Mitchell v. Liberty Mut. Ins. Co., 271 Kan. 684

Summary

The Supreme Court of Kansas considers whether an employer's automobile insurance policy provided underinsured motorist coverage above the statutory minimum after the employer previously rejected excess coverage. The court analyzes the effect of prior written rejections under K.S.A. 40-284 and concludes that the rejection remained effective for subsequent policies, limiting Liberty Mutual's coverage and making the plaintiff's individual Shelter policy applicable to the remaining underinsured motorist benefits. The court also addresses prejudgment interest and affirms in part and reverses in part.

Holdings

1. A written rejection of excess underinsured motorist coverage remains effective for a later policy when the later policy replaces the prior policy between the same parties and contains substantially the same coverage provisions; such a policy qualifies as a renewal policy under K.S.A. 40-284(c).
2. The signed but incomplete 1989 rejection form did not operate as an affirmative request for coverage equal to the liability limits; K.S.A. 40-284(c) requires only a written rejection and does not require the rejection form to be attached to or encompassed within the policy; the affidavit and rejection were properly considered; and denial of additional discovery was not an abuse of discretion.
3. Shelter's obligation to pay interest began on March 29, 1995, the date of judgment against the tortfeasor when the amount Shelter was required to pay became fixed, rather than October 12, 1999, when Liberty was determined not to owe coverage.
4. Shelter was liable for interest only on the $50,000 it was required to pay under its underinsured motorist coverage, not on the entire $840,000 judgment.

Questions Presented

1. Whether UPS's 1984 written rejection of excess underinsured motorist coverage remained effective under K.S.A. 40-284 for the Liberty policies issued in 1986 and 1989.
2. Whether the 1989 unsigned or incomplete rejection form, the insurance commissioner's bulletin, evidentiary issues concerning the 1984 rejection, and discovery issues invalidated the 1984 rejection or prevented summary judgment.
3. Whether Shelter's obligation to pay prejudgment interest began on March 29, 1995, rather than October 12, 1999.
4. Whether Shelter's liability for interest extended to the entire $840,000 judgment or only to the $50,000 it owed under its underinsured motorist policy.

Disposition

reversed