Ballesteros v. American Standard Insurance Company (1/20/11)

This is the review of a Court of Appeals decision we reported here.

20-259.01 requires automobile insurers to offer uninsured and underinsured coverage. Cases had said that the offer must be reasonably calculated to come to the insured’s attention. Ballesteros claimed that American Standard’s offer wasn’t because its UM/UIM offer form was in English and his “primary language” is Spanish. American Standard argued that the English form is required and approved by the Department of Insurance so using it should be a “safe harbor.” The trial court granted Ballesteros summary judgment; American Standard appealed. The Court of Appeals reversed, holding that the form wasn’t a safe harbor and that there questions of fact about whether American Standard had done enough to make Ballesteros aware of the offer.

The Supreme Court holds that using the State-approved form satisfies the statute.

The statute says that the insurer “shall make available” UM/UIM coverage and “by written notice offer” it. The Court notes that the “make available” language in the statute’s predecessors had been interpreted as not requiring action by the insurer to instruct the insured about the coverage. To make the coverage available therefore does not mean to explain it. The “offer” is measured by contract law, under which an effective offer depends not on the offeree’s actual understanding of its terms but on his reasonable understanding that an offer of some sort has been made that would bind the offeror. The Plaintiff did not dispute than an offer had been made; he therefore didn’t need something in Spanish to explain that.

The Court further notes that the statute does not require a Spanish form even though other statutes do. Moreover, it once did require a Spanish form but that requirement was dropped.

Finally, the Court reviews legislative history to conclude that by certain amendments to the statute the legislature intended that obtaining a signature on the DOI-approved form be in itself sufficient compliance with the statute. (The Court avoids using the problematic term “safe harbor.”)

The Court is careful to say, though, that “we express no opinion whether tort law may impose [the requirement of a Spanish form] . . .  in certain circumstances” (Ballesteros is also making the usual claims of negligence, bad faith, etc.)

The Court vacates the Court of Appeals’ decision and remands for entry of summary judgment for American Standard on the statutory claim.


(link to opinion)