Reinsurance Law Blog : Oklahoma Insurance Lawyer & Attorney : Stauffer & Nathan Law Firm

In Porter v. State Farm Mutual Automobile Insurance Co., 2010 OK CIV APP 8, the plaintiff, Porter, was a passenger who was injured in a car wreck.  State Farm insured the driver and also insured Porter on her own car.  The driver had limits of $100,000.  State Farm offered to settle her claim against the driver for $85,000 and Porter accepted, even after being told that she would not be entitled to UM if she did so.  She took the settlement and then continued her claim for UM.  Plaintiff believed she was entitled to UM because State Farm was the automobile insurance carrier for both Plaintiff and the tortfeasor, despite having settled with the tortfeasor for an amount less than the liability limits of tortfeasor’s policy.

Before an insured can proceed in an action to recover UM/UIM benefits under the contract, he must prove the existence of two simultaneous conditions precedent: 1) that he has a legal right to recover against the tortfeasor, and 2) that his claim exceeds the available liability coverage of the tortfeasor. These conditions precedent must both be present at the same time in order to obtain UM/UIM coverage.  Porter could not meet the first requirement because she released the driver from liability.  She could not meet the second requirement because by accepting less than the liability-policy limits and releasing the driver from further liability, she established that the claim did not exceed the available liability coverage. In other words, Plaintiff cannot prove the driver was underinsured.

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In Conner v. American Commerce Insurance, the Oklahoma Court of Appeals held that a family member who rejected uninsured motorist (UM) coverage on his motorcycle was not covered under another policy owned by a family member in his household.  Plaintiff, Barry Connor, insured his motorcycle, with AIG, and rejected UM coverage. Plaintiff was also listed a driver on his parents’ insurance policy with American Commerce.  He resided with his parents at all relevant times.  After an accident with an underinsured motorist, Plaintiff requested UM benefits from American Commerce.  American Commerce denied the claim, based on an exclusion for resident relatives who are injured while occupying an owned motor vehicle without UM coverage.  The Court of Civil Appeals upheld the denial, based on Shepard v. Farmers Ins. Co., Inc., 1983 OK 103, 678 P.2d 250 and National American Ins. Co. v. Vallion, 2008 OK CIV APP 41, 183 P.3d 175.  The Court of Civil Appeals reasons that the Plaintiff had the opportunity to purchase UM coverage but failed to do so and therefore, found the exclusion valid.

While there is case law which supports this conclusion, the law is not as clear as the Court of Appeals seems to claim.  Oklahoma has held that UM follows the person and not the vehicle.  See, e.g., State Farm v. Wendt, 708 P.2d 581 (Okl. 1985). In Wendt, the court states:

In conformity with the clearly expressed legislative intent, above, every automobile liability policy issued in this state must provide uninsured motorist coverage for "persons insured thereunder." Accordingly, this Court has examined with critical scrutiny policy provisions which purport to dilute the legislatively mandated uninsured motorist coverage. In Keel v. MFA Insurance Co., 553 P.2d 153 (Okl. 1976), this Court voided "other insurance" clauses to the extent that those clauses precluded the insured from stacking coverages under separate policies. In Biggs v. State Farm Mutual Automobile Insurance Co., 569 P.2d 430 (Okl. 1977) this Court invalidated the "physical contact" requirement for hit-and-run coverage. In Porter v. MFA Mutual Insurance Co., 643 P.2d 302 (Okl. 1982), this Court invalidated the "consent to settle" clause. In Lake v. Wright, 657 P.2d 643 (Okl. 1982), this Court held the "limits of liability" clause was void and unenforceable as against public policy. In Chambers v. Walker, 653 P.2d 931 (Okl. 1982), this Court held invalid a clause in an uninsured motorist policy which permitted the uninsured motorist carrier to offset any amounts paid or payable under Workers' Compensation against the amounts payable under the uninsured motorist coverage. In Uptegraft v. Home Insurance Co., 662 P.2d 681 (Okl. 1983), this Court held invalid a clause in an uninsured motorist policy requiring the insured to sue the tort-feasor within two years or lose his uninsured motorist coverage. In Heavner v. Farmers Insurance Company, 663 P.2d 730 (Okl. 1983), this Court refused to apply the insurer's "insured motor vehicle exclusion" to deny uninsured motorist coverage to a passenger/plaintiff under the driver/tort-feasor's policy. We today reiterate and re-emphasize the viability of our prior decisions, which hold to the principle that once a person is insured under an uninsured motorist policy, subsequent exclusions inserted by the insurer in the policy which dilute and impermissively limit uninsured motorist coverage are void as violative of the public policy espoused by [Oklahoma’s UM statute].

Since Plaintiff in this case was insured under a UM policy, it is not clear why the owned car exclusion should be permitted while the insured motor vehicle exclusion or the vehicle furnished for the regular use of an insured exclusion is not permitted. 

