Wednesday, May 27, 2009

Auto Policy Requirement Against Public Policy

In Diaz-Hernandez v. State Farm Fire & Cas. Co. (3D07-2895), the Third District decided whether an automobile insurance policy that requires "the Insured to file suit against the known uninsured motorist and State Farm, is against the public policy of the UM statute, section 627.727, Florida Statutes (2007), and therefore, void."
The court stated:

Moreover, "[u]ninsured motorist coverage was created by the legislature for the benefit of injured persons, and not for the benefit of insurance companies." Armstrong v. Allstate Ins. Co., 712 So. 2d 788 (Fla. 2d DCA 1998).

When an insured seeks to recover uninsured motorist benefits from its insurance carrier, the insured’s UM carrier stands in the shoes of the uninsured motorist.

Moreover, "in a UM claim the insured must prove that she is legally entitled to recover from the owner or operator of the uninsured or underinsured vehicle. Just as she would in a suit against the tortfeasor, the insured bears the entire burden to prove that her claimed damages were reasonable, necessary, and related to the accident."
While the provision in State Farm’s UM policy does not limit the scope of the Insured’s UM coverage, it does add an additional burden upon the Insured by requiring the Insured to join the uninsured motorist (tortfeasor) in the Insured’s contractual action against State Farm for UM coverage. There is nothing in the UM statute that imposes such a burden upon the Insured.

We find that the additional burden this policy provision places upon the Insured violates the clear policy articulated in Armstrong, 712 So. 2d at 788, that the purpose of the UM coverage is to protect the injured motorist, not to benefit the UM carrier or the uninsured motorist.


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