Payne v. State Farm, 969 N.W.2d 723

On August 8, 2012 John and Robin Payne were injured in South Dakota by an uninsured motorist while John was covered by a State Farm personal liability umbrella policy originally issued in Virginia in 2006 and renewed annually.
The Paynes moved from Virginia to Florida in 2011, established a Florida private mailbox that forwarded mail, and paid the 2011 renewal premium online from a Virginia bank; the renewed umbrella policy (2011–2012) was identical in terms to the original except for dates.
State Farm denied uninsured motorist (UM) coverage under the umbrella policy because the policy did not include or offer UM coverage under Virginia law and did not specifically insure any motor vehicle.
The Paynes sued seeking declaratory relief under Florida’s UM statute (Fla. Stat. § 627.727), arguing State Farm was required to offer UM coverage and that remedial reformation and stacking entitled them to $2,000,000 in UM benefits.
The circuit court concluded Florida law applied but held § 627.727(2) only requires an insurer to make UM available at the time of application or upon the insured’s written request; the Paynes had neither applied in Florida nor made a written request, so no UM coverage was required.
The South Dakota Supreme Court affirmed, finding the umbrella policy was excluded from Florida’s mandatory UM provision and State Farm had no duty to make UM available on the facts presented.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Fla. Stat. § 627.727 requires an insurer to provide or offer UM coverage on a personal liability umbrella policy (and whether a noncompliant policy must be reformed/stacked)	§ 627.727 requires UM be provided or, if not provided, be made available; remedial reformation and stacking should grant $1M per exposure (total $2M)	Umbrella policies are excluded from the statute’s mandatory UM requirement because they are not primary liability policies and do not specifically insure a motor vehicle; statute only requires making UM available as part of an application or upon a written request	Held for State Farm: umbrella policies that are not primary liability and do not specifically insure a vehicle fall outside § 627.727(1); § 627.727(2) only obligates insurers to make UM available at application or upon written request—Paynes did neither, so no UM or reformation/stacking applies
Whether South Dakota’s choice-of-law statute mandates applying Florida law to this policy (State Farm’s notice of review)	Paynes argued South Dakota choice-of-law leads to application of Florida law	State Farm argued Virginia law (where policy was issued) governs, which would defeat the Paynes’ claim	Court did not resolve choice-of-law because it affirmed on the merits under Florida law; thus State Farm’s notice of review was unnecessary to decide the appeal

Burhenn v. Dennis Supply Co., 685 N.W.2d 778 (S.D. 2004) (choice-of-law determinations reviewed de novo)
Swenson v. Auto Owners Ins. Co., 831 N.W.2d 402 (S.D. 2013) (insurance policy interpretation is a question of law reviewed de novo)
Hooper v. Zurich Ins. Co., 789 So. 2d 368 (Fla. Dist. Ct. App. 2001) (personal liability umbrella policies are excluded from Florida’s mandatory UM requirement)
Strochak v. Federal Ins. Co., 717 So. 2d 453 (Fla. 1998) (distinguishes when a renewal worksheet can function as an application under § 627.727(2))