT Uninsured Motorist Bodily Injury coverage.” Her signature
constituted an affirmative act rejecting coverage which was clear and
unmistakable.
[4] The insured does not claim that she did not understand the form when she
signed it or that she was misled in any way. She only claims that the
form is defective on its face. She argues that the title makes the form
ambiguous because it is labeled “Uninsured Motorist Coverage-Coverage
Selection,” when it is actually only used for rejection of coverage.
We do not agree. If the insurance applicant fails to sign the form, the
*1216 applicant is
selecting the option of retaining the benefits of UM coverage mandated by law. The
form provides a means of selecting between options, because by not signing
the form, the applicant is choosing to keep that which the law stipulates
for his or her benefit. Thus, the title of the form does not render it
unacceptable.
[5] The insured further argues that the form should have provided a means
of affirmatively choosing UM coverage by providing boxes or blanks for
her to check indicating her selection among the statutory options. While
such a format may be desirable, it is only one way of making sure that
the applicant is informed of the available options and allowed to choose
between them.
[FN8] In
Tugwell, we noted that the task of informing the applicant of available options
can be accomplished in several ways. It is not the job of the courts to
draft insurance forms or to dictate the exact format or wording which
must be used for a valid rejection of the mandated UM coverage. The legislature
specifically left that task to the insurers. Moreover in
Henson, we held that the statute does not require an affirmative act to choose
coverage. Any affirmative signature or mark accepting coverage would be
mere surplusage, since the coverage is automatically extended by operation
of law. An applicant does not have to sign a separate document opting
for coverage already provided in the policy. Such a document could be
thrown away after the insured’s execution of it without any effect whatsoever.
The statute requires an affirmative act only if UM coverage is rejected
altogether or, in an appropriate case, where lower UM limits are statutorily
permitted and desired. Accordingly, we cannot conclude that Louisiana
Indemnity’s failure to set up its form so as to require a penstroke in
favor of coverage renders the form defective.
FN8. In
Tugwell v. State Farm Ins. Co.,609 So.2d 195 (La.1992), we gave two examples of formats that could be used to provide an applicant
with a meaningful selection from among the statutory options in a case
where a selection of lower limits was possible. We neither held nor implied
that those were the only acceptable methods of informing the applicant
of the available options. We found the form used in
Tugwell defective because it did not inform the applicant of an option available
in that case (lower limits) and foreclosed the selection of that option.
[6] We also reject Daigle’s contention that the uninsured motorist coverage
selection form used by Louisiana Indemnity in conjunction with applications
for insurance had to provide a written definition of uninsured motorist
coverage in order to permit a valid rejection of UM coverage. The statute
does not impose such a requirement in order to satisfy the insurer’s responsibility
to inform the applicant of available options and allow a choice between
them. Moreover, we do not consider it necessary or appropriate for this
court to impose such a requirement.
In our view, the execution of the form designed by Louisiana Indemnity
constituted a valid and enforceable rejection of UM coverage under Louisiana
law. Accordingly, we will affirm the decision of the court of appeal.
DECREE
For the reasons assigned, the decision of the court of appeal is affirmed.
All cost are assessed against Merril Daigle.
691 So.2d 1213, 96-1662 (La. 4/8/97)
END OF DOCUMENT
