United Services Automobile Ass'n v. Litchfield

GOOLSBY, J.: United Services Automobile Association (“USAA”) brought this declaratory judgment action against Lesli Litchfield and Vernon Litchfield seeking a declaration that no basis exists for reforming Lesli Litchfield’s automobile insurance policy to include underinsured motorist (“UIM”) coverage. The trial [583] court granted USAA’s motion for summary judgment. The Litchfields appeal, contending USAA failed to make a meaningful offer of UIM coverage. We affirm. FACTS USAA sent Lesli Litchfield (then Lesli Tillman) an automobile insurance policy on July 9, 1997. USAA included an offer of UIM, using form 338SC(10), a form prescribed by the Chief Insurance Commissioner of South Carolina. This form listed each and every limit of UIM coverage that USAA had filed with and had been approved to sell by the South Carolina Department of Insurance, instructed Litchfield how to select UIM coverage if she wished it, and told her how she could later increase or decrease the limits of such coverage. The coversheet of the policy contained the following notice: “Important Notice! SC law requires us to add ... UIM to your policy in the same limits as your liability unless you sign the attached offer of optional ... UIM Form 333SC and return it to us within 30 days.” When Litchfield failed to respond, USAA issued her a policy on August 19,1997, that included UIM coverage in the amount of her liability coverage. Six months later, Litchfield telephoned USAA and asked that it drop the UIM coverage from her policy. USAA sent her a form annotated with the words “Rejection of UIM per phone conversation” written across the bottom and asked her to sign, date, and return it by mail. Litchfield did so, returning the form on February 2, 1998. USAA then prepared and sent to Litchfield an amended declaration that reflected the deletion of the UIM coverage and the prorated, decreased premium for the remainder of the policy period. On October 5, 1999, while driving a rented automobile in Hawaii, Litchfield’s husband was injured in a motor vehicle collision. Litchfield’s husband then presented a claim for UIM benefits against her USAA policy because the damages he sustained allegedly exceed the $100,000.00 liability coverage of the at-fault driver. USAA instituted this declaratory judgment action against the Litchfields, asserting Litchfield had effectively cancelled her UIM coverage. The latter counterclaimed, seeking to [584] have the policy reformed to include the UIM that Litchfield, almost two years previously, had specifically asked be deleted from her policy. The trial court granted USAA summary judgment, finding the sole reason that Litchfield’s policy did not contain UIM coverage at the time of the accident was because she had voluntarily elected to drop it. The Litchfields do not challenge this finding on appeal. The Litchfields claim that USAA did not make a valid offer of optional UIM coverage when she purchased her coverage. LAW/ANALYSIS We do not view this as an “offer of UIM coverage” case.1 We are beyond the point of having to decide whether USAA made a valid offer of UIM coverage to Litchfield. This is because Litchfield did in fact enjoy such coverage and in an amount up to the limits of her liability coverage; however, she later, on her own initiative, voluntarily decided to drop it. Because Litchfield once had UIM coverage and later changed the policy by dropping the UIM coverage from her policy, USAA was under no obligation to make another offer of UIM coverage.2 Moreover, we agree with the trial court that “[ijt would make no sense ... for an insurer to be required to ‘offer’ a given coverage to an insured who had contacted the insurance company for the specific purpose of dropping that coverage.” [585] Indeed, if Litchfield were allowed to prevail in this instance, then anyone whose policy currently includes UIM coverage in an amount less than his or her liability coverage would be able to question later the sufficiency of the offer of UIM coverage and seek to have the policy reformed in an attempt to increase the limits thereof. The opportunity for fraud would be enormous. AFFIRMED. STILWELL, J., concurs. HUFF, J., dissents in a separate opinion. Footnotes [1] Because we do not consider this an “offer" case, we do not reach the issue of whether the offer made by USAA to Litchfield was valid to begin with. Cf., however, Norwood v. Allstate Ins. Co., 327 S.C. 503, 506-507, 489 S.E.2d 661, 663 (Ct.App.1997) (holding an automobile insurer made a valid offer of UIM coverage under a policy with liability limits of 25/50/25 where insured offered UIM coverage of 15/30/5, 15/30/10, and 25/50/10, and offer form indicated insured could purchase UIM coverage “up to” her liability limits and instructed her how to increase or decrease her limits of UIM coverage); cf. also S.C.Code Ann. § 38-73-470 (Supp.2002) (“There is no requirement for an insurer or an agent to offer underinsured motorist coverage at limits less than the statutorily required bodily injury or property damage limits."). [2] See S.C.Code Ann. § 38-77-350(c) (2002) (“An automobile insurer is not required to make a new offer of coverage on any automobile insurance policy which renews, extends, changes, supersedes, or replaces an existing policy.”).