John Rando, Et Al. v. Government Employees Insurance Company (SC09-240)

SUMMARY: 7-0 Decision. The Court held that section 627.727, Florida Statutes, has specific requirements regarding what an insurance company must do to prevent paying uninsured motorist (UM) benefits on multiple policies for multiple vehicles held by one insured. One of these statutory requirements is that the insurance company must obtain informed consent from its insured when it will not allow "stacking" of UM benefits. Although GEICO's insurance policy had a provision that prevented "stacking" of UM benefits, GEICO did not follow the requirements of F.S. 627.727. Therefore, GEICO's provision that prevented "stacking" was unenforceable

Florida resident John Rando sustained permanent, life-altering injuries in a 2005 automobile accident. The accident occurred in Florida and was caused by an underinsured driver. At the time of the accident, John Rando and his wife Gail Rando were the named insureds on two motor vehicle insurance policies issued by GEICO. One policy, the Florida policy, covered two vehicles that were registered and principally garaged in Florida. The second policy, the Delaware policy, covered a vehicle that was registered and principally garaged in Delaware, where the Randos’ daughter resided. The Randos lived in Delaware until 2004, when they moved to Florida and established residency here. The Delaware policy was executed, issued and delivered in Florida. There was no express choice of law provision in the Delaware policy.

Each of the Randos’ motor vehicle policies provided uninsured motorist coverage, and the Randos paid premiums for coverage on each vehicle. Following the accident, the Randos were paid the full amount of uninsured motorist benefits under the Florida policy. However, they were denied benefits under the Delaware policy because of a provision that prohibited the combining, or stacking, of uninsured motorist benefits from separate GEICO motor vehicle policies. The anti-stacking provision in the Delaware policy stated: If separate policies with us are in effect for you or any person in your household, they may not be combined to increase the limit of our liability for a loss.

Because the Delaware policy was executed, issued, and delivered in Florida, it is the law of Florida that forms the basis for our interpretation of the parties’ rights and liabilities in this case. Florida’s public policy, as reflected in section 627.727, Florida Statutes, favors the providing of insurance coverage for losses caused by uninsured motorists. Uninsured motorist protection does not inure to a particular motor vehicle, but instead protects the named insured or insured members of his family against bodily injury inflicted by the negligence of any uninsured motorist under whatever conditions, locations, or circumstances any of such insureds happen to be in at the time.

In the event of a loss caused by an uninsured motorist, stacking allows an insured who pays separate premiums for uninsured motorist coverage to obtain benefits for each premium paid. Florida law with respect to the stacking of uninsured motorist coverage has evolved over the last four decades. At present, although Florida law prohibits the stacking of most forms of motor vehicle insurance coverage, uninsured motorist coverage is expressly excluded from this prohibition. See § 627.4132, Fla. Stat. (2009) (providing that the prohibition against stacking of motor vehicle insurance policies contained in that statute “does not apply . . . [t]o uninsured motorist coverage”). Therefore, the stacking of uninsured motorist coverage is permissible under Florida law.

The stacking limitation in subsection (9)(a), which provides that insurers may issue a policy stating that “[t]he coverage provided as to two or more motor vehicles shall not be added together to determine the limit of insurance coverage available to an injured person for any one accident,” is akin to the anti-stacking provision contained in the Randos’ Delaware policy. However, section 627.727(9) also places limitations on how an insurer may restrict uninsured motorist coverage. Thus, while section 627.727(9) provides insurers with a mechanism to provide less coverage to an insured, it also protects the insured by requiring that the insurer obtain informed consent from the insured. Using a form approved by the Office of Insurance Regulation (OIR), the insurer shall inform the named insured of the limitations authorized by section 627.727(9), and advise the insured that the offer is an alternative to a policy without those limitations. The insured’s signature on the OIR-approved form establishes an informed and knowing acceptance of the limitations. Additionally, the statute requires the insurer to file revised rates that reflect a minimum of a twenty percent decrease in rates as a result of the limited coverage.

It is this requirement that we conclude dictates the outcome in this case. GEICO concedes that it did not obtain informed consent from the Randos for the anti-stacking provision. Consequently, the anti-stacking provision is unenforceable under Florida law because GEICO did not satisfy the informed consent requirement.