Dog Bite arose out of use of vehicle, covered by UM (New Mexico)

In State Farm v. Bell, Sophia Bell was bitten by LeBarre's dog Jeb, while Jeb was in the car.  A claim was made for Uninsured/Underinsured Motorist benefits.  State Farm asserts that the vehicle was the mere situs of the injury, therefore the event does not fall within the insurance policy. The Bells contend the injury arose out of the use of the vehicle; therefore, they are entitled to coverage. Plaintiff does not otherwise dispute coverage, i.e. State Farm agrees that Ms. LaBarre is underinsured within the meaning the policy. An expert testified that Jeb's behavior (biting) was linked to the car; and the car was not merely the site of the injury, but was a cause of the injury. Based on this testimony – and other factors, such as the bite being facilitated by the height of the vehicle – the court concluded that the vehicle was a contributing factor to the injury and not just the mere situs: “Finally, and most importantly, the testimony of Dr. Nichols and Ms. LaBarre herself demonstrate that the bite occurred because of the unique setting of the car. Contrary to Plaintiff’s assertion, the fact that Jeb was specifically territorial over the vehicle is relevant; it transforms the vehicle from the mere situs of the injury into a contributing factor to the bite. Jeb felt threatened because he was in a confined space, the vehicle. Further, being in a confined space not only made him feel threatened but also made him territorial over the vehicle. Therefore, it was something about the characteristics of the vehicle itself that facilitated the bite, making the vehicle an active accessory to the bite. This was more than simply transporting Jeb in the vehicle.”


Randy Maniloff also discusses the opinion, here.

Arkansas uses Lex Loci Contractus for UM Choice of Law

In Hoosier v. Interinsurance Exchange, the insureds moved from California to Texas, and had a car accident in Arkansas that wasn't their fault.  The insureds damages exceeded the $50,000 limits of the other driver's insurance.  The insureds' policy was issued in California.  Under California law, there is no right to UM unless the amount recovered from the at fault party is less than the UM limits.  But the insureds claimed when they moved to Texas, they were told the policy was converted to a Texas policy, which would have paid the insureds the UM limits.  

It was a question of law as to whether the move changed the policy from a California policy to a Texas policy.  In the absence of any material change to the policy provisions upon [the insureds'] change of residence, the only remaining question is whether the change of residence from California to Texas had the legal effect of changing the state in which the insurance policy was issued. Under Arkansas law, it did not. The law of the place where the contract was made prevails. Lincoln National Life Insurance Co. v. Reed, 234 Ark. 640, 353 S.W.2d 521 (1962).

The validity, interpretation and obligation under a policy applied for, executed and delivered to the insured in one state has been held governed by the law of that state, though the insured subsequently moved elsewhere. The laws of the latter place apply only to remedy and procedure.

The dissent claims that the most significant relationship test should be used, but even under the lex loci contractus rule (place of making the contract controls) Texas law should be applied. 


No UM/ UIM where insured settled for less than policy limits (Arkansas)

In Corn v. Farmers, 2013 Ark. 444, the Corns were injured when they were rear-ended by Gafford after slowing down to miss debris in the road which fell off Eden's truck.  The Corns settled with Gafford for policy limits. The Corns then sued Edens.  Edens eventually settled with the Corns for less than policy limits.  Because Edens' policy limits were not used up or exhausted, no UM / UIM (uninsured / underinsured motorist coverage) was due.  The Court relied upon its holding in Birchfield v. Nationwide Insurance, 317 Ark. 38, 875 S.W.2d 502 (1994), that the limits of the liability coverage from the tortfeasors must be paid in full before the insured is entitled to underinsurance benefits.

The Corns argued that since joint and several liability was abolished and defendants were only severally liable, that exhaustion of all limits was not required. But if the change in joint and several liability affects the exhaustion requirement for UM / UIM claims, then its up to the legislature to let the courts know.  The dissent claims that exhaustion is no longer required.

