Insurance_automobile--underinsured motorist coverage_rejection form_proper
The trial court's grant of summary judgment for the unnamed defendant Allstate was
proper in underinsured motorist claims based upon the insureds' rejection of such coverage.
Although plaintiff argues that Allstate's Selection/Rejection form deviates from the form
promulgated by the Rate Bureau, Allstate's form uses the precise wording contained in the Rate
Bureaus' form in its entirety, with the inclusion of additional language explaining the coverage.
Moreover, the presentation of the text is completely legible and does not impede the intent that
consumers make an informed decision when selecting or rejecting coverage although it is in ten
point type rather than the twelve point type set forth in the Rate Bureau's form. .
Roberson Haworth & Reese, PLLC, by Robert A. Brinson and
Christopher C. Finan, for plaintiff-appellant.
Burton & Sue, L.L.P., by James D. Secor, III and Desiré E.
Carter, for Allstate Insurance Company, unnamed defendant-
appellee.
JACKSON, Judge.
On 15 June 2001 Yvonne Stegenga (“Plaintiff”) was involved in
a head-on collision with a car driven by Jamie Allen Burney and
owned by his wife, Tina Lee Burney (“Defendants”). The accident
occurred in Randolph County, North Carolina. Plaintiff suffered
permanent physical injuries along with property damage.
Defendants' insurance carrier tendered the limits of its liability
insurance policy in the amount of $30,000.00 to Plaintiff. At thetime of the accident, Plaintiff was insured by Allstate Insurance
Company (“Allstate”).
In May 1996, Plaintiff had applied for an insurance policy
through Allstate. When applying for coverage, Plaintiff completed
a form entitled “Selection/Rejection Form Uninsured Motorists
Coverage Combined Uninsured/Underinsured Motorists Coverage”
(“Selection/Rejection Form”). On the form, Plaintiff selected the
option stating, “I choose to reject Combined Uninsured/Underinsured
Motorists Coverage and select Uninsured Motorists Coverage at
limits of . . . .” Allstate then issued an automobile insurance
policy to Plaintiff, which remained in effect at the time of the
2001 accident. Plaintiff also was covered under an additional
Allstate automobile insurance policy obtained by Paula Arnold in
July 1996. At the time of Paula Arnold's application for coverage,
she too completed a Selection/Rejection Form and she too chose the
option “I choose to reject Combined Uninsured/Underinsured
Motorists Coverage and select Uninsured Motorists Coverage at
limits of . . . .”
Following her settlement with Defendants' insurer, Plaintiff
filed a claim with her insurance carrier, Allstate, for payment
pursuant to the underinsured motorists (“UIM”) coverage provision
under both of the Allstate policies. Prior to her settlement with
Defendants' insurance carrier plaintiff had commenced a civil
action against Defendants. Allstate, as an unnamed defendant,
filed an answer asserting a counterclaim for declaratory relief,
citing the rejection of UIM coverage as a basis for its denial ofcoverage. Plaintiff subsequently filed a motion for summary
judgment, asking that the court rule that she is entitled to
judgment as a matter of law against unnamed defendant Allstate. In
an order filed 29 September 2004, the trial court denied
Plaintiff's motion, and, sua sponte, granted summary judgment in
favor of Allstate.
In granting summary judgment for Allstate, the trial court
concluded as a matter of law that: (1) “the two Selection/Rejection
Forms utilized by Allstate in this matter were VALID;” (2) “the
insureds' rejection of underinsured motorist coverage in the two
Selection/Rejection forms was VALID;” and (3) “unnamed defendant
Allstate has no obligation to provide underinsured motorist
coverage to the plaintiff for any injuries, claims or damages
arising out of the motor vehicle accident that is the subject of
this litigation . . . .” From this order Plaintiff now appeals.
Plaintiff's sole assignment of error is that the trial court
erred in granting summary judgment for unnamed defendant Allstate,
in that Allstate's Selection/Rejection Forms were invalid, and thus
Plaintiff's rejection of UIM was invalid.
Summary judgment is proper, when based on the pleadings and
affidavits, there is “no genuine issue as to any material fact.”
N.C. Gen. Stat. § 1A-1, Rule 56(c) (2004); see, Lowe v. Murchison,
44 N.C. App. 488, 490, 261 S.E.2d 255, 256 (1980). Summary
judgment may be rendered against a moving party when appropriate.
N.C. Gen. Stat. § 1A-1, Rule 56(c) (2004); A-S-P Assocs. v.
Raleigh, 298 N.C. 207, 212, 258 S.E.2d 444, 447 (1979). Summaryjudgment for a non-moving party is proper “when the evidence
presented demonstrates that no material issues of fact are in
dispute, and the non-movant is entitled to entry of judgment as a
matter of law.” A-S-P Assocs., 298 N.C. at 212, 258 S.E.2d at 447-
48.
North Carolina General Statutes, section 20-279.21(b)(4)
governs the rejection of UIM, and provides in relevant part:
The selection or rejection of underinsured
motorist coverage by a named insured or the
failure to select or reject is valid and
binding on all insureds and vehicles under the
policy.
Rejection of or selection of different
coverage limits for underinsured motorist
coverage for policies under the jurisdiction
of the North Carolina Rate Bureau shall be
made in writing by the named insured on a form
promulgated by the Bureau and approved by the
Commissioner of Insurance.
