Metropolitan Property and Liability Ins. Co. v. Gray

• Decision Date: 01 March 1984
• Docket Number: No. 82-1677,82-1677
• Citation: 446 So.2d 216
• Parties: METROPOLITAN PROPERTY AND LIABILITY INSURANCE COMPANY, a corporation, Appellant, v. Richard GRAY and Nancy Marie Gray, his wife, Appellees.
• Court: Florida District Court of Appeals

Page 216

446 So.2d 216

METROPOLITAN PROPERTY AND LIABILITY INSURANCE COMPANY, a corporation, Appellant, v. Richard GRAY and Nancy Marie Gray, his wife, Appellees.

No. 82-1677.

District Court of Appeal of Florida,

Fifth District.

March 1, 1984.

Sutton G. Hilyard, Jr. and Michael K. Bailey, of Pitts, Eubanks & Ross, P.A., Orlando, for appellant.

John DeM. Haines, of Winderweedle, Haines, Ward & Woodman, P.A., Winter Park, for appellees.

COWART, Judge.

The issues in this case are to what extent and under what circumstances the contractual rights and obligations of an insured and an insurer can be varied or impaired by a statutory amendment and whether an uninsured motorist policy with a per person limitation provides less coverage than a liability policy without a per person limitation.

"No bill of attainder, ex post facto law or law impairing the obligation of contracts shall be passed." Art. I, § 10, Fla. Const.

Prior to its amendment ¹ effective October 1, 1980, section 627.4132, Florida Statutes (1979), mandated that every uninsured motorist policy provide total coverage only to the extent of coverage on one of the vehicles covered (called anti-stacking). The amendment removed this restriction thus permitting policies to be interpreted to provide total uninsured motorist coverage equal to the sum of that relating to all vehicles covered (called "stacking").

Prior to the statute's amendment appellee Richard Gray entered into a contract for automobile insurance with appellant Metropolitan Property and Liability Insurance Company. The policy was for a period of one year, to expire, or to be renewed, on July 26, 1981. The policy provided uninsured motorist and other coverage on three vehicles and for three named drivers, Richard, Nancy and Kathleen Gray. The policy provided for a maximum of $100,000 in bodily injury coverage per accident with no per person limit but uninsured motorist was limited to $50,000 per person and $100,000 per accident. In keeping with the intent of the statute before its amendment, the policy specifically provided that no more than $100,000 per accident would be paid regardless of the number of persons insured under the policy and regardless of the number of automobiles insured under the policy. After the effective date of the statutory amendment (October 1, 1980) but before the renewal date of the policy (July 26, 1981) an additional driver, James Gray, was added to the policy. Soon afterwards (on January 30, 1981), Nancy Gray was injured in an accident with an underinsured tortfeasor while a passenger in a vehicle covered under the policy and driven by Richard Gray. Nancy and Richard Gray obtained a declaratory judgment in their favor holding (1) that the uninsured motorist coverage was not subject to the $50,000 per person limitation and provided the same amount coverage as the bodily injury liability coverage ($100,000), and (2) in effect, that the amended statute, which permits stacking, applied so as to invalidate the anti-stacking provision of the policy and to cause the uninsured coverage on the three insured vehicles to be available for a total coverage of $300,000. The insurer appeals.

It is generally held that the renewal of a contract of insurance constitutes the making of a new contract for the purpose of incorporating into the policy changes in the statutes regulating insurance contracts. Conversely, statutory changes occurring between renewals cannot be incorporated into the policy without unconstitutionally impairing the obligations of the parties to the insurance contract. See, e.g., Dewberry v. Auto Owners Insurance Co., 363 So.2d 1077 (Fla.1978); Lumbermens Mutual Casualty Co. v. Ceballos, 440 So.2d 612 (Fla. 3d DCA 1983); Florida Insurance Guaranty Ass'n v. Johnson, 392 So.2d 1348 (Fla. 5th DCA 1980); Hausler v. State Farm Mutual Automobile Insurance Co., 374 So.2d 1037 (Fla. 2d DCA 1979); Bunch v. Hartford Accident and Indemnity Co., 370 So.2d 455 (Fla. 4th DCA 1979). The renewal date is usually certain and definite and litigation rarely arises concerning whether statutes in effect on the renewal date are applicable to the policy. It is generally accepted that they are. The difficult question is whether statutes that become effective during the time between the effective date of legislation regulating insurance contracts and the renewal date of a policy are effective to change, alter or amend a policy. But for Article I, section 10 of the Florida Constitution, this issue would be merely one of legislative intent. However, regardless of the intent of the legislature, a statute may not, constitutionally, alter, amend or impair the rights of the parties to an existing contract. Thus, the amendment to section 627.4132 does not apply in the instant case unless, between the effective date of the amendment (October 1, 1980) and the date of the accident (January 30, 1981), a new contract was made between the parties.

