Insured’s Claim for UIM in Kentucky Denied Despite 30-Year Misunderstanding About Coverage

by Mandy Hicks

Do you know how much uninsured motorist coverage you have, or whether you have such coverage at all? One man thought that he had such coverage, but, as it turns out, uninsured motorist coverage was not part of his insurance plan with Allstate.

In a case that went all the way to the state’s highest court, the parties vehemently disagreed about the issue of coverage. Ultimately, the man lost his case in an appellate court opinion issued some 10 years after the automobile accident that led to the dispute.

Facts of the Case

In the case of Allstate Insurance Company v. Smith, the appellee was a man who was insured by the appellant, Allstate. In 2006, the man was involved in an automobile accident in which he sustained bodily injuries. After settling his negligence claim against the allegedly at-fault driver for that person’s liability insurance policy limits, the man sought additional payment from Allstate, The man said the policy limits settlement was insufficient to cover his total losses.

Allstate denied the man’s claim for underinsured motorist coverage (UIM) benefits on the basis that his policy – which had been maintained on a six-month renewal basis since 1979 – did not include UIM. Although he never specifically requested that Allstate provide him with UIM coverage and had never paid a premium for it, he was apparently under the impression that his policy included such coverage. He filed suit, alleging breach of contract and asking for a declaration of rights. He also sought punitive damages based on Allstate’s alleged bad faith in denying his claim.

The trial court ruled in favor of Allstate on the basis that the man had never requested UIM coverage or been charged a premium for such coverage. The appellate court reversed, holding that Allstate had a duty under the Kentucky Motor Vehicle Reparations Act (MVRA) to advise the man of possible UIM coverage.

The Kentucky Supreme Court‘s Opinion

The state supreme court reversed the intermediate court of appeals’ ruling, agreeing with Allstate that it was under no obligation to remind the man of the possibility of UIM coverage with each renewal of his policy. The MVRA did not require Allstate to do so, only to mention such coverage when giving the insured the notice of first renewal. In so holding, the court observed that UIM is “an optional coverage to be requested by the insured.”

After paying premiums to Allstate for well over 30 years, the court’s ruling no doubt came as an unpleasant surprise to the man, and it is a lesson to all. Ask questions about your coverage not only when you are first applying for insurance but also as often as necessary thereafter.

If You Have a Question About UIM Coverage

Insurance coverage disputes are unfortunately a common occurrence when it comes to motor vehicle accident cases. Naturally, after years of paying premiums and having a friendly relationship with his or her insurance company, the insured expects UIM or UM payments to be swift, fair, and uncontested, but this is the exception rather than the rule. If you believe your insurance company has wrongfully denied a claim or made an unreasonable settlement offer on a UIM or UM matter, the assertive and knowledgeable Kentucky vehicle accident attorneys at English, Lucas, Priest & Owsley offer a free case consultation. Our offices are located in Bowling Green, and we handle cases throughout south central Kentucky and middle Tennessee.

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