Uninsured Motorist Waiver

I had a prospective client call in a few weeks ago with an interesting uninsured motorist waiver issue that I thought I would share.

To keep the world simple, Maryland law requires that insurance companies match up their insured liability coverage with their uninsured motorist coverage. But it allows for an exception in those cases where the insurance offers uninsured/underinsured motorist coverage in the same amount as their liability coverage and the insured signs a waiver that its liability coverage will exceed its UM coverage. This is an odd bet for the insured who is more worried about getting sued and not having enough coverage then making sure they are protected when they get in a car crash that is caused by someone who had no or little insurance. But, I don’t disagree that in the free market economy (I’m talking to you, Mitt), people ought to have the right to make this odd choice as long as it is a knowing and


intelligent waiver. I think the law makes sense.

But what about these waivers? In this case, I have a high wage earner who gets into an accident with a driver with a minimum limits policy. He has a $300,000 liability policy that would clearly be offered if his uninsured motorist coverage mirrored the liability policy. Instead, he has the minimum $30,000 UM policy.

Or is it $20,000? The waiver says $20,000 – Maryland minimum is $30,000 – because it was signed in 1993! Seriously, it is a 19 year-old waiver and GEICO wants to hold him to it.

I don’t think the waiver applies because I don’t think GEICO’s waiver says what the statute says that it “must” (for one, that the coverage will still be offered even if the insured elects to have matching coverages). But I can’t find any law that says what I think should be just a slam dunk: you have to renew these waivers more often than every 19 years.

If you have any opinions about these facts, let me know. Assuming we take the case – and I think we will – we will simply file suit and file a summary judgment on this issue with the complaint and see what the court decides.

  • Bill

    I’m not sure about the length of time argument. It cuts both ways. I imagine Geico would argue that he had 19 years to change it, and did not do anything until after he needed the coverage. I doubt time, in and of itself, is a bar to enforcing a contract.

    As for the difference in limits, I imagine the court would modify the K to conform with the statute, thereby raising the limit to 30k.

    You need to attack the waiver itself. Can they produce the signed waiver? Is the waiver language proper? Maybe he changed other coverages and a new policy was issued. That may make the waiver only applicable to coverages in force when it was signed.

    Here in Alabama, there are many reported UIM decisions. The Maryland law is fairly well settled too I am sure. If they are dead wrong on the law, that opens up a bad faith claim- at least here. Find a good case and hang ’em up by their fingernails!

    Enjoy the blog by the way. Hope things are better for plaintiffs up there than they have been down here.

  • Ron Miller

    Bill, I think the big problem with this waiver is that it does not comply with what the statute says it must do: tell the insured that they are still can get coverage if they opt for a larger UM policy. That I think is the biggest issue I see. In this case, I think the length of time is a collateral issue. But the waiver should set forth the price difference between the two coverages. It can’t do that if it is 19 years old and has the wrong limits on it in the first place.

    I agree with you, though, that the waiver length arguable does cut both ways.

  • Tony

    It’s been many years, but I recall a case which permitted an insured to reform a policy to allow UM up to minimum limits.  As I (mis?)remember it, the carrier in that case did not advise the insured of the availability of minimum UM limits at all.  If Maryland has a new requirement of further advice to an insured that he can contract for higher limits, it seems to me you can extend the logic of the earlier case to permit reformation of UM limits up to at least liability limits.  Maybe a call to Andy Janquitto, who was the dean of auto insurance law back in the day.  He probably still is.  In any case, you’ll probably have to file a DJ action — I can’t imagine any carrier paying more than stated limits of a policy in a settlement.

  • I definitely think you should take the case and when all is said and done, Allstate is going to be stuck with having to match the $300K liability coverage. I had a very similar case in Montgomery County some years past – small UM limits and larger liability limits with an old policy of many years and a half assed non conforming waiver AND the insured’s recollection of misleading statements from the insurance agent as to her rights, the cost differential and other stuff. I settled the case and never got the chance to fully litigate the issue. As I recall the case, the carrier settled rather than see Maryland precedent made on this issue. I’m frankly surprised the issue is still unresolved at law. Keep us abreast of this one,please.

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