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WVSCA Addresses Insurers’ Duties Upon Death, Separation, or Divorce of Named Insured and Spouse



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United Services Automobile Association v. Lucas, No. 12-1500, a decision from the Supreme Court of Appeals of West Virginia, reviewed W. Va. Code Section 33-6-36 [1993] and created two new syllabus points interpreting this code section and clarifying insurers’ obligations under the statute.   W. Va. Code Section 33-6-36 is a statute which, in certain circumstances, requires insurers to continue motor vehicle liability coverage for a spouse after the death of, or separation or divorce from, the named insured.  The dispute between the parties in the underlying case was whether USAA was required by this statute to notify Francis McComas, Jr. (a covered operator, but not the named insured) of the termination of his coverage and his right to buy a separate liability insurance policy from USAA upon his separation and ultimate divorce from the named insured, his ex-wife, and whether the alleged failure to comply with the statute rendered the termination of coverage invalid.

The Court specifically held that an insurer is obligated to notify a named insured and his or her spouse of any change or termination in coverage as well as the option to request a separate policy in the event of the named insured’s death, legal separation, or termination of the marriage, when the underlying policy has been in effect for two or more continuous years.  The Court confirmed that an insurer, upon request, has a duty to issue a separate policy to a named insured or his or her spouse in the event of death, separation, or divorce, if requested within 30 days of the expiration or termination of an auto policy that was previously in place for two or more continuous years.

Critical to the Court’s analysis in this case was an Insurance Commissioner regulation, 114 C.S.R. § 38.5, which the Court found to trigger the application of W. Va. Code Section 33-6-36 [1993] to any motor vehicle liability insurance policy in effect for two or more continuous years, regardless of whether the spouse was covered under the policy for two continuous years.

The effect of this ruling in Lucas was to require USAA to provide liability insurance coverage to the Estate of Francis McComas, Jr. (the alleged negligent party) for the underlying motor vehicle accident because the Court determined that USAA had not properly notified Mr. McComas that he had been removed from coverage under his ex-wife’s policy after his ex-wife informed USAA of their separation and impending divorce or of his right to request his own USAA policy.  The record indicated that correspondence addressed to Mr. McComas from USAA was sent to his ex-wife’s address, instead of his new address as reported to USAA by his ex-wife.  Under these circumstances, the Court determined that the purported termination of his coverage after the separation and divorce was void even though Mr. McComas had only been a covered operator under the policy for 18 months.

In light of the Court’s decision, insurers are urged to be vigilant in notifying the appropriate individuals of the availability of a separate automobile liability policy where a death, separation, or divorce has occurred, regardless of whether the spouse has been covered for two or more continuous years.