 

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When an Oklahoma resident is injured in Oklahoma by an uninsured motorist, you might expect Oklahoma law to apply.  But not if the UM policy was issued or delivered in another state on a vehicle registered or principally garaged in another state.  In Bernal v. Charter County Mutual Insurance Co., the Oklahoma Supreme Court said that Oklahoma's UM statute only applies to vehicles registered in or principally garaged in Oklahoma.  Thus, even though the accident occurred in Oklahoma, and the insured was from Oklahoma, Texas law would apply because that was where the vehicle was registered. Since Oklahoma law does not apply, there was no need to do a choice of law analysis -- and really, who wants to do that?  

The court says that Oklahoma's statute applies solely to cars registered or garaged in Oklahoma.  It then concludes that this a legislative mandate to use the law of the state of the policy or where the car is garaged and/or registered. 

There is no discussion as to whether there is any choice of law provision in the policy, and whether that would make any difference.  Certainly, under Oklahoma (and most other states laws), the parties may choose to be governed by a specific state's laws.  Whether and to what extent this may affect other types of insurance is not yet known.

 

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In Gaither v. Allstate Insurance Company,  the Gaithers sued Allstate for bad faith for failing to pay them under their UM coverage.  Summary judgment to Allstate was affirmed on appeal. 

The Gaithers with their children stopped at a convenience store to get drinks.  There was an altercation inside the store and Mr. Ramirez ran out, grabbed Mrs. Gaither, and put a gun to her head.  One child was still in the car, but got away; and Mrs. Gaither was able to get away as well.  Mr. Ramirez then drove off and crashed the car.  Allstate paid for the car and also paid for medical expenses under its medical payments coverage.  But Allstate refused to pay UM to the Gaithers for their injuries.  The trial court granted summary judgment to Allstate on all claims:

First, the district court concluded that the injuries suffered by the Gaithers regarding the incident with Mr. Ramirez did not “arise out of the . . . use of an uninsured auto,” thus falling outside the scope of UM coverage.

The court further granted summary judgment in favor of Allstate on the Gaithers’ bad faith claim. The court then concluded that Plaintiffs failed to raise any genuine issue of material fact relating to the Medical Payments coverage. Although the Gaithers had submitted bills that allegedly remained unpaid, the court found that they failed to demonstrate how the bills related to treatment regarding the injuries incurred on September 18, 2005.

In order to be covered for UM, there must be injuries caused by an accident, arising out of the “ownership, maintenance or use of a motor vehicle.”  The court found there were accidental injuries, but that those injuries did not arise out of the ownership, maintenance or use of the car. In order for the injuries to be causally related to the use of the car, the use of an uninsured motor vehicle must be related to its transportation nature and the injuries must be “connected to that use.”  The court discussed the various cases dealing with the issue of when an injury is caused by the car.  Eventually, the Court found that the assault took place outside the car; the Gaithers were not injured by any part of the car; the car was not running when the assault occurred; and that therefore, the Gaither’s injuries were not connected to the transportation use of the vehicle.  The fact that the assaults occurred while Ramirez was trying to escape was not sufficient to raise a fact question. 
 

The Tenth Circuit focuses on two facts to deny coverage:  first, there was no injury to the Gaithers from physical contact with the car; and second, the car was not running at the time of the injuries.  Plaintiffs may have been able to survive summary judgment in state court where the standard is higher than in federal court.  But the cases are not helpful.  To me, it seems that those injured while someone is stealing their car are injured because of the transportation nature of the vehicle, and are arguably entitled to UM coverage.  But, without more, the courts seem unwilling to extend coverage.  

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In National American Insurance Co. v. Vallion, 2008 OK CIV APP 41 , NAICO issued an insurance policy to a school district which covered vehicles owned by the school district.  Vallion was employed by the school and was a passenger in a covered vehicle which was hit by an underinsured driver. Vallion had a car which was covered by insurance. 

The NAICO policy excluded from the definition of an "insured" for uninsured motorist coverage purposes, those who own their own vehicles which are covered by statutorily mandated insurance.  Thus, NAICO argued that even though Vallion was injured while riding in a district-owned vehicle, the policy language excludes UM coverage for him because he owns a personal motor vehicle and is insured under an insurance policy in compliance with the Oklahoma Financial Responsibility Act, 47 O.S. 2001 §7-101 et seq. (the Act).

Under Oklahoma law, the purpose of UM is "to protect the insured from the effects of personal injury from an accident with another motorist who either carries no insurance or has inadequate coverage." Burch v. Allstate Ins. Co., 1998 OK 129, ¶13, 977 P.2d 1057, 1063.  Similar contractual exclusions were upheld in Shepard v. Farmers Ins. Co., 1983 OK 103, 678 P.2d 250, and Graham v. Travelers Ins. Co., 2002 OK 95, 61 P.3d 225.

The appellate court affirmed the trial court's ruling that Vallion was not covered under the policy.

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