Class Action: Liberty Mutual Fire Ins. Co. Unlawfully Rejects Uninsured Motorist Coverage in Texas

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Liberty Mutual Fire Ins. Co. is on the receiving end of a proposed class action lawsuit that claims the company issues uninsured motorist coverage selection/rejection forms that misinterpret Texas law and are therefore invalid.

The suit explains that the Texas Insurance Code requires all automobile liability insurance policies in the state to include uninsured motorist coverage unless the policyholder submits a written rejection. The Texas Supreme Court, according to the complaint, considers a motorist underinsured “when the available proceeds of his liability insurance are insufficient to compensate the claimant for his actual damages, regardless of the amount of uninsured motorist coverage purchased by the claimant.”

The lawsuit poses that contrary to this definition, insurance companies such as the defendant have wrongfully defined someone who’s “underinsured” as a driver whose liability limits are less than the amount of underinsured motorist coverage purchased by the claimant, rather than the amount of actual damages the claimant suffered. In fact, the defendant’s uninsured motorist coverage selection/rejection forms supposedly contain the following language:

“An uninsured or underinsured motor vehicle is a vehicle with no liability insurance or with liability limits that were originally lower, or whose limits have been reduced by payment of claims arising from the same accident to an amount less than the limit of liability for Uninsured/Underinsured Motorist Coverage stated in your policy.”

The case argues that this interpretation “gave no consideration to the amount of actual damages sustained by the claimant,” noting that the underinsured motorist coverage purchased by the claimant is rendered “totally worthless” if both drivers carried only the minimum coverage limit.

According to the lawsuit, the defendant’s selection/rejection forms are invalid and have resulted in the unlawful rejection of Texas uninsured motorist coverage for “thousands – if not tens or hundreds of thousands – of insurance consumers since at least January 1, 2013.” 

“As is apparent from the experience of [the plaintiff],” the lawsuit says, “Liberty Mutual has wholly ignored the express mandate of the Texas Supreme Court by routinely employing coverage selection/rejection forms which patently misrepresent the nature of Texas uninsured motorist coverage.”