Stephen Stefan had first secured automobile insurance in July 1975, from State Farm through Robert Bahr, Sr., owner of Bahr Insurance Agency. Bahr was an exclusive agent for State Farm. Sometime after January 1, 1988, Robert Bahr, Jr. took over the agency and offered to procure and maintain the insurance. Stefan contended that he had, on occasion, requested the agent to update his policies, including the auto policy. He recalled that he had asked the agent if he had everything he needed with respect to his coverage.
The evidence showed that after the younger Bahr had taken over the operation of the agency, he had initiated State Farm's "Family Insurance Check-Up Program," whose purpose was "to review the adequacy of the insured's coverage in light of their specific circumstances and needs and to recommend the appropriate changes that better serve the insured."
Stefan alleged that when his automobile policy was renewed on December 24, 1989, the agent did not inform him of the availability and benefits of UIM coverage and failed to recommend that the insured take advantage of it. Stefan further alleged that State Farm breached its statutory duty to offer him that coverage in an amount equal to the bodily injury liability limits, thereby denying the insured the opportunity to purchase UIM protection.
A representative of the company testified that when the new UIM and UM law became effective in 1983, the company sent to its policyholders a notice and insert explaining the new coverage with each semiannual and annual renewal notice until July 1984. The insert and notice instructed the insured to return the lower portion of the notice if (s)he elected to take advantage of the higher limits of coverage then available. If the lower portion was not returned with the next payment, the company assumed that the insured rejected the offer of additional coverage. The company representative stated that Stefan did receive the premium renewal notices with the insert since he had renewed the policy by payment of the premium.
The trial court granted State Farm's motion to dismiss, finding that it had complied with its statutory obligation to offer UIM and UM coverage to the insured, that Bahr, Jr. was the exclusive agent for State Farm and had no independent duty to the insured, and the "Family Insurance Check-Up" plan did not extend his duties.
On appeal, the judgment was reversed and remanded.
The insured contended that Bahr, Jr. assumed the duty of an annual review of his insurance coverage and that he breached that duty.
The evidence showed that the insured was riding his bicycle when he was struck and seriously injured by a car driven by William Sanson. Sanson had a policy with limits of $20,000 per person, and his carrier paid that amount to the insured. At the time of his injuries, the insured had an auto policy with limits of $50,000/100,000; but that policy provided only for limits of $20,000/40,000 for uninsured motorist coverage, and no provision was made for underinsured motorist coverage.
The insured argued that the trial court improperly dismissed his complaint since questions of fact were raised regarding the insured's alleged receipt of the notice and insert offering UM and UIM coverage. He had also made a timely request for a jury trial.
The higher court said that where a material and genuine question of fact exists, and a timely request for a jury trial has been demanded, a motion for involuntary dismissal of the complaint should be denied. In his deposition, the insured stated he did not recall receiving any notices regarding changes in UM and UIM coverage. He said that no notice of that coverage ever appeared on the bottom of his monthly premium bills; that he had initially mailed in his monthly payments but had later changed to automatic withdrawals of the premiums from his checking account; and that he did not recall when this method of payment began.
The court noted that State Farm did not show its practice of notifying policyholders whose premium payments were made automatically from checking accounts.
The insured asserted further that Bahr, Jr. had a duty to inform him of the additional coverage since he had assumed the duty of reviewing his coverage. He was required to use ordinary care in discharging that duty. The higher court pointed out that it had been held that whether a person is an insurance agent or an insurance broker is determined by his actions and depends upon who consults him, who controls his movements, and who pays him, and whose interests he represents. Whether an insurance agent is an agent for the insured, the company, or both is a factual matter. Since the question of Bahr, Jr.'s agency was a factual matter, the trial court improperly dismissed count II of the insured's complaint.
As to the agent's offer to review the insured's coverage regularly, his offer was a voluntary undertaking, and it would be necessary for the insured to allege facts sufficient to support his claim of the agent's liability.
The judgment of the trial court in favor of the company was reversed, and the action was remanded for further proceedings.
Stephen Michael Stefan, Appellant, v. State Farm Mutual Automobile Insurance Company and Robert Bahr, Jr., d/b/a Bahr Insurance Agency--No. 5-95-0570--Appellate Court of Illinois, Fifth Circuit--November 21, 1996--672 North Eastern Reporter 2d 1329.