Bower v. National General Insurance , 342 S.C. 315 ( 2000 )

SHULER, Judge:

In this declaratory judgment action, Jason Bower sought reformation of his father’s automobile insurance contract issued by National General Insurance Company to include underinsured motorist (UIM) coverage. Both parties moved for summary judgment. The trial court denied Bower’s request for reformation and granted summary judgment to National General. Bower appeals. We reverse and remand.

FACTUAL BACKGROUND

In February 1997, Jason Bower, while a passenger in someone else’s car, was injured in a wreck. The owner of the car in which Bower was riding did not have UIM coverage. Bower, living with his father Robert at the time of the accident, filed a claim for UIM coverage with his father’s insurance carrier, National General. National General denied the claim, asserting Robert Bower had rejected its offer of UIM coverage.

Jason Bower subsequently filed this action alleging National General failed to make a meaningful offer of UIM coverage. Based on this alleged failure, Bower sought reformation of the policy to include UIM coverage up to the policy’s limits of $100,000 per person, $300,000 per occurrence, and $50,000 for property damage. The case was referred to a master-inequity with appeal directly to the Supreme Court. The master concluded National General made a meaningful offer of UIM coverage that was rejected by Robert Bower and granted summary judgment to National General. Bower appeals.

LAW/ANALYSIS

Pursuant to South Carolina Code section 38-77-160, automobile insurers must “offer, at the option of the insured, underinsured motorist coverage up to the limits of the insured liability coverage_” S.C.Code.Ann. § 38-77-160 (Supp.1999). To fulfill this statutory obligation, an insurer’s offer of UIM coverage must be “meaningful.” State Farm Mut. Auto. Ins. Co. v. Wannamaker, 291 S.C. 518, 354 S.E.2d 555 (1987). In order to constitute a meaningful offer:

(1) the insurer’s notification process must be commercially reasonable, whether oral or in writing; (2) the insurer must specify the limits of optional coverage and not merely offer additional coverage in general terms; (3) the insurer must intelligibly advise the insured of the nature of the optional coverage; and (4) the insured must be told that optional coverages are available for an additional premium.

Id. at 521, 354 S.E.2d at 556. When offering optional coverages, the insurer must offer UIM coverage in any amount up to the policy limits. Todd v. Federated Mut. Ins. Co., 305 S.C. 395, 409 S.E.2d 361 (1991) (emphasis added).

The insurer bears the burden of establishing it made a meaningful offer of UIM coverage. Butler v. Unisun Ins. Co., 323 S.C. 402, 475 S.E.2d 758 (1996). If an insurer fails to make a meaningful offer, the policy will be reformed by operation of law to include UIM coverage up to the limits of liability insurance carried by the insured. Id. It is irrelevant that the insured rejects UIM coverage, as a “noncomplying offer has the legal effect of no offer at all.” Hanover Ins. Co. v. Horace Mann Ins. Co., 301 S.C. 55, 57, 389 S.E.2d 657, 659 (1990). The question of whether an offer of UIM coverage is sufficient is a question of law for the court. Id.

In the present case, Bower contends National General failed to satisfy the fourth element of the Wannamaker test because its offer did not inform him of the right to select optional coverages not listed on its form. We agree.

National General’s offer form contained the following language:

You have a right ... to buy underinsured motorist coverage in limits up to the limits of liability coverage you will carry under your automobile insurance policy. The limits of underinsured motorist coverage ... are shown upon this Form.

The form then identified three choices of both bodily injury and property damage UIM coverages equal to or less than Bower’s liability limits.¹

In Wilkes v. Freeman, 334 S.C. 206, 512 S.E.2d 530 (Ct.App.1999), cert. denied (August 23, 1999), this Court addressed similar language in the context of whether an insured made a meaningful offer. In Wilkes, the insurer’s offer form stated: “[A]ll of the limits of underinsured motor vehicle coverage we sell, together with the additional premiums you will be charged, are shown on this form.” Id. at 208, 512 S.E.2d at 531. The policy then listed three UIM coverage options that were equal to or less than Wilkes’ liability limits.

In determining whether a meaningful offer had been made, this Court recognized that an offer of UIM “must contain language describing how the insured may request coverage ‘up to’ his liability limits, but different from those amounts listed on the insurer’s form.” Id. at 212, 512 S.E.2d at 533 (emphasis added). The Court stated “merely listing several available options without providing a clear description on how the applicant may request other limits is insufficient to discharge the insurer’s duty under section 38-77-160.” Id. at 211-12, 512 S.E.2d at 533. The Court then held that the insurer failed to make a meaningful offer when it provided no indication that the insured could have requested coverage amounts other than those amounts listed on the form.

While National General’s form does state that the insured is entitled to purchase UIM insurance in amounts up to the liability limits, that statement is immediately followed by language indicating that the available limits are those identified on the form. This language can be fairly construed as an offer to purchase only those coverage amounts identified on the form so long as none of the amounts exceed the insured’s current liability limits. See Yarborough v. Phoenix Mut. Life Ins. Co., 266 S.C. 584, 225 S.E.2d 344 (1976) (“It is well settled that in construing an insurance contract, all of its provisions should be considered- Presumably, all portions of a contract are inserted for a purpose and the contract must be read as a whole, giving appropriate weight to all provisions.”); Diamond State Ins. Co. v. Homestead Indus., 318 S.C. 231, 456 S.E.2d 912 (1995) (noting that to the extent there are conflicting or ambiguous provisions, we must construe the language in favor of coverage). Had National General intended the listed coverages to be mere examples of available coverages or the most common coverages chosen, it certainly could have said so.²

National General contends that the case at bar is controlled by Norwood v. Allstate Insurance Co., 327 S.C. 503, 489 S.E.2d 661 (Ct.App.1997). We disagree.

In Norwood, this Court held that where an offer form listed at least three specific options of UIM coverage below Nor-wood’s liability limits, coupled with plain language notifying her that she could increase or decrease her UIM coverage, the requirements of section 38-77-160 were satisfied. The form in Norwood, however, unlike the form in this case or in Wilkes, gave no indication that the coverages listed were the only options offered. Moreover, Norwood understood that the options listed were not the only coverages available, as she struck through one of the listed policy amounts for uninsured (UM) coverage and wrote in a different amount not on the form. The Court noted that the instructions for selecting UM and UIM coverages were “practically identical.” Id. at 507, 489 S.E.2d at 663.

Because Robert Bower was not apprised of his right to choose any amount of UIM coverage, including coverages not listed on the form, National General failed to make a meaningful offer. Accordingly, we reverse the grant of summary judgment in favor of National General and remand to the trial court for entry of summary judgment in favor of Bower and reformation of the contract up to the liability limits.

REVERSED AND REMANDED.

CURETON, J., concurs. GOOLSBY, J., dissents in a separate opinion.

1 . National General’s form failed to list UIM coverage amounts of 15,000/30,000/5,000, even though National General was authorized to sell those amounts.

2 . In fact, National General’s form once contained language stating that other coverage limits were available but not shown upon the form. National General, however, elected to delete that language.