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UNUNDERINSURED MOTORISTS COVERAGE UPDATE

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1. UN/UNDERINSURED MOTORISTS COVERAGE UPDATE. Robert W. Kerpsack, Esq. ... POLICY CHANGES RE: STATUTE AMEND OKAY DURING 2-YR GUAR PD ... – PowerPoint PPT presentation

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Title: UNUNDERINSURED MOTORISTS COVERAGE UPDATE


1
UN/UNDERINSURED MOTORISTS COVERAGE UPDATE
  • Robert W. Kerpsack, Esq.,
  • ROBERT W. KERPSACK CO., L.P.A.
  • 21 East State Street, Suite 300
  • Columbus, OH 43215
  • Telephone (614) 242-1000
  • Facsimile (614) 242-3948

2
UM/UIM UPDATE TOPICS
  • RECENT AMENDMENTS TO R.C. 3937.18
  • CREATING UM/UIM COVERAGE
  • BY OPERATION OF LAW
  • APPLICATION OF AMENDMENTS TO
  • R.C. 3937.18
  • CIRCUMVENTING UM LEGISLATION

3
RECENT AMENDMENTS TO RC. 3937.18
4
RECENT AMENDMENTS TO RC. 3937.18
  • S.B. 267 (EFFECTIVE 9/21/00)
  • INSURED WD BENEFICIARY MUST SUSTAIN BODILY INJURY
  • POLICY CHANGES RE STATUTE AMEND OKAY DURING 2-YR
    GUAR PD
  • NO NEED TO RE-OFFER UM/UIM COVERAGE AT RENEWAL OF
    POLICY
  • OTHER-OWNED AUTO EXCLUSION VOID

5
WHICH AMENDMENT TO R.C. 3937.18 APPLIES?
  • Ross v. Farmers Ins. Group (1998), 82 Ohio St. 3d
    281
  • Statute in effect on date of policy issuance or
    renewal applies.
  • Hillyer v. Great Am. Ins. Co. (1999), 85 Ohio St.
    3d 410
  • Same rule applies to liability policies.

6
TWO-YEAR UM/UIM COVERAGE GUARANTEE
  • R.C. 3937.31
  • Automobile insurance policies shall be issued
    for a policy period of not less than two years
    or guaranteed renewable for successive policy
    periods totaling not less than two years.

7
APPLYING POLICY ENDORSEMENTS THAT CONFORM TO
R.C. 3937.31(A)
  • Townsend v. State Farm Mut. Auto. Ins. Co. (Aug.
    14, 1998), Sandusky App. No. S-97-059, unreported
  • 1/25/94 Policy first issued
  • 1/25/95 Endorsement added (S.B. 20)
  • 8/23/95 DOL

8
Townsend v. State Farm
  • HELD Insurer could not enforce a policy
    endorsement (reducing UM/UIM coverage consistent
    with S.B. 20) that is implemented during the
    two-year coverage guarantee period required by
    R.C. 3937.31
  • HELD The language of the policy establishes
    that the renewals constitute one continuing
    contract for insurance during the two-year
    guarantee period.

9
APPLYING POLICY ENDORSEMENTS THAT CONFORM TO
R.C. 3937.31(A)
  • Wolfe v. Wolfe (2000), 88 Ohio St.3d 246
  • 12/12/83 Policy first issued
  • 12/12/93 Policy renewed
  • 10/20/94 S.B. 20 Effective
  • 12/12/94 Policy renewed
  • 4/2/95 DOL

10
Wolfe v. Wolfe
  • OH Supreme Court Held
  • R.C. 3937.31(A) provides a two year guarantee
    period during which a policy cannot be altered.
    The guarantee period is not limited to the first
    two years after inception of the policy.
  • A new 2-year guarantee period commences every two
    years

11
Implication of Wolfe v. Wolfe 1
  • Every two years, there is a window of
    opportunity (only) for the insurer to add a
    policy endorsement
  • Are endorsements added outside the two-year
    window void?
  • Do we now need to obtain a complete policy
    history in order to determine which policy
    endorsements, if any, are valid?

12
Implication of Wolfe v. Wolfe 2
  • It must be determined when the policy was
    originally issued in order to determine where you
    are in the two-year guarantee period
  • Obtaining applications for insurance policies may
    become standard practice

13
Implication of Wolfe v. Wolfe 3
  • Wolfe dicta
  • Were we to adopt the appellees (insurers)
    argument (that each renewed policy is a new
    policy), insurance companies would have the
    unenviable task of complying with R.C. 3937.18(A)
    every time a renewal constituted a new policy of
    insurance.
  • Implication Insurers need to obtain a new
    rejection of UM coverage every 2 years!