Policy Barred Underinsured Stacking -- Mo Law

Policy Barred Underinsured Stacking
Automobile policy provided underinsured motorist coverage of $50,000 per person and $100,000 per accident. Because only one person sustained injury by underinsured motorist, $50,000 maximum applied.  Provision for "other/excess" insurance unambiguously did not allow more than when read with two anti-stacking disclaimers.  Summary judgment for insured reversed, case remanded for further proceedings. 
Missouri Court of Appeals, Southern District - SD32345

Uninsured Motorist coverage and Bad faith -- failure to pay undisputed amount -- Okla law

In Tran v. Nationwide Mutual Ins. Co, (unpublished) Ms. Tran was injured in an accident with an uninsured motorist.  She filed a claim with Nationwide.  After Nationwide made several requests for medical bills, Ms. Tran's attorney submitted them with a demand for payment of policy limits.  The bills totaled approximately $11,000.  There followed several rounds of offers between Nationwide and Tran's attorney.  At some point, the lawyer demanded payment of the undisputed amount of the damages, but Nationwide declined.  Eventually, Tran sued Nationwide for breach of contract and bad faith.  The parties filed summary judgment motion on the issues of bad faith and breach of contract.  The trial court granted Nationwide's motion and denied Tran's motion and Tran appealed.  The 10th Circuit affirmed. 

Tran claimed that Nationwide was in bad faith for not tendering the undisputed amount of the claim until after suit was filed, and was in breach of contract for not paying her the non-economic (pain and suffering) damages to which she was entitled.  Tran relied on the Quine case which was previously summarized here. There was no bad faith because there was a legitimate dispute as to the value of Ms. Tran's claim.  There was no breach of contract because there was no evidence of Ms. Tran's non-economic damages presented to the trial court. 



No bad faith where delay in payment was requested by insured Oklahoma law

In Porter v. Farmers Insurance Co., (unpublished decision) the insured, Porter was in a one car accident in 2007.  Porter anonymously called in the accident in 2008, and then identified himself and told Farmers about the accident in 2009.  Porter initially claimed he did not recall the circumstances of the accident, but thought it was a one car accident.  Later, he claimed another car was involved which caused the accident.  Before the accident, Porter added the car to his policy.  Porter said he wanted to add it as an additional car, but the agent replaced the truck Porter had insured with the car.  Porter had previously signed a UM waiver on his truck, but did not sign one on the car.  

Farmers decided that UM coverage was imputed as a matter of law and tendered payment.  Porter's lawyer told Farmers to withhold payment while it was determined whether there were any liens on the payment.  Eventually, in October, 2011, payment was made.  Porter sued for breach of contract and bad faith. Summary judgment to Farmers was affirmed by the Tenth Circuit. The trial court held that to the extent UM coverage was imputed by law, Farmers’ payment of the statutory limit entitled it to summary judgment on the breach of contract claim. Denying Mr. Porter’s bad faith claim, the court held that Farmers’ investigation was adequate and its delayed payment was reasonable.

The Tenth Circuit states:

Mr. Porter’s breach of contract claim fails for two reasons. First, Mr. Porter has not offered evidence from which a reasonable jury could find that Farmers breached its contractual duties—express or implied. Farmers only has a duty to pay UM coverage where its insured suffers damages due to an uninsured motorist or a hit-and-run. In the event of an accident, “notice must be given to [Farmers] promptly” and must include “the time, place and circumstances of the accident.” The first time Mr. Porter gave notice of his UM claim was August 4, 2009—over two years after the accident. Farmers promptly investigated this allegation but found no evidence of a second driver. . . .It was not until his November 2009 EUO that Mr. Porter first mentioned the other vehicle. Less than seven weeks later, Farmers offered full payment of the UM coverage.  Second, Mr. Porter failed to offer evidence of any damages resulting from the alleged breach. Mr. Porter claimed he was entitled to prejudgment interest on the UM payment.  It was Mr. Porter who initially requested a delay in payment, and the later delays were not the fault of Farmers. Accordingly, it would be improper to hold Farmers liable for delays beyond its control.

As to bad faith, the delay in payment was reasonable while Farmers investigated the claim. Also, there was a legitimate dispute as to whether the accident involved an uninsured motorist.  Farmer's decision to seek counsel did not cause unreasonable delay as stated by Porter's expert, Diane Luther.  "Ms. Luther contends that the retention of counsel and subsequent EUO were unnecessary because Farmers already had the information necessary to decide Mr. Porter’s claim. But this conclusion is simply contrary to the facts viewed against a backdrop of the applicable law, and we need not accept it as true." It was in the EUO that Porter mentioned the other car for the first time.  And, the delay in payment was reasonable, since Porter's attorney requested the delay. 

There was no inadequate investigation.  It is unclear whether additional investigation would have uncovered other facts.  There was no duty to investigate based on the telephone call where Mr. Porter failed to identify himself.

