Osborne v. Allstate Ins. Co.

• Decision Date: 02 May 1995
• Docket Number: No. 2377,2377
• Parties: Sherri L. OSBORNE, Appellant, v. ALLSTATE INSURANCE COMPANY, Respondent. . Heard
• Court: South Carolina Court of Appeals

Page 291

462 S.E.2d 291

319 S.C. 479

Sherri L. OSBORNE, Appellant, v. ALLSTATE INSURANCE COMPANY, Respondent.

No. 2377.

Court of Appeals of South Carolina.

Heard May 2, 1995.

Decided July 17, 1995.

Rehearing Denied Sept. 21, 1995.

Certiorari Granted March 7, 1996.

Jim S. Brooks, Spartanburg, for appellant.

W. Francis Marion, Jr., Greenville, for respondent.

CURETON, Judge.

Appellant, Sherri L. Osborne, brought declaratory judgment action, claiming Respondent, Allstate Insurance Company, failed to make an effective offer of underinsured motorist (UIM) coverage and seeking reformation of her automobile policy with Allstate so as to include UIM coverage. Both parties moved for summary judgment. The court denied Mrs. Osborne's motion but granted summary judgment for Allstate. Mrs. Osborne appeals. We reverse and remand.

Prior to 1988, Mrs. Osborne was the named insured under a policy with Allstate. In 1988, Mrs. Osborne married Charles Osborne and added him to the policy as a named insured. Between May 1988 and May 1990, both Mr. and Mrs. Osborne made changes to the policy. On each occasion, the Osbornes dealt with agent James W. Fleming.

On April 9, 1990, Allstate issued a renewal notice for the policy to the Osbornes. The declaration page notes:

See enclosed form describing offers of uninsured and underinsured motorist coverages.

Attached to the premium notice was an offer to purchase optional uninsured (UM) and UIM coverages. The offer was contained in Allstate Form No. U10774, which had been approved by the South Carolina Department of Insurance.

On May 11, 1990, Mr. Osborne went to Fleming's office to discuss the Osbornes' coverage. Mr. Osborne signed Allstate Form No. U10774-1 which rejected the offer of UIM coverage and as a consequence UIM coverage was not included in the policy. The basic coverage of 15,000/30,000/5,000 afforded under the policy continued in force and effect through December, 1991.

On December 6, 1991, Mrs. Osborne was injured in an automobile accident. She claimed damages in excess of the at-fault party's liability limits. Mrs. Osborne put Allstate on notice of a possible UIM claim. Allstate denied UIM coverage was available based upon the rejection form signed by Mr. Osborne.

Mrs. Osborne commenced the instant action, claiming (1) Allstate failed to make a valid offer of UIM coverage, and (2) even if the offer was valid and UIM coverage was properly rejected by Mr. Osborne, he had no authority to act on her behalf and, therefore, the rejection of UIM coverage was ineffective as to her.

The trial court found that under S.C.Code Ann. § 38-77-350 (Supp.1994), an insurance company is conclusively presumed to have made a valid offer if it followed the statutory scheme. The court found it "unrefuted" Allstate offered the Osbornes UIM coverage on a form approved by the Insurance Commissioner and that Mr. Osborne, a named insured, rejected the coverage. The trial court also held Mr. Osborne's actions binding upon Mrs. Osborne under the theory of apparent authority. Accordingly, the trial court granted Allstate's motion for summary judgment. This appeal followed.

I.

Mrs. Osborne first claims the trial court erred in granting Allstate's motion for summary judgment because Allstate failed to include in its offer of UIM coverage a quote for insurance amounts less than the minimum liability coverage required by law, to wit, an amount of UIM coverage under $15,000. ¹

S.C.Code Ann. § 38-77-160 (Rev.1989) mandates the offering of UIM motorist coverage as follows:

Automobile insurance carriers shall offer, at the option of the insured, ... underinsured motorist coverage up to the limits of the insured liabilitycoverage to provide coverage in the event that damages are sustained in excess of the liability limits carried by an at fault insured or underinsured motorist.... ²

In the recent case of White v. Allstate Ins. Co., 314 S.C. 167, 442 S.E.2d 195 (Ct.App.1994), cert. denied, November 3, 1994, this Court stated:

Section 38-77-140 mandates that automobile insurance carriers offer coverage of not less than 15/30/5. S.C.Code Ann. § 38-77-140 (1989). In addition, carriers must offer minimal limits of uninsured (UM) coverage of not less than 15/30/5. S.C.Code Ann. § 38-77-150 (1989). The statutory provision for UIM coverage, however, is devoid of any minimum offer requirement.

