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Libby v. Government Employees Insurance Co.6/12/1989
able that an insured who is not informed and does not know that additional coverage may be obtained does not have available to him the opportunity to contract for higher coverage.
Appellant contends that the statute imposes on the insurance carrier an affirmative duty to give its insureds notice of the availability of higher coverage and, what is more, to do so in what he refers to as a "commercially reasonable manner." In support of that contention, appellant refers us to cases from other jurisdictions, in which somewhat similar uninsured motorist insurance statutes were held to impose an obligation on insurance companies to notify their insureds of their right to obtain uninsured or underinsured motorist coverage up to the limits of their liability coverage.
Appellant's contention that an insurer is required to give notice of the availability of underinsured motorist coverage
in a "commercially reasonable manner" appears to be based on language employed by the Supreme Court of Minnesota in Jacobson v. Illinois Farmers Ins. Co., Minn., 264 N.W.2d 804 (1978), and later in Hastings v. United Pacific Ins. Co., Minn., 318 N.W.2d 849 (1982). Jacobson involved a statute (Minn.Stat.1971, §§ 65B.25 and 65B.26(d)) which provided that effective January 1, 1972, no automobile liability policy could be renewed, issued or delivered in Minnesota unless underinsured motorist coverage up to the limits of the policy were "made available" to the insured. The Court construed the statute as imposing upon the insurance company an affirmative obligation to make the coverage available, i.e., to offer the coverage. It then held that the insurance company, by enclosing in its semi-annual premium notices a "stuffer" which explained the coverage and included an application form, had employed a "commercially reasonable" method of notifying the insured of the availability of the coverage.
The Minnesota statute was amended in 1977. The amended version (Minn.Stat) § 65B.49, subd. 6(e) (1977 Supp.) (Repealed 1980)), employing language far more positive than "make available," provided that insurers "shall offer," as an optional coverage, underinsured motorist coverage in an amount at least equal to the insured's residual liability limits and also at lower limits. The Court in Hastings held the "offer" must contain sufficient information to enable the insured to make an intelligent choice and that notice of the option must be given the insured in a commercially reasonable manner. A letter that merely informed the insured that optional underinsured motorist coverage may be purchased, without explaining what underinsured motorist insurance means and without indicating that substantial protection could be obtained for only a small additional charge failed to meet the statutory obligation to "offer" the coverage. The remedy afforded by the lower court, reformation of the policy, was affirmed.
Tucker v. Country Mutual Ins. Co., 125 Ill.App.3d 329, 80 Ill.Dec. 610 465 N.E.2d 956 (Ill.App. 4 Dist.1984), involved
an Illinois statute (§ 143-1 of the Illinois Insurance Code (1979 Ill. Laws 4771)) which provided that no motor vehicle liability insurance policy could be renewed or delivered or issued in Illinois unless underinsured motorist coverage is offered in an amount equal to the insured's uninsured motorist coverage limits. The Court adopted the same four-part test of compliance with that statute that the Supreme Court of Minnesota had applied to the similar Minnesota statute in Hastings: (1) if the offer is made in other than face to face negotiations, the notification process must be commercially reasonable; (2) the insurer must specify the limits of its optional coverage
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