July 3, 1976

Mr. Max Gors, Secretary
Commerce and Consumer Affairs
State Capitol Building
Pierre, South Dakota 57501

OFFICIAL OPINION NO. 76-69

SDCL 58-11-9.4, underinsured motorist coverage to be available with liability policies

Dear Mr. Gors:

You have requested an official opinion from this office in regard to the following factual situation:

SDCL 58-11-9.4 states "No automobile liability or motor vehicle liability policy of insurance shall be renewed, issued, or delivered in this state with respect to any automobile registered or principally garaged in this state unless underinsured motorist coverage is made available to the insured." (Emphasis added.)

Based on the above you ask:

Does the proper interpretation of the wording "made available" mean that such insurance must be offered to the insured and either accepted or rejected? If so, does the offering and the acceptance or rejection have to be put in writing or can it be verbal?

In your letter you refer to a recent court decision in the state of Minnesota wherein an insurance company and its agent were found negligent for failing to advise a Minnesota resident that a certain type of automobile in­surance coverage was available. The jury found the agent and the company were negligent for not advising the insured that underinsured motorist coverage could be purchased and that if the insured would have known of such coverage he would have purchased the coverage. In view of this court decision, the above suggestions have been raised in regard to SDCL 58-11-9.4.

In view of the decision of the Minnesota court, it appears to me that in­surers would be best advised to document that they do make underinsured motorist coverage available under SDCL 58-11-9.4 and that the insured has knowingly refused or accepted such insurance coverage. To attempt to in­terpret the term "made available" in SDCL 58-11-9.4 by opinion is really not a solution to the problem presented. What I would conclude as to the proper interpretation of "made available" in SDCL 58-11-9.4 would not be binding in a court of law in this state and would, at best, be "advisory." Rather than interpret SDCL 58-11-9.4 by opinion, it appears that the answer to your question is to be found in a practical approach to the statute in view of the Minnesota court's decision. To me it seems only reasonable that, in view of the language in SDCL 58-11-9.4 and the decision of the Minnesota court, insurers who want to protect themselves from charges such as those brought in the Minnesota case should inform their insureds in writing of the fact that such insurance is available and document to a reasonable degree how the insured responds to such an offer.

Respectfully submitted,

WILLIAM J. JANKLOW
ATTORNEY GENERAL

WJJ:DOC:dh­