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Sammarco v. USAA Casualty Insurance Co.6/30/2005
ed. In Knapp, however, there was no record evidence that USAA was offering UM/UIM coverage in excess of the statutorily mandated amounts. Therefore, in USAA v. Knapp, we held that there was no basis to order reformation of the UM/UIM contract beyond the statutorily mandated amounts, in the absence of record evidence that such higher coverage had been offered but not in a meaningful way.
Statute Preserves Contract Rights
In Humm v. Aetna Casualty, we held that the focus of section 3902(b) is to make additional UM/UIM coverage available above the basic minimum uninsured coverage and "then allow the insurer and the insured to engage in traditional means of contracting; that is by an offer and an acceptance." In this case, USAA voluntarily offered to contract with Sammarco for UM/UIM coverage in excess of the statutory limits. Thus, unlike Knapp, the record reflects that USAA offered Sammarco the option of purchasing additional UM/UIM coverage equal to his liability limits of $300,000/$500,000 for a cost of $51. USAA admits, however, that offer was not made to Sammarco by USAA in a meaningful way.
In accordance with our decision fifteen years ago in Nationwide Mut. Ins. Co. v. Starr, Sammarco's right to reform his UM/UIM policy with USAA is based upon the public policy identified by this Court in Arms and derived from the legislative intent of section 3902. Since USAA's offer of additional coverage did not comply with the notice required by section 3902, USAA's offer to contract at those higher limits was continuing and could be accepted by Sammarco, at any time -- even as in Arms, after an accident.
Therefore, Sammarco is entitled to reformation of his UM/UIM policy in an amount equal to the limits of his bodily injury liability coverage.
Consequently, we hold that Sammarco's UM/UIM policy must be reformed to provide coverage limits of $300,000 per person and $500,000 per accident.
Conclusion
The judgment of the Superior Court is reversed. This matter is remanded for further proceedings in accordance with this opinion.
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