Waivers in Insurance Policies Require Careful Consideration Due to Risk of Accident

In some instances, employers and individuals can waive uninsured/underinsured motorist bodily injury coverage in order to decrease their insurance rates. According to LSA-R.S. 22:1295(1)(a)(ii), rejection of the coverage must be made on a form approved by the commissioner of insurance. If the form is properly completed and signed by the insured or a legal representative who signs on behalf of the insured (like the president of a company), then it creates a presumption that the insured knowingly rejected the coverage. In other waivers, an employer could argue that they were unaware that they waived the coverage, but in the case of the uninsured/underinsured motorist bodily injury waiver, the employer cannot make this argument because of this presumption. In addition, if the form is valid, then the waiver will last for the entire life of the policy, even if the policy is renewed, reinstated, substituted, or amended.

The notion that the waiver lasts through renewal or amendment is particularly important. As a result, generally, as long as an employer or individual stays with the same company, then the waiver will continue to be valid. A case decided in January of last year provides an excellent example of this concept. An employee was involved in a two-car accident while he was acting within the scope of his employment. The employee filed suit against the other driver, the other driver’s insurance company, and the employer’s insurance company, Progressive Security Insurance Company (“Progressive”).

Progressive challenged the suit because the employer signed an uninsured/underinsured motorist bodily injury waiver six years prior to the accident. The employee argued that the waiver was invalid. However, a legal representative of the company signed the waiver and the owner of the company initialed a document that stated, “I do not want UMBI Coverage. I understand that I will not be compensated through UMBI Coverage for losses arising from an accident caused by uninsured/underinsured motorists.” The employee’s central argument rested on the notion that the name of the company changed each time the coverage was renewed. If the name changed, the employee argued, then the waiver could not apply to the new named company.

The rejection form was validly executed, but the “named insured” changed on the policy. However, the court rejected this notion because although the name changed slightly, the entity that was insured did not. The court explained that LSA-R.S. 22:1295(1)(1)(ii) specifically says, “Any changes to an existing policy, regardless of whether these changes create new coverage, except changes in the limits of liability, do not create a new policy and do not require the completion of new uninsured motorist selection forms.” Therefore, since the limits of the liability were not changed, a new waiver form was not required and the waiver form signed six years prior to the accident was still valid.

Since the waiver was valid, the company will likely have to pay for the injuries out of their own pocket. In addition, the injured employee may also get some money from the other driver involved in the accident.

In another case, Munsch v. Liberty Mutual Insurance Company, a surviving spouse did not validly waiver uninsured/underinsured motorist bodily injury coverage. In that case, the deceased actually waived the coverage and even though the coverage passed to the spouse, it changed who it covered when it passed so the waiver was not valid. Unlike the previous case, the person or entity that the insurance covered changed, so the waiver could not be valid. The surviving spouse did not have the opportunity to waive the coverage, so it could not apply to her directly. If the coverage were going to be waived, a new form signed by the insured and approved by the insurance commissioner would be required.

These situations highlight the importance of reading all of the fine print in your insurance policy. Where some waivers and rules may only last for one term of coverage, uninsured/underinsured motorist bodily injury waivers do not follow this pattern. Experienced lawyers can help walk you through your insurance policy if you have any questions or concerns.

Contact The Berniard Law Firm toll free at 1-866-574-8005 and will be happy to discuss your concerns with you and help determine your legal rights.

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