UM Coverage Tagged Articles

In Madden v. Fairburn, the plaintiff amended her petition to assert a UM claim against an insurer based upon the alleged negligence of a new defendant not named in the original petition. The amended petition asserted a new theory of liability but sought the same recovery under the same UM policy.

The issue presented to the Louisiana Court of Appeal for the First Circuit was whether the original petition interrupted prescription for the claim brought against the UM insurer. Because the insurer did not receive notice in the original petition that it could be liable for damages based upon the new defendant’s fault, the court found prescription could not be interrupted.

Madden was a passenger in a vehicle driven by John Seibert that collided with Steven Ray Fairburn. Madden timely filed suit against Fairburn and Capitol Specialty Insurance Corporation (Capitol Specialty), claiming uninsured motorist (UM) coverage under its policy. The Trial Court later dismissed Madden’s claims against Fairburn. While the appeal of that ruling was pending, and over five years after the accident, Madden amended her petition to allege Seibert was at fault and sought the same UM coverage any damages he caused. Capitol Specialty argued the claim brought against it in the amended petition had prescribed.

At the time of the accident, claims for torts/delictual actions had a one-year prescriptive period that commenced from the date of the injury or damage sustained* Claims to recover damages under a UM policy are subject to a prescription period of two years.^ Madden argued her original claim against Capitol Specialty interrupted prescription because her amended claim arose from the same accident and sought to recover damages under the same UM policy.

La. C.C. art. 3462 states that prescription is interrupted when an obligee (Madden) commences an action against an obligor (Capitol Specialty) in a court of competent jurisdiction and venue. However, in Kling v. Hebert, the Louisiana Supreme Court has clarified that the “essence of interruption of prescription by suit is notice to the defendant of the legal proceedings based on the claim involved.” The Kling judges emphasized that prescription serves to protect defendants from unexpected liability years after an event, particularly when a new legal theory or a different alleged tortfeasor is introduced.

The court also considered Trahan v. Liberty Mutual Insurance Company, which held that a claim against an insurer based on one party’s negligence does not interrupt prescription for a later claim against the same insurer based on another party’s negligence. Because Madden’s original suit was based on Fairburn’s negligence, Capitol Specialty did not receive timely notice that she would later seek UM coverage based on Seibert’s alleged fault. Thus, the appellate court ruled in favor of the insurer, affirming the prescription of the plaintiff’s claims.

References:

Madden v. Fairburn, 2024-0513 (La. App. 1 Cir. 12/27/24), — So.3d —, 2024 WL 5232995.

Kling v. Hebert, 23- 00257, p. 4 (La. 1/ 26/24), 378 So. 3d 54.

Trahan v. Liberty Mutual Insurance Company, 314 So. 2d 350 (La. 1975).

*La. C.C. art. 3492. See As of July 1, 2024, delictual actions are subject to a two-year liberative prescriptive period, applying to delictual actions that arose or after the effective date.

^ La. R.S. 9:5629.

Louisiana law requires UM coverage in automobile liability insurance policies in the same amount as the policy’s bodily injury liability coverage. UM coverage will be included in the policy unless the insured rejects UM coverage, selects lower limits, or selects economic-only coverage. This rejection, selection of lower limits, or selection of economic-only coverage must be made on a form prescribed by the commissioner of insurance and must be signed by the insured or its legal representative. See La. R.S. 22:1295. If a rejection form is not completed, UM coverage will be read into the policy. However, a valid UM waiver form executed for a policy of insurance remains in effect when that policy is renewed with a few exceptions. Generally, execution of a new waiver form is not required unless a new policy is issued or the liability limits increased. These basic principles were considered in the recent First Circuit decision in Johnson, et al. v. Bass, Geico General Ins. Co., and GoAuto Management Services, LLC, 2021 CA 0139 (La. App. 1 Cir. 12/22/21).

In Johnson, the plaintiff obtained a policy of insurance from GoAuto on July 17, 2015 and validly rejected UM coverage on the commissioner’s UM rejection form. The plaintiff renewed the policy multiple times and also completed an “Application for Personal Automobile Insurance” on February 23, 2018 to add her husband and an additional vehicle to the policy.

The Johnson plaintiff was in a motor vehicle accident on November 26, 2019 and claimed UM benefits under the policy. She argued that the insurance application she completed in February 2018 to add a new driver and a new vehicle to the policy created a new policy of insurance that required completion of a new UM waiver form. Because a new UM waiver form was not executed in February 2018, the plaintiff argued that UM coverage should be read into the policy. Thus, the question posed to the court was whether the 2018 policy became new or was simply a renewal. The trial court found that the policy was a renewal and dismissed the UM claim.

The First Circuit affirmed and rejected the plaintiff’s argument holding, “the language of La. R.S. 22:1295 is clear and unambiguous; only changes in the ‘limits of liability’ to an existing policy will create a new policy that requires the completion of a new UM selection form.” Despite multiple renewals, the liability limits of the policy did not change from the date it was issued through the date of the accident. Importantly, the limits also did not change when the new driver and vehicle were added to the policy in February 2018. Thus, no new policy was created. The original rejection of UM coverage remained in effect, and the plaintiff’s claims against her alleged UM insurer were dismissed.