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Libby v. Government Employees Insurance Co.6/12/1989
Appellee, Government Employees Insurance Company (GEICO), issued an automobile liability policy to appellant, Henry N. Libby, for a one year term beginning 1 February 1985. The policy was renewed for another one year term beginning 1 February 1986. It provided, inter alia, personal injury liability coverage of $500,000 per person and $1,000,000 per occurrence, but only $20,000/$40,000 uninsured motorist coverage.
On 1 July 1986, appellant was a passenger in a car that was struck head-on by a motor vehicle which crossed the center line of the roadway to do so. The tort-feasor apparently had no substantial assets other than an automobile liability insurance policy, and his carrier tendered the full amount of the policy limits, $100,000, in settlement of appellant's claim against its insured.
Contending that he had suffered losses, injuries, and damages in excess of $500,000, appellant brought an action against GEICO in the Circuit Court for Montgomery County, seeking a declaration that GEICO must provide him with uninsured motorist benefits, for the 1 July 1986 accident, up to the maximum available coverage of $500,000 per injured person. He also sought counsel fees and "such other further relief the court deems just and proper."
Following a non-jury trial, the court (Cave, J.) ruled in favor of GEICO, declaring that Mr. Libby is not entitled to have the contract of insurance reformed to provide uninsured motorist coverage equal to the liability coverage. This appeal is from that judgment.
Issues
The parties do not agree on the issues that are presented on this appeal. As we see it, the questions before us are:
1. What duty is imposed upon a motor vehicle liability insurance carrier by Md. Code Ann., art. 48A, ยง 541(c)(2), to inform its insureds of the availability of underinsured motorist coverage?
2. Did GEICO breach that duty?
3. If GEICO did breach that duty, is reformation of the insurance contract an appropriate remedy?
Facts
Appellant is a practicing attorney. His practice is confined to corporate and securities law; he has never been involved in any aspect of law dealing with negligence or insurance matters. Prior to 1 February 1985, appellant
carried automobile insurance with The Home Insurance Company. Faced with steadily increasing insurance rates, he began to explore the possibility of obtaining comparable coverage for less cost through another carrier. In January 1985, he telephoned GEICO's office and spoke to a Ms. Waters, who answered his questions concerning available coverage and premium rates. Satisfied that GEICO would provide the same coverage he had under the Home Insurance Company policy at considerably less cost, Mr. Libby chose to insure with GEICO. Being concerned that if he relied upon the mail to complete the transaction begun by telephone there might be a hiatus in his coverage, appellant went to GEICO's office, met with a sales representative, filled out an application, and received a binder. By so doing, appellant did not receive all the written information he would ordinarily have received either in the mail, if he had completed his transaction through Ms. Waters, or from the sales representative, if he had begun the transaction at GEICO's office. Of importance to this case is the fact that Mr. Libby did not receive information, at the time he became one of GEICO's insureds, that he could have obtained uninsured motorist coverage in a greater amount than the $20,000/$40,000 coverage GEICO included in the policy, not to exceed the $500,000/$1,000,000 personal injury liability coverage af
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