Tuscaloosa Car Insurance Policies: A Look at Swartzbaugh v. Encompass Ins.

May 10, 2012 - Car Accidents by Cross & Smith

When you are involved in a car accident in Tuscaloosa, you may be confused over your rights.

Our personal injury attorneys understand your confusion and we are here to help you get the benefits necessary to pay for lost wages, medical bills, pain and suffering and other expenses.

Swartzbaugh v. Encompass Insurance Company of America is a recent Maryland case that shows the confusion that is often times created by language in automobile insurance policies.

Mrs. Swartzbaugh purchased auto insurance from the defendant, Encompass Insurance Company of America, through a local independent insurance broker. The automobile insurance policy named Mrs. Swartzbaugh, her husband Mr. Swartzbaugh and their daughter Kelly as drivers. Mrs. Swartzbaugh purchased the minimum mandatory under-insured motorist (UM) but waived the higher UM coverage option. This waiver was done on a standard form and signed by Mrs. Swartzbaugh. As in many states, a waiver of further insurance coverage remains in effect until the clients withdraw the waiver and purchase additional insurance coverage.

In 2008, Kelly was a passenger in a vehicle that was involved in a car accident with an under-insured driver. The insurance company of the under-insured, tendered the policy limits of the under-insured’s policy. Kelly petitioned her own insurance company for the higher amount of UM coverage waived by Mrs. Swartzbaugh; however, defendants refused to pay the higher amount of UM benefits to Kelly because of the waiver executed by Mrs. Swartzbaugh. Kelly contended that the waiver signed by Mrs. Swartzbaugh was not valid, and as a result, she contended that she should be entitled to the higher amount of UM benefits.

In many states, a minimum car insurance policy is mandatory. This coverage provides for liability coverage, personal injury coverage, and coverage for property damage. Additionally, most states require that drivers purchase or be given the option to purchase no-fault insurance which is referred to as personal injury protection or PIP coverage. Lastly, states usually require that insured drivers purchase or be given the option to purchase coverage to protect them where they are involved in a car accident with an uninsured driver.

In order to encourage drivers to purchase minimum liability insurance coverage, many states have allowed drivers to waive all or portions of PIP and/or UM coverage. By waiving PIP and/or UM insurance coverage, a driver is limiting the amount that he or she will be compensated if involved in a car accident. A waiver of PIP and/or UM insurance is usually executed on a standard legal form. This form is customarily signed by the “first named insured.” This is the form which Mrs. Swartzbaugh signed to limit the amount of UM coverage available. Kelly argued that her father, Mr. Swartzbaugh, was the first named insured because he was listed first on the policy. Therefore, Kelly argued that the waiver signed by her mother, Mrs. Swartzbaugh, was not vailid.

The court, however, held that the “first named insured” is classified as the person who acts on behalf of the other parties insured under the policy. Because Mrs. Swartzbaugh purchased the policy and signed the document, she was considered the “first named insured.” Because of this, the waiver was valid and Kelly was not allowed to receive the higher amount of UM benefits.