No UM Stacking under Allstate policy, Missouri law

In Hall v. Allstate, the Missouri Court of Appeals reversed summary judgment in favor of the insured on a claim for stacked UM.  Brian Hall was seriously injured in an automobile accident. After exhausting the tortfeasor’s policy limits, Mr. Hall and his wife filed a claim seeking underinsured motorist coverage provided in an Allstate insurance policy. The parties submitted the matter to the trial court on cross-motions for summary judgment. All agree that Mr. Hall should recover underinsured motorist benefits. The parties disagree on whether that coverage should stack. The parties also dispute whether Mrs. Hall is entitled to recover separate underinsured motorist benefits for her loss-of-consortium claim. The trial court permitted stacking, and thus entered summary judgment in favor of the Halls and against Allstate. Allstate appeals that decision. The trial court, however, ruled that Mrs. Hall was not entitled to recover separate underinsured motorist benefits for her loss-of-consortium claim, and therefore entered summary judgment against her. The Halls appeal that decision.

Because the policy unambiguously prohibits stacking of underinsured coverage, the appellate court reversed the trial court’s summary judgment permitting such stacking. The policy expressly barred “stacking” of underinsured liabilities and the limits-of-liability provision applied that limitation to each insured vehicle. Underinsured coverage had an “other insurance” clause that allowed stacking but only in excess of coverage “under another policy.”  No ambiguity in that language.

The trial court’s entry of summary judgment denying separate underinsured motorist benefits for Mrs. Hall’s loss-of-consortium claim was affirmed.


Exhaustion of Limits does not make tortfeasor uninsured, Missouri Law

In Leslie Hill vs. Government Employee Insurance Company, Leslie was injured in a car accident when she was struck by Malone who was drunk.  Malone's insurer paid its limits on the claim, and then Leslie went after the owner of the car, Malone's father.  But the limits had been paid, so there was no money to pay any claim by Leslie against the owner.  Leslie therefore claimed the owner was "uninsured" and made a claim on her own insurance company for uninsured motorist benefit.  Apparently, Leslie did not purchase under-insured motorist benefits.

The trial court granted the insurance company's motion for summary judgment and the court of appeals affirmed.  The issue was appropriate for summary judgment, as it was a contract question, and the facts were undisputed.  The issue of whether an insured is entitled to uninsured motorist (UM) benefits is based on the insurance policy, not tort law.  Furthermore, the owner was not uninsured since he had an insurance policy with the minimum statutory limits.  The fact that those limits were not available to pay claims did not make him "uninsured".  

In addition, the tort of negligent entrustment was covered by the policy. 


Some states and /or policies require that uninsured motorist coverage and underinsured motorist coverage be sold together, but apparently, not Missouri.  Oklahoma requires both to be sold together.  The court looked to Leslie's own policy to determine whether the owner was uninsured, because the policy defined that term. This can be a tricky area for both insureds and attorneys.

UM Rejection on unapproved form still effective

In Davis v. Progressive Northern, 2012 OK CIV APP 98, Davis was a passenger in a car involved in a one car accident. Progressive paid Davis liability limits but did not pay him UM (uninsured motorist) coverage because the named insured had rejected UM coverage and had not paid any premiums for it.  Davis sued Progressive, claiming that the rejection was ineffective because the UM rejection form had not been approved by the insurance department.  Eventually, the trial court dismissed the claim.  The trial court found the selection/rejection form was in complete accord with 36 O.S. §3636(H) and failure to submit the form to the Department of Insurance for approval did not render the form invalid, citing 36 O.S. §3620.

The court of civil appeals affirmed the dismissal.  The form used by Progressive was virtually identical to the required statutory language and was therefore effective to waive UM.


Bad Faith, UM, and Judgment as a matter of Law (Oklahoma law)

In Bannister v. State Farm, Bannister was involved in a one vehicle accident.  Bannister claimed that a car cut off the car in front of him, and the car in front of him slammed on the brakes.  Bannister had to lay his motorcycle down, and was injured.  When State Farm denied the claim, Bannister sued for breach of contract and bad faith.  Later, though, Bannister withdrew his breach of contract claim.  The jury found for Bannister on the bad faith claim and awarded him $350,000 actual and $350,000 punitive damages.  The trial court granted State Farm's judgment as a matter of law, saying there was a reasonable dispute as to whether the accident was Bannister's fault.  The Tenth Circuit affirmed. 

The court noted that Bannister admitted  he was driving under the influence, speeding and following too closely.  These facts reasonably supported a legitimate dispute as to whether Bannister was majority at fault in his accident; and that no evidence suggested that further investigation would have undermined the State Farm’s legitimate basis for disputing the claim.  No other witnesses were found regarding the accident, so the determination was based on the police report and Bannister's own statements. 

