Indiana’s Statute on Written Rejection of UM/UIM Coverage does not apply to Personal Umbrella Policy

Kim Howard prevails at the Indiana Court of Appeals.

In April 2018, Shannon North was involved in a car accident which caused Shannon to suffer personal injury.  At the time of the accident, Shannon and her husband Miles lived with Miles’ father, James, at James’ residence.  Prior to the accident, James had applied for and was issued a personal umbrella insurance policy through the Selective Insurance Co. of South Carolina.  Shannon received payment for her injuries from the at-fault driver’s automobile liability insurance company and from her own insurance company under its UM/UIM coverages.  Thereafter, she attempted to find additional UIM coverage under James’ umbrella policy as a member of James’ household.  Selective denied coverage on the basis that James has rejected UM/UIM coverage on his umbrella application. Shannon filed suit in the Allen County Superior Court.  In that action, the trial court granted Selective’s Motion for Summary Judgment holding that James’ policy did not provide UIM coverage for Shannon’s accident.

Shannon and her husband appealed arguing that Selective was required to conform to the requirements of UIM/UM rejection set forth in Ind. Code Section 27-7-5-2 (b) and (c) pertaining to automobile liability policies.  They claimed that those same rejection requirements apply equally to personal umbrella policies in the state, and, that since those statutory requirements for rejection were not met by Selective in issuing James’ policy, Shannon should be afforded UM/UIM coverage under James’ policy.

The Court of Appeals disagreed.  The Court found that the North’s argument ignored Subsection (h) of Ind. Code Section 27-7-5-2 which specifically addresses personal umbrella policies.  The Court noted that Subsection (h) states that insurers “may, but are not required to, make available UM/UIM coverage” in personal umbrella policies.  The Court noted that UM/UIM coverage under such policies is dependent upon whether “(1.)  UM/UIM coverage was available from the insurer, and, (2) whether the insured requested, and perhaps more importantly purchased, the coverage as part of the policy.”

While Selective did offer UM/UIM coverage under James’ personal umbrella, in James’ application that coverage was rejected.  James signed the application acknowledging that he read its contents and that the information in the application was correct.  He did not pay any additional premium for UM/UIM coverage.  The Court held that because an insurer is not required by Indiana statute to make UM/UIM coverage available under a personal umbrella policy, “it would be inconsistent to require an insurer to obtain a written rejection of coverage it was not required to make available in the first place.”

Shannon petitioned the Supreme Court for Transfer. Transfer was denied.

Shannon M. North and Miles T. North v. Selective Insurance Co. of South Carolina, 155 N.E.3d 662 ( Ind. Ct. App. 2020), transfer denied, 166 N.E.3d 905 (Ind. 2021)

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