Swartzbaugh v. Encompass: Maryland High Court Uninsured Motorist Opinion
In Swartzbaugh v. Encompass, the court took a look at which family members have the authority to waive certain types of automobile insurance known as "enhanced uninsured motorist coverage." This was before our new definition of enhanced coverage in 2018, which we talk about at the end of this post.What Is Uninsured Motorist Coverage?
First, a quick primer on uninsured and underinsured insurance. If you drive a car or have family members who drive a car and you don't know this law well, read this section. It might cause you to change your insurance coverage.
In Maryland, automobile policies come with a type of coverage known as uninsured/underinsured (UM/UIM). This is insurance designed to protect a car's driver and occupants in two automobile accident scenarios:
- a negligent driver has too little insurance coverage to pay for injuries caused by the collision
- a negligent driver is completely uninsured or cannot be located (hit-and-run or "phantom driver")
Basically, this insurance protects you from the bad insurance decisions made by all the other drivers in the world. If another driver has no insurance or too little insurance and causes an accident with you, your insurance company is supposed to step in and take care of you.
In Maryland, all insured vehicles must have at least $30,000/$60,000 in uninsured and underinsured motorist coverage (that means a maximum $30,000 per person in an accident, with an absolute limit of $60,000 to be paid for the entire accident). However, you can choose to have more anything more than those minimums are called "enhanced uninsured/underinsured motorist benefits." In our opinion, you should have more. Our lawyers recommend that you get as much as you can afford. It doesn't cost that much more. A $250,000/$500,000 won't cost you much more (it's even better to get $500,000/$1,000,000). We have seen too many catastrophic injury and wrongful death cases settle for pennies on the dollar because the coverage was not there.The Facts of the Swartzbaugh Case
In Swartzbaugh, there are three relevant people: Mom, Dad, and Daughter. Mom handled all of the family's insurance. She took care of obtaining and signing for the automobile insurance policy. She told her insurance agent that she wanted only the minimum amount of UM/UIM, and she signed a form to that effect (at the time she signed, the minimums were $20,000/$40,000). Had she not signed the waiver, she would have been entitled to $250,000/$500,000 in UM/UIM benefits.
Ten years after signing that form (called a waiver), Daughter was in a significant car accident. The other driver's insurance company paid their limits, which was not enough to take care of the costs of Daughter's injuries. The Swartzbaugh family then went after their insurance company, trying to get underinsured motorist coverage benefits. A lawsuit was filed in Carroll County by Frank Murer, a Baltimore lawyer. Frank is an excellent advocate and a friend of Miller & Zois. Encompass was represented by McCarthy Wilson, LLP, a quality insurance defense firm that does a lot of work for Allstate - which owns Encompass - and Erie Insurance. This was a fair fight.Why Swartzbaugh is Important? (First-Named Insured)
So here is one case that is created by confusing insurance terms. The entire thrust of the case centers on whether Mom had the right to waive the "enhanced" uninsured/underinsured for her entire family. That means the court had to decide whether Mom was the "first-named insured." The court had to decide it because that term is not defined anywhere in Maryland law, even though the Courts told the Legislature back in 1996 that it would be a good idea to define it.
The lawyer for the Swartzbaugh family, desperate to find more coverage for the Daughter's accident, argued that "first-named insured" meant exactly that the insured who was first listed on the insurance document. Dad's name was first in line on the "Policyholder" section of the insurance policy, so the lawyer argued that Dad was the first-named insured and the only one with the power to waive enhanced UM/UIM.
As the Court says, the order of the insureds on any particular document is probably happenstance, and not relevant of any hierarchy. The Court of Appeals, in the first appellate opinion written by new Judge Robert N. McDonald, disagreed with the family's argument and decided that a more loose definition was appropriate. They ruled that "first-named insured" was simply a convenience. Not all people named in the insurance policy need to sign, so the people signing an insurance policy could designate the first-named insured through those documents. Indeed, Mom signed the UM/UIM waiver above a line that read "first-named insured."
The Court's ruling is logical and consistent with common sense. When a family contracts for insurance, or changes insurance provisions, there is usually someone in charge to handle it. Maybe mom, maybe dad, and maybe it changes from time-to-time.
In most cases, the signer will have authority from the rest of the family. There was no evidence in this case that Mom didn't have the authority from the family to make these decisions that would be a different case. I'm betting that when Mom signed for her insurance, had no idea what UM/UIM was. She just knew that her yearly premiums were $204.00 cheaper (it averages out to $17.00 per month - crazy right?). Her insurance agent probably didn't really explain UM/UIM, and why it is so important. The Court mentioned that "[i]t simply appears that the family regrets that decision in light of subsequent events." Of course they do. For a measly $204 per year, her daughter would have been protected instead of having a virtually worthless claim.
After this case was written, enhanced underinsured motorist coverage has a whole new meaning. In July 2018, a new law went into effect that requires insurance companies to essentially offer a policy that allows for stacking. If you elect this coverage, the available insurance coverage for your injuries is the combined uninsured motorist limit with the at-fault driver's policy. This creates more insurance coverage that is available to the victim.
If there is not enhanced coverage in Maryland, the uninsured motorist carrier get a credit for the amount of the at-fault driver's policy. So if you and the at-fault driver have a $100,000 policy, there is no additional uninsured motorist coverage.
Most Maryland drivers do not have enhanced underinsurance motorist coverage. Why? Insurance companies are only obligated to offer coverage. Very few consumers will change their current coverage. So our accident lawyers are not seeing many cases where our client has enhanced underinsured motorist coverage.
For most car accidents, $100,000 in coverage is plenty. The problem is that in the more serious accident cases, there is not nearly enough coverage. People don't fully appreciate that there are wrongful death cases in Maryland where the victims only get $100,000 (or worse, the minimum coverage is $30,000).
Your umbrella policy will likely give you extra protection for claims against you. But most umbrella policies do not protect you in the event of an accident where the at-fault driver does not have enough insurance coverage?
The first named insured is typically the person who is in charge of the insurance policy. It is the person responsible for payment and making decisions with respect to changing coverage, canceling the policy, and so forth.
An additonal insured is someone who is not the named insured but still may be entitled to protection, benefits, and indemnity under the policy.