14
Implication of Wolfe v. Wolfe 4
  • When a court declares insurance policy language
    to be ambiguous, is the insurer precluded from
    curing the ambiguity until the arrival of the
    two-year anniversary of the last policy renewal?

15
BUT . . .
  • S.B. 267 (EFFECTIVE 9/21/00) ADDED R.C.
    3937.18(E)
  • INSURERS ARE PERMITTED TO CHANGE THEIR POLICIES
    DURING THE TWO-YEAR GUARANTEE PERIOD SO LONG AS
    THOSE CHANGES ARE IN ACCORDANCE WITH SUBSEQUENT
    STATUTORY CHANGES

16
BUT . . .
  • S.B. 267 ALSO CHANGES
  • R.C. 3937.18(C)
  • ELIMINATES THE REQUIREMENT OF AN ADDITIONAL
    MANDATORY OFFERING/EXPRESS REJECTION (OR
    REDUCTION) OF UM/UIM COVERAGE

17
UM COVERAGE BY OPERATION OF LAW
  • Homeowners, Renters, Farmowners Policies
  • General Commercial Liability Policies
  • Employers Auto/Commercial Policies

18
HOMEOWNERS-TYPE POLICIES
  • Coverage for Motor Vehicles Excluded
  • Policies then Undefine the Term Motor Vehicle
  • A motor vehicle means . . . a motorized
    land vehicle owned by an insured and designed
    for recreational use off public
  • roads, while off an insured location.

19
HOMEOWNERS-TYPE POLICIES
  • IMPLICATION
  • Non-owned recreational vehicles used on an
    insured location are not excluded.

20
HOMEOWNERS-TYPE POLICIES
  • LEGAL ARGUMENT
  • If an insurance policy provides liability
    coverage for motor vehicles, even in a limited
    scope, then it is a motor vehicle liability
    insurance policy that is subject to R.C.
    3937.18.

21
HOMEOWNERS-TYPE POLICIES
  • UNDISPUTED
  • UM/UIM coverage was not offered and
    expressly rejected by insured therefore,
  • the policy provides UM/UIM coverage by
    operation of R.C. 3937.18.

22
HOMEOWNERS-TYPE POLICIES
  • CASE LAW
  • Davidson v. Motorists Mut. Ins. Co. (Dec. 8,
    1999), Franklin App. No. 99AP-163, unreported
  • Accepted 4/19/00 by Ohio Supreme Court on
    discretionary appeal and a certified conflict
    with Overton v. Western Reserve Group (Dec. 8,
    1999), Wayne App. No. 99CA0007, unreported.

23
HOMEOWNERS-TYPE POLICIES
  • Davidson policy provides bodily injury liability
    coverage for a residence employee operating a
    motor vehicle in the scope of employment by an
    insured.
  • Overton policy does not provide such coverage.

24
GENERAL COMMERCIAL LIABILITY POLICIES
  • Selander v. Erie Ins. Group (1999), 85 Ohio St.
    3d 54
  • Business liability policies do not cover a
    particular vehicle, but do cover an insureds
    vicarious liability for the use of unspecified,
    non-owned (hired) vehicles therefore, they are
    motor vehicle liability insurance policies
    subject to R.C. 3937.18.

25
EMPLOYERS AUTO/COMMERCIAL INSURANCE POLICIES
  • Policies insuring corporate named insureds define
    the insured to include 1) you (the named
    insured corporation) and 2) if you are an
    individual, your relatives.

26
EMPLOYERS AUTO/COMMERCIAL INSURANCE POLICIES
  • The word you is ambiguous when applied to a
    corporation.
  • You can be construed to mean employees of the
    corporation because it is nonsensical to provide
    UM/UIM insurance to a corporation.

27
EMPLOYERS AUTO/COMMERCIAL INSURANCE POLICIES
  • Scott-Pontzer v. Liberty Mut. Fire Ins. Co.
    (1999), 85 Ohio St. 3d 660 Bagnoli v.
    Northbrook Prop. Cas. Ins. Co. (1999), 86 Ohio
    St. 314 (employee need not be in the scope and
    course of employment or operating a company
    auto).
  • Ezawa v. Yasuda Fire Marine (1999), 86 Ohio
    St. 3d. 557 (resident relatives of employees
    household are covered under employers UM policy).

