Steven Plitt, Expert Witness Steven Plitt, Expert Witness
Insurance Bad Faith Claim Handling Expert Serving Clients Nationwide

Once is Enough!

The Kentucky Supreme Court in Allstate Insurance Co. v. Smith, 487 S.W.3d 857 (Ky. 2016) held that the insurer had a duty to advise its insured of the availability of underinsured motorist coverage when the policy was initially purchased. However, the insurer had no duty to advise the insured of the availability of UIM coverage after the insured renewed the policy for the first time. Although it was undisputed that the designation of UIM coverage was not listed on the declarations page of the insured's policy, the evidence also showed that Allstate sent a form to the insured with each renewal, notifying the insured about the ability to purchase higher limits for UM and UIM coverage.

Kentucky's Motor Vehicle Reparations Act contained a provision that required insurance companies to make available UIM coverage to their insureds upon request. After the enactment of the Act, the legislature amended the Act to require that the insurer provide notice of the ability to purchase UIM coverage with the first renewal of the policy. The Kentucky Supreme Court ruled in favor of Allstate, finding that the statutory reference to first renewal meant literally the first renewal notice sent to the insured and was not broad enough to require every notice of renewal to mention the opportunity to purchase UIM coverage. The record established that the insured's policy was first renewed well over 30 years prior to the accident and before the enactment of the statute requiring notice of the ability to purchase UIM coverage. Because of this, the Court held that Allstate was not under an obligation to provide UIM information when the insured's policy was first renewed. The Court also rejected the insured's argument that his lengthy relationship with Allstate somehow created an affirmative duty to inform him about his lack of UIM coverage. The Court noted that the insured never sought counsel from his insurance agent on coverage, and the agent indicated that the insured never actually read his policy. The Court found that being willfully ignorant of a contract's terms did not equate to placing trust in the party with whom one contracts.

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