Sentry Insurance A Mutual Co. v. McGowan, 425 So.2d 98 (Fla. 5th DCA 1982), rev. den., 434 So.2d 888 (Fla.1983), considered the question of whether the addition of a vehicle to an existing policy of insurance constituted the issuance of a "new policy" which incorporated statutory provisions enacted after the issuance of the original policy. In that case, the applicable version of section 627.727(1), Florida Statutes (1979), required insurance companies to offer uninsured motorist coverage equal to the limits of liability when any policy (contract of insurance) was issued, other than a renewal policy. The addition of a vehicle to an existing policy was held not to constitute the issuance of a "new policy" because there had been no material change in the terms and conditions of the original policy. Kerr v. State Farm Mutual Auto Insurance Co., 434 So.2d 970 (Fla. 5th DCA 1983), rev. den., 441 So.2d 632 (Fla.1983), held that the substitution of a wife's name for that of her deceased husband's as named insured on an existing policy of insurance was not such a material change as to constitute the issuance of a "new policy." Section 627.727(1), Florida Statutes (1981), now provides that uninsured motorist coverage need not be offered and rejected in connection with a renewal policy "or any other policy which extends, changes, supersedes, or replaces an existing policy". Thus, it is now clear that an amendment or endorsement to an existing policy does not require a new offer of uninsured motorist coverage regardless of whether the change constitutes the issuance of a "new policy." Nonetheless, the issue in the instant case is identical to the issue in Sentry Insurance A Mutual Company v. McGowan: what changes in an existing policy constitute the issuance of a new contract of insurance subject to statutory provisions enacted after the issuance of the original policy. In the instant case, the addition of a driver (James Gray) to an existing policy of insurance did not in any material way change the terms and conditions of the existing policy and the 1980 amendment to section 627.4132 could not, constitutionally change the obligation of the insurance company under that existing policy.

Appellee relies on United States Fire Insurance Co. v. Van Iderstyne, 347 So.2d 672 (Fla. 4th DCA 1977). Van Iderstyne stated three possible ways of interpreting an endorsement to an existing policy:

a. The endorsement relates back to the date of the issuance of the original policy.... b. issuance of the endorsement constitutes a reissuance or redelivery of the entire policy.... c. issuance of the endorsement constitutes issuance of a severable and independent contract of insurance....

Id. at 673.

The Van Iderstyne court adopted the view that the endorsement constitutes the issuance of a severable and independent contract of insurance.

Assuming that the endorsement which added James Gray as an additional named driver to Richard Gray's policy of insurance constituted the issuance of a separate and severable contract and further assuming that under section 627.412(1), Fla.Stat., the provisions of section 627.4132 as amended in 1980, were incorporated into every uninsured motorist insurance policy issued after October 1, 1980, and were incorporated into the new "separate and severable contract" of insurance issued to James Gray and resulted in providing him with "stacked" coverage under all applicable UMC policies if he were injured, nevertheless, in this instant case it is not James Gray who was injured by the underinsured motorist. Nancy Gray was the injured insured and she was covered under the original policy issued under the anti-stacking statute. Nancy Gray's policy and the statutes incorporated into that policy do not permit her to stack uninsured motorist coverage and the issuance of a "separate and severable contract" to James Gray should not be used as a device to allow an amendment to section 627.4132 to impair the rights of the insurance company with respect to Nancy Gray. ²

Thus, the mere addition of another person on a policy, like the addition of a vehicle, is not a reissuance of the whole policy.

Section 627.727(2), Florida Statutes (1981), provides:

The limits of uninsured motorist coverage shall be not less than the limits of bodily injury liability insurance purchased by the named insured, or such lower limit complying with the company's rating plan as may be selected by the named insured, but in any event the insurer shall make available, at the written request of the insured, limits up to $100,000 each person, $300,000 each occurrence, irrespective of the limits of bodily injury liability purchased, in compliance with the company's rating plan.

Nancy Gray's policy with Metropolitan provides limits of uninsured motorist coverage lower than the limits of bodily injury coverage in that the...