Progressive Select Insurance Company v. Ober

Fourth DCA

Progressive Select Insurance Company v. Ober—(J. May; 4DCA; 1/18/23). Ober purchased an auto insurance policy from Progressive, and while on the phone purchasing the policy, she expressed that she wanted to decline Uninsured/Underinsured Motorist (“UM”) coverage. The insurance agent told her that she would need to sign a form to reject that coverage. A few days later—before receiving the rejection form—the insured was in an accident. About a month after purchasing coverage, the rejection form showed up in the mail, and the cover letter informed her that she had to fill out the form in order to decline UM coverage. The cover letter added that if she failed to return the letter, UM coverage would be added to her policy. Well, it turns out the person she was in the accident with qualified as an uninsured or underinsured motorist. She made a claim for UM benefits, and Progressive denied the claim. Ober sued for a declaratory judgment that she had UM coverage, and the jury agreed because she had never filled out the rejection form.

In a prior appeal, the DCA affirmed the holding that verbal waivers of UM coverage are not valid— they must be written per section 627.727.

Ober then sought to amend the complaint to add a claim of bad faith for denial of coverage due to the invalid verbal waiver. Ober also sought to add a claim for punitive damages, arguing that Progressive had a regular business practice of issuing policies without a written rejection of UM coverage, which violated section 627.727. Progressive countered that the evidence failed to show the insurer’s acts were frequent enough to be considered a business practice, and that those acts were willful, wanton, malicious, or done in reckless disregard of the insured’s rights. The trial court sided with the insured, and Progressive appealed. The DCA reminded us that punitive damages pleadings are unusual in that a judge must first rule that there is a reasonable evidentiary basis before a plaintiff can seek such damages.

Section 624.155(5) requires that before a plaintiff may seek punitive damages against an insurer, the plaintiff must make a showing of a reasonable basis for recovery by demonstrating that the violation occurred with such frequency as to indicate a general business practice and the act or acts are:

  • (a) Willful, wanton, and malicious;
  • (b) In reckless disregard for the rights of any insured; or
  • (c) In reckless disregard for the rights of a beneficiary under a life insurance contract

There is a difference between bad faith and the claim for punitive damages, and plaintiff failed to show that the act here—accepting verbal instead of written UM waivers—was done so frequently that it constituted a business practice. There was no proof of willful, wanton, or malicious acts or reckless disregard for an insured’s rights. The insurer simply took the position that Florida law permitted verbal UM waivers. While it was wrong about that, taking that legal position did not trigger a reasonable basis for punitive damages. In a footnote, the DCA made more clear the plaintiff’s basis for thinking she had spotted a business practice. Progressive admitted during the discovery phase that it had essentially done the same thing in 3000 cases—signed up an insured who verbally waived UM coverage and then sent then a UM rejection form. This fell short of demonstrating a general business practice that recklessly disregarded rights for one simple reason: plaintiff failed to show that any of those other cases resulted in a denial of UM benefits without the written waiver. 101523_i.pdf S

Terry P. Roberts
Director of Appellate Practice Fischer Redavid PLLC
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