28
APPLICATION OF AMENDMENTS TO R.C. 3937.18
  • Are the UM flood gates opened or closed?

29
UM COVERAGE BY OPERATION OF LAW
  • Myers v. Safeco Ins. Co. (Feb. 18, 2000), Licking
    App. No. 99CA00083, unreported
  • Held Plaintiff entitled to UIM coverage under
    homeowners policy even after releasing the
    tortfeasor without the consent of the insurer
  • UIM coverage provided by operation of R.C.
    3937.18, which contains no subrogation clause

30
UM COVERAGE BY OPERATION OF LAW
  • Myers v. Safeco Ins. Co.
  • Accepted 7/19/00 by Ohio Supreme Court on
    discretionary appeal and certified conflict
  • Briefing stayed pending decision in Davidson

31
UM COVERAGE BY OPERATION OF LAW
  • R.C. 3937.18 (A)(2) provides only for a reduction
    of UIM coverage by the amounts of bodily injury
    liability insurance coverage available to persons
    liable to the insured.
  • R.C. 3937.18(A)(2) does not include any
    subrogation clauses, anti-stacking clauses, or
    other insurance clauses.

32
DID S.B. 20 OVERRULE SEXTON?
  • Can an insured present a UM claim against their
    own policy for the death of a non-resident
    relative?
  • Moore v. State Auto. Mut. Ins. Co. (2000), 88
    Ohio St. 3d 27
  • R.C. 3937.18(A)(1), as amended by Am. Sub. S.B.
    20, does not permit an insurer to limit uninsured
    motorist coverage in such a way that an insured
    must suffer bodily injury, sickness, or disease
    in order to recover damages from the insurer.

33
OHIO LEGISLATURE AT WORK
  • S.B. 267 (EFFECTIVE 9/21/00)
  • LEGISLATIVELY OVERRULES MOORE
  • POLICIES WRITTEN AFTER 9/21/00
  • INSURED MUST SUSTAIN BODILY INJURY

34
AUTO INSURERS AT WORK
  • RUMOR
  • Effective 5/15/00, some State Farm automobile
    insurance policies will provide bodily injury
    liability coverage of only 12.5K/25K for
    permissive users of its insured vehicles,
    regardless of the amount of BI coverage on the
    named insureds

35
LIMITING WD CLAIMS TO PER PERSON LIMITS
  • CURRENTLY BEFORE OH SUP CT
  • Clark v. Scarpelli, S. Ct. No. 00-374.
  • Issue Whether an automobile insurer may limit
    recovery in a wrongful death claim to the per
    person limits of UM coverage?
  • ORAL ARGUMENT 11/29/00

36
AVAILABLE FOR PAYMENT
  • Decedent survived by wife and 2 children
  • Tortfeasor has liab. coverage of 100K
  • Decedent has UIM coverage of 300K
  • QUERY
  • How much UIM coverage is available to each
    next-of-kin?

37
AVAILABLE FOR PAYMENT
  • Insurers position (after S.B. 20)
  • 300K - 100K 200K of UIM for all claims
  • Derr v. Westfield Cos. (1992), 63 Ohio St.3d 537
  • If one next-of-kin receives only 33K from the
  • tortfeasor, then entitled to UIM of 266K
  • Set off the 33K received from the tortfeasor,
    not
  • the 100K of liab. cov. available to all
    claimants

38
AVAILABLE FOR PAYMENT
  • Derr v. Westfield Cos. and Motorists Mut. Ins.
    Co. v. Andrews (1992), 65 Ohio St.3d 362
  • Were Derr/Andrews legislatively overruled by
    S.B. 20?
  • Issue is currently pending before the OH Supreme
    Courtmaybe.

39
AVAILABLE FOR PAYMENT
  • AUGUST 2, 2000
  • Littrell v. Wigglesworth (March 13, 2000), Butler
    App. Nos. CA99-05-092, CA99-08-141, unreported
  • Accepted 8/2/00 by OH Supreme Court on
    discretionary appeal and certified conflict

40
IS S.B. 20 CONSTITUTIONAL?
  • ALL OHIO SUPREME COURT CASES WITH THIS ISSUE HAVE
    EITHER BEEN RESOLVED ON OTHER GROUNDS OR ORDERED
    STAYED PENDING A DECISION IN LITTRELL
  • S.B. 20 IS PROBABLY HERE TO STAY!
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