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Insurance Companies Should Define “First Named Insured” in its Policy

Swartzbaugh v. Encompass Ins. Co. of Am.
No. 946 (Md. Ct. Spec. App. September 7, 2011)

by Gregory L. Arbogast, Associate
Semmes, Bowen & Semmes (

In Swartzbaugh v. Encompass Insurance Company of America, the Maryland Court of Special Appeals upheld an uninsured/underinsured motorist waiver, even though the signatory to that waiver was not the first name listed on the policy. The Court found that an uninsured/underinsured motorist waiver was not void merely because the policy listed Mr. Swartzbaugh first on the policy and Ms. Swartzbaugh signed the waiver.

This case arose out of an automobile accident in which Kelly Swartzbaugh (“Kelly”) was injured. Steven Hedrick admitted fault for the accident, but Mr. Hedrick had a $50,000 personal injury limit on his automobile insurance policy. Mr. Hedrick’s liability carrier tendered the policy limits to Kelly, but the policy limits did not fully compensate Kelly for her injuries. Therefore, Kelly requested underinsured motorist coverage from her parent’s liability carrier, Encompass Insurance Company of America (“Encompass”). Encompass denied Kelly’s claim and Kelly filed this declaratory judgment action for underinsured motorist coverage.

Kelly’s parents, Mr. and Ms. Swartzbaugh, carried an automobile insurance policy with limits of $250,000 for each person and $500,000 for each accident. Pursuant to MD. CODE ANN., INS. § 19-510, when Encompass sold the Swartzbaughs the policy, Encompass offered uninsured/underinsured motorist coverage in the same amount as their liability coverage. The Swartzbaughs declined that amount of uninsured/underinsured motorist coverage in favor of the statutory minimum. § 19-510, however, requires the “first named insured” to sign a waiver if the policyholder elects a lesser amount of uninsured/underinsured motorist coverage. Ms. Swartzbaugh signed the waiver. When the policy listed the named insureds, however, it listed Mr. Swartzbaugh before Ms. Swartzbaugh.

The Swartzbaughs argued that the waiver of uninsured motorist coverage was void because Mr. Swartzbaugh was the only person who was permitted to waive uninsured motorist coverage under § 19-510. The Swartzbaughs argued that Mr. Swartzbaugh was listed first on the policy, so he was the only person who could qualify as the “first named insured.” Encompass argued that neither § 19-510, nor the policy, defined “first named insured” and that the Legislature intended “first named insured” to include all primary insureds. Encompass argued that “first named insured” was not limited to the person who happened to be named first on the policy.

The Court of Special Appeals analyzed whether Ms. Swartzbaugh was a “first named insured” within the meaning of § 19-510, even though her husband was technically listed first on the policy. The Court acknowledged that the MARYLAND CODE and the policy did not define “first named insured.” The Court also acknowledged that uninsured motorist statutes from other jurisdictions did not contain the language “first named insured.” Therefore, the Court had to analyze the purpose of the statute to assess whether “first named insured” included Ms. Swartzbaugh.

The Court held that § 19-510 left the parties to determine who qualified as the “first named insured.” Since the policy did not define “first named insured,” the Court found that Encompass did not determine who would qualify. The Court held that the Swartzbaughs determined who qualified to sign the waiver. Since both Mr. and Ms. Swartzbaugh were primary policy holders, the Court found that Ms. Swartzbaugh elected to be the “first named insured.”