Ramirez

The critical issue tendered by this appeal is whether an insurer owes a duty to its insureds to disclose within a reasonable time the existence and amount of underinsured insurance coverage which may or may not become operative depending on the adequacy of the available bodily injury liability insurance. If such a duty exists, the specific question on this appeal is whether a factual basis for the breach of that duty has been presented by the respondent herein. We shall find that an insurer owes such a duty and that plaintiff Ramirez on the granting of a new trial was properly given leave to amend to state a cause of action based on such breach.

Factual and Procedural Background

The facts as disclosed by the original complaint are that Jesus Ramirez (Ramirez), then 16 years of age, was the passenger of Todd Rentsch, who was driving a motorcycle insured by USAA Casualty Insurance Company (USAA). On November 16, 1985, in Lake County, their vehicle collided with a car alleged to have been negligently driven by James Dean Murr (Murr). Murr had only a $15,000/$30,000 bodily injury liability policy issued by American Excel Corporation. Ramirez was severely injured. Rentsch’s…