Cohen v. Progressive N. Ins. Co.

• Decision Date: 13 February 2013
• Docket Number: No. 5083.,5083.
• Court: South Carolina Court of Appeals
• Parties: Greg COHEN and Stacy Cohen, Appellants, v. PROGRESSIVE NORTHERN INSURANCE COMPANY and Auto–Owners Insurance Company, Respondents. Appellate Case No. 2011–199408.

402 S.C. 66

737 S.E.2d 869

Greg COHEN and Stacy Cohen, Appellants,

v. PROGRESSIVE NORTHERN INSURANCE COMPANY and Auto–Owners Insurance Company, Respondents.Appellate Case No. 2011–199408.

No. 5083.

Court of Appeals of South Carolina.

Heard Dec. 12, 2012.

Decided Feb. 13, 2013.

Daniel L. Draisen, Krause, Moorhead & Draisen, PA, of Anderson, for Appellants.

J.R. Murphy, Murphy & Grantland, PA, of Columbia, for Respondent Progressive Northern Insurance Company.

J. Victor McDade, Doyle, Tate & McDade, PA, of Anderson, for Respondent Auto–Owners Insurance Company.

FEW, C.J.

Greg and Stacy Cohen filed this action requesting reformation of a motorcycle insurance policy issued by Progressive Northern Insurance Company to include underinsured motorists (UIM) coverage. The trial court refused to reform the policy, finding Progressive made a meaningful offer of UIM coverage. We affirm.

I. Facts and Procedural History

In 2005, Greg Cohen called Citizens Insurance Agency to purchase a policy for his motorcycle. He remembers speaking with a female employee about the policy but does not recall her name. Meredith Thomason, a Citizens Insurance agent, does not specifically recall speaking with Cohen but testified she wrote the quote sheet generated as a result of that call. She also signed the application form for Cohen's policy.

Thomason does not remember the transaction with Cohen. Therefore, her account of how Cohen applied for the policy is based on the procedure she typically follows for completing an application. She testified that a transaction begins with a phone call, and she fills out a quote sheet while talking with the client. She then creates an application form using input from the client, and prints it only after she and the client have discussed and agreed upon what types and limits of coverage he wants. When the client comes to Citizens Insurance's office to complete the application, Thomason gives him an opportunity to read it. Going through each page of the application, she explains UIM coverage, tells the client he is not required by law to have it, and recommends the client buy UIM coverage with limits equal to the other types of coverage he is purchasing. She also reviews which coverage the client is selecting and which he is rejecting in the application form. The client signs the application in several places, including an acknowledgment stating he has read the information that Thomason presented to him regarding UIM coverage. Thomason then signs on a line indicating that the client has completed and signed the application. After that, she gives the client a copy. Thomason testified she never deviates from this procedure.

Cohen's recollection of applying for his policy differs from Thomason's procedure. He testified that when he called Citizens Insurance, he told the agent, “I want the same coverage that I have on my Expedition, my other vehicle.” He does not recall talking on the phone about UIM coverage. The next day, he went to Citizens Insurance's office and spent less than five minutes signing paperwork. The employee with whom he met did not explain what was in the paperwork, and Cohen did not review the documents before signing them. They did not discuss what coverage limits he wanted or what would happen if he did not buy UIM coverage and was later injured. He testified he did not tell the employee that he did not want UIM coverage.

The application Cohen and Thomason signed includes an explanation of what UIM coverage is and how it works. Additionally, using language nearly identical to that endorsed by the supreme court in Bower v. National General Insurance Co., 351 S.C. 112, 119–20, 569 S.E.2d 313, 317 (2002), the application explains that UIM coverage is optional and that it can be purchased up to the limits of the liability coverage Cohen was purchasing. Another page, entitled “Offer of underinsured motorist coverage,” has a table listing four levels of UIM coverage limits and the increased premium Cohen would have to pay for each level. The highest of the four levels is equal to the limits of the liability and uninsured motorist coverage Cohen requested in the application form. Below that table, the application asks, “Do you wish to purchase underinsured motorist coverage?” and provides blanks next to the words “Yes” and “No.” A computer-generated “X” appears in the blank next to “No.” Thomason selected that “X” when she generated the form on her computer. The next line of the application states, “If your answer is ‘no’ then you must sign here,” and then provides a signature line. Cohen signed on that line. Below Cohen's signature, the application states, “If your answer is ‘yes,’ then specify the limits which you desire. These limits cannot exceed your motor vehicle insurance liability limits.” The word “REJECTED” is typed below that instruction. Based on this application form, Progressive issued Cohen a policy that does not provide UIM coverage.

