Mitchell v. Broadnax
Mitchell v. Broadnax, 208 W. Va. 36, 537 S.E.2d 882 (2000) involved a little old lady who bought an uninsured motorist insurance policy - with $ 300,000.00 in coverage - on a car she probably never drove.
She religiously paid her premiums for several decades.
She was seriously injured on her way home from church when an uninsured drunk driver plowed head-on into a car in which she was a passenger.
Ms. Mitchell sought uninsured motorist benefits from her insurance policy, but the insurance company refused to pay.
Buried in the insurance policy was an exclusion that said if Ms. Mitchell was hurt by an uninsured motorist while she was riding in a car that she owned, but did not insure under the insurance policy she paid for, then she had no coverage.
When Ms. Mitchell was injured by the drunk driver, she was a passenger in a car she owned 50-50 with her daughter. Since her daughter bought insurance coverage for the car in which they were riding from another company, Ms. Mitchell's insurance company refused to pay her anything.
In other words, Ms. Mitchell paid premiums for $ 300,000.00 in insurance to protect her in case she was injured by an uninsured motorist.
But because she helped her daughter buy a car, and then didn't encourage her daughter to buy insurance from the same insurance company as Ms. Mitchell, when she was injured by an uninsured motorist her insurance company refused to pay her the coverage for which she had paid her premiums. The circuit court upheld this decision by the insurance company.
All the Court said in Mitchell v. Broadnax was that under West Virginia law, if an insurance company wants to use an "owned-but-not-insured" exclusion to reduce its statutorily-required uninsured motorist coverage, like the one that surprised Ms. Mitchell, the insurance company has to prove that it appropriately adjusted its premiums to reflect a reduction in coverage for the exclusion.
The Court was called upon to interpret a related statutory provision, W. Va. Code 33-6-31(k) (1995) (Repl. Vol. 1996), which states that "nothing contained herein shall prevent any insurer from also offering benefits and limits other than those prescribed herein, nor shall this section be construed as preventing any insurer from incorporating in such terms, conditions and exclusions as may be consistent with the premium charged."
The interpretation of this language in Mitchell resulted in the following holdings:
When an insurer incorporates, into a policy of motor vehicle insurance, an exclusion pursuant to W. Va. Code 33-6-31(k) (1995) (Repl. Vol.1996), the insurer must adjust the corresponding policy premium so that the exclusion is "consistent with the premium charged."
When an insurer has failed to satisfy the statutory criteria of W. Va. Code 33-6-31(k) (1995) (Repl. Vol.1996) requisite to incorporating an exclusion in a policy of motor vehicle insurance, the enforcement of such an exclusion is violative of this State's public policy.
(Syl. pts. 5-6, Mitchell v. Broadnax, 208 W. Va. 36, 537 S.E.2d 882.)
The Court applied several insurance statutes enacted by the Legislature, and held that when an insurance company relies upon an exclusion in an insurance policy to avoid providing coverage, then the insurance company bears the burden of proving:
(1) that it adjusted the policy premium so that the premium was consistent with the amount of coverage; and;
(2) that the premium adjustment and the exclusion were plainly communicated to the policyholder.