On appeal, Bannister asserts that State Farm’s investigation was inadequate.  For example, Bannister argues that “had State Farm taken a recorded statement, it could have and should have asked Bannister whether he was (1) drunk, (2) speeding and/or (3) following too closely.” But Bannister  does not explain how the answers to those questions would have altered the factual basis on which State Farm reasonably disputed coverage. Critically, Bannister’s truthful answers to those questions would have confirmed that his blood-alcohol level was above the legal limit; that he was speeding by 5-10 mph; and that he was following too closely.  All of these show that State Farm had a reasonable basis to deny the claim.

Bannister claimed that because an element of the claim of bad faith is that the insurance company owed but did not pay benefits under the policy, he should be able to keep at least the policy limits of $125,000.  Bannister cited some criminal cases dealing with lesser included offenses.  But the court said that Bannister made a tactical decision to withdraw the breach of contract claim and could not get it in through the back door.  The court states: 

[W]e are unaware of any precedent extending that criminal doctrine to this civil context, such that a forsaken contract claim would be transformed into an independent sub-claim of a separate tort claim, upon which recovery could be independently awarded. We do not interpret the Court of Civil Appeals of Oklahoma’s decision in Cales v. Le Mars Mut. Ins. Co., 69 P.3d 1206 (Okla. Civ. App. 2002), to compel a contrary conclusion. Cales held that a new trial was warranted in light of the trial court’s improper decision to bifurcate the plaintiff’s breach of contract and bad faith claims into separate trials. . . .However, notwithstanding Cales’s “not[ing]” that the plaintiff’s breach of contract claim and bad faith claims comprised “one cause of action,” the actual holding of Cales was that it was improper to bifurcate the consideration of the “two interrelated theories of recovery” when both theories had been asserted. Id. Cales did not hold that a plaintiff could recover under the ‘lesser-included’ theory of breach of contract when he had earlier chosen to abandon that theory.

Because there was a reasonable basis for State Farm's determination that Bannister was mostly at fault for the accident, the trial court's grant of Judgment as a Matter of Law is affirmed.

UM Insurer May Intervene even if it denied the claim -- Missouri Law

In Charles vs. Consumers Insurance the underinsured motorist insurer moved to intervene in insured’s action, circuit court granted intervention, then dismissed insurer based on an allegation that insurer initially denied liability.  “[A]n uninsured or underinsured motorist carrier has an absolute right to intervene in a lawsuit brought by its policyholder against an . . . underinsured motorist [,] steps into the shoes of the alleged tortfeasor and assumes an adversarial position to that of the insured.”  Initial denial does not negate that right, as it does the contractual grounds for permissive intervention, and settlement with tortfeasor in reliance on denial of coverage does not support equitable estoppel.  Therefore, insurer was entitled to notice of a hearing on liability and damages. 

The issue is whether the plaintiff’s underinsured motor vehicle (“UIM”) insurer has a right to intervene in plaintiff’s liability action against the underinsured motorist when the UIM insurer first denied that underinsured motorist coverage applied, but later determined that such coverage may apply, conceding such at the time of the relevant intervention ruling and prior to trial in the liability action against the underinsured motorist. We hold that, under these facts, the UIM insurer does have a right to intervene to contest the underinsured motorist’s liability and/or damages.

A party seeking intervention under this rule must show “1) an interest relating to the property or transaction which is the subject of the action; 2) that the applicant’s ability to protect such interest is impaired or impeded; and 3) that the existing parties are inadequately representing the applicant’s interest.” Stafford v. Kite, 26 S.W.3d 277, 279 (Mo. App. W.D. 2000).

Generally, when an insured files suit against an uninsured motorist (“UM”) or an underinsured motorist (“UIM”), there is no debate under Missouri law that the insured’s UM/UIM insurance carrier has an interest that may be impaired or impeded if the UM/UIM carrier is not allowed to intervene to contest the issues of liability and/or damages. Pollock v. Searcy, 816 S.W.2d 276, 278 (Mo. App. S.D. 1991).

As the terms of Rule 52.12(a) make clear, an intervenor, at the time of its intervention, need not concede that it will be bound by the judgment. Beard v. Jackson, 502 S.W.2d 416, 418-19 (Mo. App. 1973). Rather, it is the potential for liability under an underinsurance clause that triggers the “interest” recognized by Rule 52.12(a). See id.

