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American National Property and Casualty v. McNeely

United States District Court, D. Utah, Northern Division

November 16, 2016



          DALE A KIMBALL United States District Judge

         This matter is before the court on Plaintiff American National Property and Casualty Co.'s Motion for Summary Judgment [Docket No. 16], and Defendant Lloyd McNeely's Motion for Summary Judgment [Docket No. 18]. On October 26, 2016, the court held a hearing on the motions. At the hearing, Plaintiff American National was represented by A.J. Sano and Defendant McNeely was represented by Brian C. Stewart and Mark R. Taylor. The court took the motions under advisement. The court has carefully considered the materials submitted by the parties and the facts and law relevant to the motions. Now being fully advised, the court issues the following Memorandum Decision and Order.


         On January 18, 2007, Lloyd McNeely and his wife, Joyce Wiley, obtained automobile insurance through American National Property and Casualty Company with selected bodily injury liability limits of $100, 000 per person, $300, 00 each accident. During the application process, McNeely and Wiley were presented with a form entitled “Coverage Options Section/Rejection Form - Utah.” The 2007 Selection/Rejection Form sets forth various coverage options concerning Personal Injury Protection (“PIP”), Uninsured Motorist Bodily Injury Coverage (“UM”), Underinsured Motorist Coverage (“UIM”), and Uninsured Motorist Property Damage Coverage (“UMPD”).

         With respect to UIM, American National's 2007 Selection/Rejection Form stated, in relevant part, that UIM “provides you with additional insurance benefits if you or someone in your automobile suffers bodily injury because of an automobile accident caused by another party who is primarily at fault, but who does not have enough insurance to compensate for the injuries.” The form indicates that McNeely and Wiley selected UIM in amounts equal to their bodily injury liability limits of $100, 000 per person, $300, 000 each accident.

         The automobile policy American National issued to McNeely and Wiley became effective January 28, 2007, and has been renewed every six months since. Over the years, vehicles were added to or deleted from the Policy, but no change was ever made to the named insureds listed on the Policy or to the amount of bodily injury liability coverage.

         Around January 2013, McNeely and Wiley, who are both retirees living on a fixed income, sought to reduce the amount of their insurance premiums. McNeely testified that the cost of the Policy kept increasing so he talked to his agent about bringing the cost down.

         On January 15, 2013, McNeely met with his insurance agent and decided to have UIM and UM removed from the Policy. To do this, McNeely signed a form entitled “Coverage Options Selection/Rejection Form - Utah” (“2013 Selection/Rejection Form”). The 2013 Selection/Rejection Form reads, in relevant part:

         Underinsured Motorist Bodily Injury Coverage (Automobile and Motorcycles)

         The following Underinsured Motorist Bodily Injury limits are available under your ANPAC insurance policy. Additionally, if you prefer, you have the option of rejecting Underinsured Motorist Bodily Injury Coverage completely by checking the appropriate box below.

         Underinsured Motorist Bodily Injury (UIM) coverage protects an insured person from bodily injury caused by a liable motorist who is insured under a bodily injury liability bond or policy at the time of the accident with limits of liability for bodily injury:

a. which are less than the amount of the damages of the insured person; or b. that have been reduced by payments to persons other than the insured to less that the amount of the damages of the insured person.

         Under the 2013 Selection/Rejection Form, three coverage options are listed. Option A provides UIM equal to the bodily injury limits provided under the Policy. Option B rejects UIM equal to the bodily injury limits but allows for the selection of lower UIM limits. And Option C rejects UIM coverage in its entirety. McNeely selected Option C and checked a box which states: “I do not desire to purchase Underinsured Motorist Bodily Injury Coverage.” He then signed the 2013 Selection/Rejection Form.

         Approximately eight months later, on August 13, 2013, McNeely was involved in an automobile accident with an underinsured motorist. On May 14, 2015, McNeely's counsel sent a letter to American National stating that McNeely had settled his liability claim against the underinsured motorist for the policy limit of $100, 000, and demanding that American National pay $100, 000 in UIM coverage under McNeely's Policy. On November 30, 2015, American National took examinations under oath of McNeely and Wiley concerning the facts and circumstances underlying their rejection of UIM coverage.

         On January 20, 2016, American National sent a letter to McNeely's counsel confirming that McNeely's claim for UIM benefits had been denied based on the 2013 Selection/Rejection Form. American National then filed this declaratory judgment action seeking a determination on the UIM coverage claim.


         In 2000, the Utah Legislature amended Utah's insurance code in an effort to make the presumptive limits of uninsured motorist and UIM coverage the same as the insured's liability limits, effective January 1, 2001. Therefore, in 2007 when McNeely and Wiley obtained their Policy from American National, Utah's insurance code provision regarding UIM coverage provided:

(f)(i) A named insured may reject underinsured motorist coverage by an express writing to the insurer that provides liability coverage under Subsection 31A-22-302(1)(a).
(ii) This written rejection shall be on a form provided by the insurer that includes a reasonable explanation of the purpose of underinsured motorist coverage ...

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