Rejecting Uninsured Motorist Coverage and Stacking

Under Florida law, when someone makes an election not to have uninsured motorist coverage (UM) on their policy, a specifically worded form must be signed. The insured also has the right to accept or reject stacked uninsured motorist coverage. The effect of stacking such coverage would be to double the effective coverage, for instance, if there were two cars on the policy. The question of whether such coverage has been validly rejected often comes into question when the insured is involved in an accident, long after the insurance papers have been executed. The insured, at that point, is typically looking for additional coverage on their policy and challenging whether the rejection of such coverage had been validly executed. One of Florida's District Courts of Appeal recently considered the question of whether someone, other than the named insured on an auto policy, had the ability to make a binding rejection of such coverage.

The case, which came before the court, involved a husband and wife. The wife was made the "named insured" on the policy and the husband listed as an "additional insured". At the time that the policy application was completed it was done by the husband. He rejected stacked UM coverage which would have effectively quadrupled their coverage due to four cars being on the policy. Of course, years later they were in a serious accident and challenged the rejection of stacked coverage by the husband who is only listed as an additional insured on the policy.

They lost. The Court discussed the well established case law in Florida on this subject and recently issued a written opinion. Under the principles of agency law, the wife clearly gave her husband the apparent authority to obtain the insurance and waive the stacked coverage. The signature of an insured's agent on an insurance application binds the insured to the coverage selected. The insured's agent could be a spouse or even a broker. In that regard, there is case law which says that the insured is bound even if their broker applied for the wrong insurance coverage. The risk of such error lies with the insured who allowed the agent to act on their behalf.

It is not my intention, nor am I allowed, to give legal advice regarding any specific coverage question. However, this case raises an issue which is commonly encountered and one that consumer's need to specifically consider when they allow someone to act on their behalf in arranging insurance coverage.