The initial denial of coverage made by Appellant Consumers Insurance (“Consumers”) did not prevent Consumers from changing its position at the time of intervention. Consumers is not attempting to assert any contractual right. Its right to intervene in this situation springs—not from the insurance contract—but from Rule 52.12(a). Thus, the cases cited by Respondent Bradford Charles, which hold that an insurer cannot rely on its contractual rights after having itself breached the contract, do not apply here.

The only issues are whether Consumers claimed an interest in the subject of Charles’s lawsuit; whether that interest may be impeded or impaired by the litigation’s outcome; and whether the tortfeasor adequately represents the interest. Each of those issues are resolved in a manner that requires that Consumers be permitted to intervene. Since the circuit court denied Consumers the right to intervene, the judgment must be reversed.


Off road trail is not a road; exclusion upheld

In Hale v. Allied Insurance, Plaintiff was hurt in an accident involving a non-owned ATV on a wilderness trail.  The ATV was not registered, and not covered by insurance.  Plaintiff claimed he was entitled to UM coverage under his own policies for his injuries.   The insurer denied the claim, relying on an exclusion for accidents involving “any vehicle or equipment . . . [d]esigned mainly for use off public roads while not upon public roads.” Reasoning the ATV was designed for off-road use and the trail was not a public road, the insurer denied the claim.  The trial court agreed, granting summary judgment to the insurer. 

The Tenth Circuit affirmed.  It noted that although "road" wasn't defined in the policy, the policy  distinguishes between public roads and terrain suitable only for specially designed vehicles.  The policy’s language excludes coverage for accidents involving vehicles “designed mainly for use off public roads while not upon public roads.”  The trail where the accident happened was not a road, but an obstacle course, which inexperienced drivers were told to avoid. 

In addition, Plaintiff argued that UM coverage was mandated by Wyoming law, which required motor vehicles be covered; since ATV 's are defined as motor vehicles, they are required to be covered.  But, since this argument wasn't made to the trial court, the Tenth Circuit declined to consider it. 

Uninsured Motorist coverage and Bad faith

 In GEICO v. Quine, Watkins was a fault free passenger injured in a 3 car collision. Her medical bills were $9,000 and she was paid $13,000 from the tortfeasor. GEICO waived its subrogation rights and Watkins sought policy limits of $100,000 for her injuries. GEICO declined to pay policy limits and offered between $6,000 and $11,000 to settle Watkins’ claim. Watkins rejected the offers but demanded that GEICO was required to tender the “undisputed” portion of the UM policy. GEICO declined to make any payment without a release and filed a declaratory judgment action. 

Based on the facts and following the doctrine of stare decisis, the court answered the certified legal question in the negative.

In reaching its decision, the Supreme Court relied heavily on Garnett v. GEICO, 2008 OK 43, 186 P.3d 935. Watkins received compensation from the tortfeasor's insurer in excess of her economic/special damages. GEICO, through its evaluation, determined that Watkins was entitled to some amount of UIM benefits under the GEICO policy for the noneconomic/general damage element of her claim. The distinction between these two damage elements is especially germane under the facts of this case. The parties could not agree on an appropriate value for Watkins' general damage claim; thus, a legitimate dispute arose. GEICO's refusal to issue an advance payment on Watkins' UIM claim presents a scenario far different than one involving a request for partial payment needed to satisfy unpaid medical expenses, lost wages, or other economic/special damages--cases where the impact of the loss is direct, immediate, and measurable with reasonable certainty.See, e.g., Weinstein v. Prudential Prop. & Cas. Ins. Co., 233 P.3d 1221, 1229-1231, 1241 (Idaho 2010) (finding sufficient evidence to support bad faith verdict where insurer unreasonably delayed payment of UM proceeds for unpaid medical bills). The only portion of her claim remaining after payment from the tortfeasor were those indeterminate sums attributable to general damages, and accordingly, the facts of this case are governed by our prior decision.

The court concludes:

that an insurer's refusal to unconditionally tender a partial payment of UIM benefits does not amount to a breach of the obligation to act in good faith and deal fairly when: (1) the insured's economic/special damages have been fully recovered through payment from the tortfeasor's liability insurance; (2) after receiving notice that the tortfeasor's liability coverage has been exhausted due to multiple claims, the UIM insurer promptly investigates and places a value on the claim; (3) there is a legitimate dispute regarding the amount of noneconomic/general damages suffered by the insured; and (4) the benefits due and payable have not been firmly established by either an agreement of the parties or entry of a judgment substantiating the insured's damages.


