No PIP coverage where occupying uninsured relative's car -- Arkansas

In Ballesteros v. Nationwide Mutual Insurance Company, 2013 Ark. App. 662, summary judgment for the insurer was affirmed on appeal.  Ballesteros was injured while driving his wife's car.  The wife had rejected PIP coverage. But Ballesteros had PIP coverage on his car, so he sought benefits under his policy.  The claim was rejected because Ballesteros was injured in a car owned by a family member and not insured under the coverage.  The Court reasoned the statute provides for coverage on an insured vehicle, and the wife's vehicle was not insured for purposes of med-pay.  § 23-89-202 (requiring minimum benefits) is inapplicable because Ballesteros was not occupying or struck by a vehicle insured by Nationwide.  The required minimum coverage “shall apply only to occupants of the insured vehicle . . . and to none other.”  Since Ballesteros was not occupying the covered vehicle, there was no coverage and summary judgment was affirmed.

"Other Insurance" clause does not violate mandatory car insurance law

In American Farmers & Ranchers v. Shelter, American's insured was driving a car owned by Shelter's insured when he had an accident.  American claimed that the "other insurance" clause in Shelter's policy violated Oklahoma's Compulsory Insurance law and should be disregarded such that Shelter should be required to pay its limits before American was required to pay anything.  The trial court disagreed.  The trial court found that since both policies had mutually exclusive other insurance clauses, the clauses would be disregarded and each policy would pay a prorated amount.  The Oklahoma Court of Civil Appeals agreed with the trial court and affirmed. 

The Court cites Equity Mut. Ins. Co. v. Spring Valley Wholesale Nursery, Inc., 1987 OK 121, 747 P.2d 947 as follows: 

When concurrent policies have such "other insurance" clauses which cancel each other, we hold that they are mutually repugnant and are to be disregarded, with the loss shared by the insurers on a pro rata basis. Where the insurers have designated in their policies the same method of apportionment, the contracts will control. Absent concurring provisions for apportionment, coverage of the loss is to be shared on a pro rata basis according to the ratio each respective policy limit bears to the cumulative limit of all concurrent policies. ...
Oklahoma's compulsory liability insurance laws do not dictate the determination of primary coverage.... Statutory policy is implicated only when insurers deny liability, not when they are in dispute as to which will provide primary coverage.

Even if the last part of the opinion was dicta, the Court found it persuasive and found that both insurers should pay their pro rata amounts to the injured party.  The court concludes that Oklahoma's Compulsory Insurance Law "does not constrain an insurer from declaring its coverage as excess when there is other insurance which covers its insured's liability with respect to a claim also covered by its policy. The statutory policy of the [compulsory insurance law] is implicated only if the insurer denies liability. It does not control a dispute between insurers as to which provides primary coverage. Such a dispute is a matter of contract. "

UM exclusion violates public policy

In Morris v. America First Insurance Company, 2010 OK 35, the Oklahoma Supreme Court in answering a question certified from the United States District Court for the Western District of Oklahoma, found that a UM exclusion violated Oklahoma public policy.  Specifically, the court found that an exclusion which precludes UM coverage for bodily injury sustained by a resident family member, who is otherwise insured by such policy, violates public policy and is void insofar as it requires separate UM coverage on a specific vehicle even though the owner is otherwise covered by the UM provisions of a liability policy he purchased on another vehicle. Morris was injured by an underinsured motorist while in his semi-truck.  Morris did not have UM on the truck, but did have UM on his personal auto.  In addition, Morris qualified as an insured on his mother’s policy because he was residing with his mother when the accident happened.  The court said that the mother’s insurer could not exclude Morris from coverage simply because the policy covering the truck involved in the accident did not have UM coverage where Morris had other UM coverage available to him. 

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Auto policy reformed regarding Family Exclusion

In Allstate v. Moser, Moser was injured in a one car accident. Moser was a passenger, and her brother was driving. Allstate’s policy was issued in Colorado to Moser’s parents . It had $100,000 limits and contained a family exclusion. There was an accident in Kansas. Kansas had a compulsory insurance law which required that all policies provide at least $25,000 per person, up to $50,000 per accident. Allstate’s policy also provided that when the vehicle was operated in other states, the policy would comply with the liability insurance requirements in those states. Moser also had an umbrella policy which provided coverage in excess of $100,000 when the primary policy limits were exhausted. When Moser sued, Allstate filed a declaratory judgment action. In that action, it was determined that Allstate’s liability under the policy was limited to the minimum requirements under Kansas law – $25,000.

On appeal, the issue was whether Allstate’s liability was limited to $25,000 or whether the entire policy limit was available to Moser. The Tenth Circuit affirmed the trial court’s ruling that limited Allstate’s liability to $25,000. Because $25,000 was less than the policy limits, the underlying policy was not exhausted, and therefore the umbrella policy did not apply.

Insurance company is not in bad faith in defending case against insured.

Milroy v. Allstate Insurance Company
.2007 OK CIV APP 6

The Oklahoma State Courts Record

Milroy rear-ended Lewis at a stop sign while talking on her cell phone. It was a minor fender bender, and neither Milroy nor Lewis sought medical attention at the scene. Later that day, after talking with an attorney, however, Lewis sought medical attention. She later ran up chiropractor bills and, after a demand for settlement was denied, sued Milroy in small claims court. The case was defended on behalf of Milroy by Allstate, through Horton, an attorney who was a salaried employee of Allstate. The case was taken into district court and a jury eventually awarded Lewis $2,600.

Allstate promptly paid the judgment and the later award of attorneys fees and costs. Milroy then sued Allstate, claiming it acted in bad faith by litigating the claim against her instead of settling it. Milroy sued Allstate in part because she thought Allstate mistreated the lady who sued her by disputing her claims for damages! She admitted she was never in danger of having an excess judgment against her but complained that Allstate dragged her through court in a total waste of time. Continue Reading...