Previous rejection of uninsured motorist coverage remained in affect after policy renewal.

Where a company had properly rejected uninsured motorist coverage for its fleet of vehicles in 2002, and the company submitted standard information for its 2011 policy renewal, the 2002 rejection remained in effect and uninsured motorist coverage was not part of the company’s automobile insurance policy.

In Hughes v. The Liberty Mutual Fire Insurance Company, No. E2020-00225-COA-R3-CV (Tenn. Ct. App. Dec. 30, 2021), plaintiff was the driver of a vehicle owned by a large healthcare company (HMA). Plaintiff was in an accident while driving an HMA vehicle, and he filed a personal injury suit and gave HMA’s insurer, defendant Liberty Mutual, notice of a potential uninsured motorist claim.

Liberty Mutual disputed that the HMA policy included uninsured motorist coverage. The evidence showed that in 2002, an HMA representative had rejected uninsured motorist coverage in Tennessee in a signed, dated document. This representative had “executed a new written rejection for Tennessee vehicles each succeeding year through 2010.” The policy was due to be renewed on October 1, 2011, and HMA’s insurance broker decided to shop the policy around and solicit premium quotes. The broker sent information about the insurance needs to several carriers, including Liberty Mutual, and on September 30, 2011, the broker “notified Liberty Mutual that HMA had chosen to renew its coverage for another term.” The renewal policy and liability limits were identical to previous policies, with the only changes being that the rate per vehicle was lower and the collateral requirement was waived. Like in previous years, the policy did not expressly include uninsured motorist coverage in Tennessee, and an HMA manager testified at trial that HMA “waived uninsured motorist coverage whenever possible.” Due to an acquisition, HMA increased their number of vehicles covered in Tennessee on October 1, the same day the renewed policy began, and plaintiff was driving one of these recently added vehicles when the accident occurred.

After a bench trial, the trial court ruled that HMA did not submit a new application, that the 2002 rejection of uninsured motorist coverage was still in effect, and that there was no uninsured motorist coverage in this case. The Court of Appeals affirmed this decision.

In Tennessee, “every general automobile liability policy issued or renewed…must include uninsured motorist coverage unless such coverage has been validly rejected by the named insured.” (Tenn. Code Ann. § 56-7-1201(a)). “[A]n insurer need not include uninsured motorist coverage in a renewal policy when a signed, written rejection by the named insurer remains in effect[, b]ut a prior written rejection loses its effectiveness whenever a new application is submitted in connection with any renewal…transaction.” (Tenn. Code Ann. § 56-7-1201(a)(2) (internal quotations omitted)). Because this was undoubtedly a renewal policy, the key issue was whether the correspondence in 2011 constituted a new application, with the Court deciding that it did not.

When considering whether HMA submitted a new application, the Court noted that “nothing about the August 2011 submission distinguished it from the typical renewal process between these parties.” The Court pointed out that information about company changes was sent to Liberty Mutual every year so that pricing could be determined. While the information sent in 2011 was more detailed, the Court deemed this difference to be solely due to marketing efforts by the broker. The Court specifically stated that it did “not equate marketing tactics with a complete renegotiation of the policy terms.” The Court also noted that the fact that the new policy started on the same day additional vehicles were added was “pure coincidence,” as “coverage for new acquisitions…was automatic[.]”

Because the Court held that “HMA did not submit a new application in connection with the 2011 renewal transaction, the company’s previous written rejection remained in effect for the renewal policy,” and the finding that there was no uninsured motorist coverage was affirmed.

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