Waiver of Uninsured Motorist Coverage, Agency
Yvette Bouffard v. State Farm Fire & Casualty Co.
(August 11, 2011)
For approximately ten years the plaintiff and her husband had obtained their family insurance policies, which included an umbrella policy with $1 million in uninsured motorist coverage, through the Cyr and Rogers Agency. In January of 2005 they went together to a new insurance agency in order to transfer their homeowners, automobile and umbrella insurance policies to State Farm.
Upon arriving at the agency they learned that the building was not wheelchair accessible. They agreed that the plaintiff, who suffers from multiple sclerosis and was confined to a wheelchair, would wait in the car while the husband met with the insurance agent to complete the paperwork.
The husband met with a customer service representative and completed the applications. The representative advised the husband that if he wished to reject uninsured motorist coverage under the umbrella policy he could do so by checking a box on the application form. He was also told that he could check a box to either reject UM coverage for all vehicles or for recreational vehicles only. Although the husband later testified that he had informed the agent that he wished to reject UM coverage only for recreational vehicles, the box indicating that UM coverage was rejected for all vehicles was checked and the trial court subsequently found that this testimony was not credible. After the application form was completed, the agent met with the plaintiff in the couple’s truck and showed her all three applications. The plaintiff reviewed the applications and did not notify the agent of any errors, but was not asked to sign the forms. The insurer subsequently issued the policies. The plaintiff testified that she reviewed the umbrella policy and believed that it included UM coverage.
On August 4, 2006 the plaintiff was injured in an automobile accident. After obtaining the policy limits from the tortfeasor and the UM coverage available under her automobile policy with State Farm, the plaintiff sought UM coverage under the umbrella policy. State Farm denied the claim based on the rejection of coverage on the application form.
The plaintiff brought a declaratory judgment action against State Farm, arguing that she was entitled to UM coverage under the umbrella policy because she did not personally reject such coverage. The trial court, ruling on cross-motions for summary judgment, held that the husband’s rejection of UM coverage was not sufficient as a matter of law to effectively reject coverage for his wife. The court then held an evidentiary hearing to determine whether the husband acted as the plaintiff’s agent when he rejected UM coverage on the application form. The court concluded that the plaintiff not only authorized her husband to act on her behalf, but also ratified his decision when she reviewed the application forms. The plaintiff appealed.
First, the Court ruled that an agent may waive UM coverage on behalf of a principal as long as the insurer proves the existence of an actual or apparent agency relationship. The plaintiff had argued that since RSA 264:15 provides that umbrella or excess policies “shall also provide uninsured motorist coverage equal to the limits of liability purchased, unless the named insured rejects such coverage”, an agent cannot effectively reject coverage for the principal unless the principal expressly and knowingly authorizes the rejection of coverage. The Court, however, rejected the argument that common law agency principals did not apply to UM coverage, ruling that “RSA 264:15 does not clearly indicate any legislative intent to alter common law agency principles.”
The Court then reviewed and upheld the trial court’s determination that the plaintiff’s husband acted as her agent when he rejected UM coverage. The factual elements required to establish an agency relationship are: 1) authorization from the principal that the agent shall act for her; 2) the agent’s consent to act on behalf of the principal; and 3) the understanding that the principal is to exert some control over the agent’s actions. Authority to act as one’s agent may be express or implied. Express authority occurs when the principal explicitly authorizes the agent to act for him or her. Implied authority, on the other hand, may result either as an incident of the terms of the express authority or from acquiescence by the principal in a course of dealing by the agent, and may arise from words, customs or relations of the parties.
The Court held that the facts supported a finding of an agency relationship based on implied authority. Although the plaintiff claimed that she only authorized her husband to obtain the same UM coverage they had in their prior policies, the Court deferred to the trial court’s findings and concluded that the plaintiff authorized her husband to make decisions regarding the insurance application and that he acted within the scope of his agency when he rejected UM coverage. Furthermore, the plaintiff had the opportunity to review the application and the policy itself and, therefore, effectively acquiesced in her husband’s decision to reject UM coverage.
Stephen J. Schulthess