Although UIM coverage may be distinguished from liability and UM coverage because UIM coverage is not mandated by statute, it seems clear that had the legislature intended there to be a minimum offer requirement for UIM coverage it would have done so. In addition, the clear and unambiguous language of the statute requires UIM coverage to be offered up to the limits of the insured's liability coverage.

Id., 442 S.E.2d at 196.

White does not control the outcome of this case, however, because the policy at issue in White apparently predated the effective date of § 38-77-350 (Supp.1994), and this Court did not have the opportunity to address that statute in its opinion. Section 38-77-350 is captioned "Form to be used when optional coverages are offered" and states:

(A) Not later than September 1, 1989, the Chief Insurance Commissioner shall approve a form which automobile insurers shall use in offering optional coverages required to be offered pursuant to law to applicants for automobile insurance policies. This form must be used by insurers for all new applicants after December 1, 1989. The form, at a minimum, must provide for each optional coverage required to be offered:

(1) a brief and concise explanation of the coverage,

(2) a list of available limits and the range of premiums for the limits,

(3) a space for the insured to mark whether the insured chooses to accept or reject the coverage and a space for the insured to select the limits of coverage he desires,

(4) a space for the insured to sign the form which acknowledges that he has been offered the optional coverages,

(5) the mailing address and telephone number of the Insurance Department which the applicant may contact if the applicant has any questions that the insurance agent is unable to answer.

(B) If this form is properly completed and executed by the named insured it is conclusively presumed that there was an informed, knowing selection of coverage and neither the insurance company nor any insurance agent has any liability to the named insured or any other insured under the policy for the insured's failure to purchase any optional coverage or higher limits.

* * * * * *

(D) Compliance with this section satisfies the insurer and agent's duty to explain and offer optional coverages and higher limits and no person, including, but not limited to, an insurer and insurance agent is liable in an action for damages on account of the selection or rejection made by the named insured.

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(Emphasis added). Sections 38-77-160 and 38-77-350 cover the same subject matter, i.e., the offer of optional insurance coverages for automobiles, and, therefore, must be construed together and as explanatory of each other. See Home Health Services, Inc. v. DHEC, 298 S.C. 258, 379 S.E.2d 734 (Ct.App.1989) (statutes which deal with the same subject matter are in pari materia and must be construed together, if possible, to produce a single, harmonious result); In re Asbestosis Cases, 274 S.C. 421, 266 S.E.2d 773 (1980) (where there are different statutes in pari materia, though enacted at different times, and not referring to each other, they are to be taken and construed together as one system, and as explanatory of each other).

Section 38-77-160 mandates insurers offer UIM coverage "up to the limits of the insured liability coverage," which in this case was the minimum $15,000. Section 38-77-350 requires an insurer to use a form approved by the Chief Insurance Commission when offering optional coverages, including UIM, and by using the approved form the offer is conclusively presumed to be effective. § 38-77-350(B). The form approved by the Commissioner must include "a list of available limits and the range of premiums for the limits...." § 38-77-350(A)(2) (Emphasis added). Allstate argues that the use of the language available limits connotes that insurers may offer but are not required to make UIM coverage available in amounts less than the minimum liability coverage. Hence, if it provided UIM coverage to its insureds in amounts less than $15,000, its offer would have been ineffective because it did not list the coverages available. Conversely, Osborne argues the Legislature did not intend by the enactment of § 38-77-350 to modify the requirements of § 38-77-160 which have been interpreted by this court and the Supreme Court to require insurers to offer UIM coverage in amounts less than the minimum liability limits. See Hanover Ins. Co. v. Horace Mann Ins. Co., 301 S.C. 55, 389 S.E.2d 657 (1990); Garris v. Cincinnati Ins. Co., 280 S.C. 149, 311 S.E.2d 723 (1984); White v. Allstate Ins. Co., 314 S.C. 167, 442 S.E.2d 195 (Ct.App.1994); American Sec. Ins. Co. v. Howard, 315 S.C. 47, 431 S.E.2d 604 (Ct.App.1993).

In the recent federal district court case of Holt v. State Farm Mut. Auto. Ins. Co., 870 F.Supp. 658, 666, (D.S.C.1994), Judge Norton reviewed the development of the statutory and case law of South Carolina on UIM coverage and concluded that:

[a]lthough there is language in the case law, originating in Garris in 1984 and recently applied in White, that when read literally would appear to require the insurance companies to provide offers in "any amount" up to the insured liability coverage, this court finds that such an interpretation cannot be resolved with reasonableness of the Wannamaker test and the legislative intent embodied in S.C.Code Section 38-77-350.... To the extent that such a requirement is inconsistent with Section 38-77-350, this court believes the state's highest court would find that the legislature, having spoken on the...