In 2007, Cohen was injured while riding his motorcycle. The Cohens filed this declaratory judgment action against Progressive and Auto–Owners Insurance Company. They asked that Progressive's policy be reformed to provide UIM coverage in the amount of the limits of the policy's liability coverage. ¹

Sitting nonjury, the trial court heard testimony from Cohen and Thomason and reviewed the application form. The court found Progressive made a meaningful offer of UIM coverage and Cohen rejected the offer. The Cohens filed a motion to reconsider, which the court denied.

II. Whether the Trial Court Erred in Finding Progressive Made a Meaningful Offer of UIM Coverage

Automobile insurers are required to “offer ... underinsured motorist coverage up to the limits of the insured's liability coverage.” S.C.Code Ann. § 38–77–160 (2002). Our supreme court has interpreted this language to require that “the insured ... be provided with adequate information ... to allow the insured to make an intelligent decision of whether to accept or reject the coverage.” State Farm Mut. Auto. Ins. Co. v. Wannamaker, 291 S.C. 518, 521, 354 S.E.2d 555, 556 (1987). In other words, “the insurer's offer of UIM coverage must be ‘meaningful.’ ” Atkins v. Horace Mann Ins. Co., 376 S.C. 625, 630, 658 S.E.2d 106, 109 (Ct.App.2008) (quoting Tucker v. Allstate Ins. Co., 337 S.C. 128, 130, 522 S.E.2d 819, 820–21 (Ct.App.1999), which relied on Wannamaker, 291 S.C. at 521–22, 354 S.E.2d at 556–57). The Wannamaker court adopted a standard for “determin[ing] whether an insurer has complied with its duty to offer [UIM coverage].” 291 S.C. at 521, 354 S.E.2d at 556. The Wannamaker test requires the following:

In general, for an insurer to make a meaningful offer of UIM coverage, (1) the insurer's notification process must be commercially reasonable, whether oral or in writing; (2) the insurer must specify the limits of optional coverage and not merely offer additional coverage in general terms; (3) the insurer must intelligibly advise the insured of the nature of the optional coverage; and (4) the insured must be told that optional coverages are available for an additional premium.

Progressive Cas. Ins. Co. v. Leachman, 362 S.C. 344, 349, 608 S.E.2d 569, 571 (2005) (citing Wannamaker, 291 S.C. at 521, 354 S.E.2d at 556).

“If the insurer fails to comply with its statutory duty to make a meaningful offer to the insured, the policy will be reformed, by operation of law, to include UIM coverage up to the limits of liability insurance carried by the insured.” Floyd v. Nationwide Mut. Ins. Co., 367 S.C. 253, 261, 626 S.E.2d 6, 11 (2005) (citation and quotation marks omitted). “The insurer bears the burden of establishing that it made a meaningful offer.” Atkins, 376 S.C. at 630, 658 S.E.2d at 109.

The question of whether an insurer met its burden of proving it made a meaningful offer of UIM coverage is a question of fact. See Floyd, 367 S.C. at 264, 626 S.E.2d at 12 (stating “[s]uch a case presents a factual issue”). The trial court found Progressive met its burden of proving its offer satisfied each prong of the Wannamaker test and, therefore, that it complied with section 38–77–160. On appeal, our role is limited to determining whether evidence in the record reasonably supports the trial court's findings. See Atkins, 376 S.C. at 630, 658 S.E.2d at 109 (stating in a declaratory judgment action to determine whether an insurer made a meaningful offer of UIM coverage, “the trial judge's factual findings will not be disturbed on appeal unless a review of the record reveals there is no evidence which reasonably supports the judge's findings”).

The trial court based its factual finding that Progressive made a meaningful offer of UIM in compliance with section 38–77–160 on the basis of (1) Thomason's explanation of the coverage in her conversations with Cohen on the phone and in person, (2) the contents of the application form Progressive used to make the offer, and (3) the fact that Cohen signed the application's acknowledgment stating he read the explanation of UIM coverage. The court stated “the totality of the transaction with ... Thomason shows that Cohen was given a meaningful offer.”

As to Thomason's personal explanation of UIM coverage, the court found she “not only orally presented the offer but also provided him with the written offer form,” she “specified the limits of optional coverage up to Cohen's liability limits,” she “intelligibly advised him of the nature of the optional coverages,” and she “told him that the optional coverages were available for an additional premium.” These findings were based on the trial court's credibility determination that Thomason followed “her general procedure,” which she spelled out in great detail. The court found “Thomason's testimony shows that the Wannamaker requirements for a meaningful offer were met.”

The trial court also based its factual findings on the contents of the form Progressive used to make the offer. The court specifically found...