Tennessee Court of Appeals Reverses Summary Judgment Granted to Insurance Agent and Agency in Insureds’ Failure-to-Procure Excess Uninsured Motorist Coverage Case

Uninsured motorist insurance coverage is very important because it can be the only protection available to a person who is involved in an east Tennessee car accident with an uninsured driver (similarly, underinsured motorist coverage protects against situations in which the at-fault driver has some, but not enough, liability insurance. In cases in which coverage is triggered due to a defendant’s lack of coverage (or lack of sufficient coverage, as the case may be), the insurance company essentially “stands in the shoes” of the negligent driver. This means that the insurance company can offer defenses to liability, just as the driver would do under the same circumstances. An insurance company is an insurance company, after all, and the fact that its insured is on the other side of the suit does not change the insurer’s desire to limit the payout on the claim.

This can be very upsetting to policyholders who have been loyal customers, always paying their premiums on time and being careful drivers. What can come as an even worse surprise, however, is a customer thinking that he or she has uninsured motorist insurance coverage in place and then finding out – after an accident caused by another motorist – that he or she does not have such coverage.

Facts of the Case

In a recent case, the plaintiffs were a husband and wife who had previously lived in Georgia. When they lived in that state, they had $2,000,000 worth of excess uninsured motorist coverage, and their policy included a separate “line item premium” for the excess uninsured motorist coverage. After they moved to Tennessee in 2013, the plaintiff husband approached the defendant insurance broker and insurance agency about obtaining a personal umbrella insurance policy with the same coverage that the couple had in Georgia. According to the husband, he provided a copy of the Georgia policy so that the agent could help him obtain similar coverage in Tennessee.

After paying premiums on the new policy for over two years, the plaintiff wife was involved in a motor vehicle accident caused by another driver. She was injured, and her vehicle was a total loss. Upon learning that, contrary to what they had believed to be the case, the plaintiffs’ Tennessee insurance policy did not have excess uninsured motorist coverage, the plaintiffs filed suit against the responsible party and served a copy of the complaint on the defendants. The Circuit Court for Washington County granted summary judgment to the defendants. The plaintiffs appealed.

The Appellate Court’s Decision

The Court of Appeals of Tennessee at Knoxville reversed the trial court’s granting of summary judgment to the defendants, holding that Tennessee Code Annotated § 56-7-135(b) did not apply to actions against an insurance agent for failure to procure insurance coverage as directed and that, thus, it had been error for the lower court to grant summary judgment to the defendants. While the statute might have created a rebuttable presumption in some cases that a party had accepted coverage under a particular contract if he or she had paid premiums, the court found that this presumption applied only in actions between the parties to an insurance contract – namely, the insured and the insured(s).

Here, the action was between the insured and the insurance agent (and the agency for whom he worked) who failed to procure the insurance coverage requested by the insured. Because the trial court had erred in applying the presumption to the parties at bar, it had likewise erred in granting summary judgment to the defendants.

Talk to a Personal Injury Lawyer

If you need to talk to an experienced east Tennessee car accident lawyer about a collision in which you or a loved one has been injured, please call the Hartsoe Law Firm at 865-524-5657 and set up a free consultation. We will be glad to talk to you about your case, explain your legal rights, and help you decide if filing suit is the best course of action under the unique circumstances presented by your case.

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