Insured with one vehicle, insured for UM buys another vehicle and adds it to the same policy, telling agent he wants the same coverage, including UM, for the second vehicle. Agent says since you have UM, it follows you and so agent doesn't add or charge a separate premium for the new vehicle. Insured loans second vehicle to a friend (not a resident relative), who is then hit by anuninsured driver. Company denies UM claim saying there’s no UM for the Friend because there’s no UM coverage on the second car. Is this a valid denial?
Answer: This is a tough one. Your best bet might be to sue to reform the policy. If I read your facts correctly, it wouldn’t have cost anything to put the new vehicle on the UM because the policy had a “per policy” rather than a “per vehicle” premium structure. This being so, arguably it was a mistake for the agent not to put UM on the newly acquired car. There is a good argument that constructive fraud will justify reformation where to fail to do so would cause the insurance company to benefit from a mistake on the part of its agent. See: Gentry v. American Motorist Ins. Co., 1994 OK 4, 867 P.2d 468: Constructive fraud will justify reforming an insurance policy to cover a loss not otherwise covered, where the agent led the insured to believe the loss in question would be covered, even though the agent had no intent to defraud the insured.
Posted on Sun, August 8, 2010
by Sharon Coleman filed under