Insurance – Auto – UIM – Selection/Rejection Form – Minimum Liability Coverage

Nationwide Mutual Insurance Co. v. Caudill. (Lawyers Weekly No. 10-16-1192, 17 pp.) (Sam Ervin IV, J.) Appealed from Wilkes County Superior Court. (John O. Craig III, J.) N.C. App. Unpub. Click here for the full text of the opinion.

Holding: When the defendant-insured decided to raise his auto liability limit from the statutory minimum to $100,000 per person and $300,000 per accident, he also signed a selection/rejection form indicating he wanted uninsured/underinsured motorist coverage of $100,000/$300,000. However, when the insured received the bill for coverage at this rate, he changed his mind and instructed his insurance agent to return his liability limit to the statutory minimum. Although the insured did not sign a new selection/rejection form, since he only bought the statutory minimum coverage, he was not entitled to UM/UIM coverage.

We affirm the trial court’s grant of summary judgment for the plaintiff-insurer.

The insured signed the $100,000/$300,000 selection/rejection form on Jan. 23, 2006. The applicable version of G.S. § 20-279.21(b)(4) required that a policyholder maintain liability coverage above the statutory minimum in order to be eligible for UIM coverage.

After signing a selection/rejection form electing to buy UM/UIM coverage on Jan. 23, 2006, the insured made a subsequent oral modification to the policy. The insured contends that, unless he signed a new selection/rejection form, the insurer “could not … infer a decline in underinsured motorist coverage from any request for a change in liability coverage” and that “the UM/UIM motorist coverage is independent of, and therefore not dictated by a change in, the liability coverage. …”

Once the insured requested a reduction in his liability coverage limits to the minimum levels permitted by statute, the insurer was required to delete UM/UIM coverage from his policy.

The insured also emphasizes that portion of the selection/rejection form providing that any election relating to UM/UIM coverage that the insured has made remains applicable to “any renewal, reinstatement, substitute, amended, altered modified, transfer or replacement policy with this company … unless a named insured makes a written request to the company to exercise a different option.” 

The relevant selection/rejection form language clearly implies, however, that the selected level of UM/UIM coverage applies to any policy that qualifies for UM/UIM coverage. Because the insured’s policy is a minimum limits policy which by its terms was not “written at limits that exceed” the minimum financial responsibility amounts set forth by” G.S. § 20-279.21(b)(2), § 20-279.21(b)(4) mandates that as a matter of law, UIM coverage is not available to the insured under his policy.

The insured was not eligible to purchase UM/UIM coverage.

Affirmed.