N.C. Gen. Stat. § 20-279.21(b)(4) (2004). In regulating the
rejection and selection of UIM, the North Carolina Rate Bureau
created form NC 01 85 (Ed. 7-91), which is a Selection/Rejection
Form for UIM which must be used by all insurance carriers in this
State. This form was approved by the North Carolina Department of
Insurance. When the Rate Bureau promulgated this form in 1991, it
provided a circular letter to all member companies, and stated that
the form's “language may not be changed or substantively amended,
without prior approval, except that member companies may: 1. Add
explanations of the uninsured and/or combined
uninsured/underinsured motorists coverages; . . . .” NorthCarolina Rate Bureau, Circular Letter to All Member Companies,
(Sept. 9, 1991).
Plaintiff argues that Allstate's Selection/Rejection Form
deviates substantially from the required form, in that the form
utilized by Allstate contains additional language at the top of the
form, a solid line separating the additional language from the Rate
Bureau Form, and the text of the Rate Bureau Form is reduced to a
space of 7 by 5 inches and appears in a smaller font size. The
text on the form promulgated by the Rate Bureau is in a space of 7
by 10 inches, and is printed in 12 point font. However, the lower
portion of Allstate's Selection/Rejection Form includes the precise
wording contained in the Rate Bureau's form in its entirety, while
the upper portion contains a description of uninsured motorists
coverage and the additional coverage received when adding combined
uninsured/underinsured motorists coverage.
Our courts previously have adopted the requirement that the
Rate Bureau's form be strictly adhered to in the selection or
rejection of UIM. See State Farm Mut. Auto. Ins. Co. v. Fortin,
350 N.C. 264, 513 S.E.2d 782 (1999); Sanders v. American Spirit
Ins. Co., 135 N.C. App. 178, 519 S.E.2d 323 (1999). In addition,
we also previously have addressed the issue of forms that have been
reduced in size or contain additional language. See Erie Ins.
Exch. v. Miller, 160 N.C. App. 217, 584 S.E.2d 857 (2003)
(rejecting a Selection/Rejection Form measuring 2 1/2 by 4 inches,
with dramatically reduced font size); Blackburn v. State Farm Mut.
Auto. Ins. Co., 141 N.C. App. 655, 540 S.E.2d 63 (2000) (upholdinga Selection/Rejection form containing explanatory language), disc.
review denied, 353 N.C. 369, 547 S.E.2d 409 (2001).
In Erie Insurance Exchange v. Miller, 160 N.C. App. 217, 584
S.E.2d 857 (2003), we held that Erie's Selection/Rejection Form was
invalid when it was included in Erie's insurance application form
as a separate section, measured only 2 1/2 by 4 inches, and the
text was reduced to 5.5 point type. We held that Erie's form did
not strictly adhere to the form promulgated by the State Bureau,
and thus was not a valid rejection of UIM. Id. at 223, 584 S.E.2d
at 861. Plaintiffs contend that Allstate's Selection/Rejection
Form is substantially similar to that in Erie, and that it too
should be found to be invalid. We disagree.
In Blackburn v. State Farm Mutual Automobile Insurance Co.,
141 N.C. App. 655, 540 S.E.2d 63 (2000), disc. review denied, 353
N.C. 369, 547 S.E.2d 409 (2001), we upheld the validity of State
Farm's Selection/Rejection Form when the only deviation from the
Rate Bureau's form was the inclusion of additional language that
explained uninsured and UIM coverage. There, we held that State
Farm's additional language was in conformity with the guidelines
set by the Rate Bureau and the Department of Insurance. Id. at
659, 547 S.E.2d at 65. The Selection/Rejection Form used by
Allstate in the instant case is similar to that used in Blackburn.
Here, Allstate's Selection/Rejection Form uses the precise
wording contained in the Rate Bureau's form in its entirety. The
only deviation from the promulgated form is Allstate's inclusion of
additional language which explains uninsured and UIM coverage. There is no change or substantive amendment to the text of the Rate
Bureau's form. The text of the Rate Bureau's form is completely
legible, and the parties both stated on appeal that the text
appears to be in ten point type. In contrast to the reduced font
size of 5.5 in Erie, the reduction from twelve point to ten point
type does not constitute such a significant reduction in font size
as to impede the intent of the Rate Bureau and the Commission of
Insurance to ensure that consumers make an informed decision on
whether to select or reject UIM coverage. See Blackburn, 141 N.C.
App. at 659, 540 S.E.2d at 65. The purpose of the statute itself
is to ensure that innocent persons are compensated for injuries
caused by underinsured motorists. See Williams v. Holsclaw, 128
N.C. App. 205, 211, 495 S.E.2d 166, 170, aff'd, 349 N.C. 225, 504
S.E.2d 784 (1998); Hartford Underwriters Ins. Co. v. Becks, 123
N.C. App. 489, 492, 473 S.E.2d 427, 429 (1996). We specifically
decline to determine today, however, whether a further reduction in
font size would frustrate the purpose of strict compliance with the
Rate Bureau's form.
In addition, the form utilized by Allstate is not included as
a smaller section of a larger form, and has not been reduced to a
drastically small portion of the larger page. Therefore, its
format does not conflict with Erie. Erie, 160 N.C. App. at 223,
584 S.E.2d at 861.
Therefore we hold the trial court's grant of summary judgment
in favor of unnamed defendant Allstate was proper.
Affirmed.
Judges McGEE and McCULLOUGH concur.
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