While on the face of the decision, it limits the UM carrier's liability for bad faith where the bills have been paid, the flip side of the decision is to place a duty on the UM carrier to pay bills related to the accident without a release.

No UM Coverage for Son who owned own vehicle (Missouri law)

Brendan Johnson was killed when a vehicle driven by Mark Royal collided with his Chevrolet Cavalier, which he was driving. At the time of the accident, neither Johnson's nor Royal's vehicle was covered by an automobile insurance policy. Johnson was residing with Addrea Stewart, his mother, when the accident occurred. Stewart owned a Ford Explorer, which was insured by American Family Mutual Insurance Company and provided uninsured motorist coverage with policy limits of $100,000 per person/$300,000 per occurrence. Stewart sought Uninsured Motorist ("UM") coverage benefits for the death of her son, Johnson, under the UM provisions of the policy covering her Explorer. American Family filed a motion for summary judgment contending that Johnson was not an insured person under Stewart's policy, relying primarily on a "named driver exclusion" ("NDE") endorsement. The NDE was added to Stewart's policy after its original issuance due to the termination of coverage for Johnson and for his vehicle. The exclusion was in effect on the date of the accident and read as follows:

    This policy does not apply under any of the coverages to any vehicle in the care, custody or control of, or while operated by Brendan Johnson. . . . . All other terms, agreement, conditions and provisions remain unchanged.

Stewart opposed the granting of summary judgment, claiming that she was the injured "insured person" making a claim under her own policy. She claimed that she, as a named insured, was covered under the UM coverage of the policy for wrongful death damages with respect to the death of any person as to whom she is entitled to bring a wrongful death claim; in this case Johnson. The trial court relied on the NDE endorsement, finding the Stewart policy did not apply to any of the coverages if Johnson was driving, and granted summary judgment in favor of American Family. Stewart appealed.

Division One holds: While courts will enforce an NDE when it clearly excludes coverage when any named excluded person is driving, the language of the NDE section here is not effective, by itself, to bar a claim as to UM coverage. Nevertheless, the trial court obtained the right result in the case because the record shows that Johnson owned his own vehicle and thus could not qualify under the policy as an insured person, and because the "bodily injury" was sustained by Johnson, who was not an "insured person." Because Stewart did not suffer the bodily injury herself, as required under the policy, and Johnson was not an "insured person," Stewart could not recover under UM coverage for Johnson's death. The judgment is affirmed.

Stewart v. American Family


Ambiguities in policy language must be construed in favor of the insured

In Hartford Underwriters Insurance Company v. Donna Ledbetter, the Missouri Court of Appeals considered whether an insurance policy’s language was ambiguous thus warranting coverage in favor of the insured.  Ledbetter received injuries in a car wreck  when another car driven by Danny Harris struck her car.   Ledbetter sued Harris for her personal injuries and later settled the suit in exchange for his liability insurance policy limit of $50,000.   Ledbetter then attempted to recover $200,000.00  against her insurer, Hartford, under the Underinsured Motorist provision of the Policy. Hartford denied that Harris’ vehicle was underinsured.  Both parties filed a Motion for Summary Judgment and the trial court entered judgment in favor of Hartford finding that Harris’ vehicle failed to meet the Policy’s definition of an underinsured vehicle.  Ledbetter appealed. 

 The appellate court’s review focused on the Policy’s “Other Insurance” clause pertaining to underinsured motorist coverage. The applicable provision stated, “Any insurance we provide with respect to a vehicle you do not own shall be excess over any collectible insurance providing such coverage on a primary basis.”  Ledbetter argued the provision was ambiguous and required a construction that the underinsured motorist coverage was excess to the tortfeasor liability coverage regardless of whether she occupied the non-owned vehicle because a requirement that she actually occupy the non-owned vehicle was not contained in the policy.

 “Language in an insurance policy is ambiguous if it is reasonably open to different constructions, and the language used will be viewed in the light of the meaning that would ordinarily be understood by a layman who bought and paid for the policy.”  Hobbs v. Farm Bureau Town & Casualty Ins. Co., 965 S.W.2d 194, 197-98 (Mo. App. 1998).

 The Court considered Goza v. Hartford Underwriters Ins. Co., 972 S.W.2d 371, 372 (Mo. App. 1998) where Hartford’s  “Other Insurance” clause, which mirrors the “Other Insurance” clause in question, was found ambiguous and resolved in favor of the insured despite the fact that Goza was driving her own insured vehicle at the time of the accident.  The Goza  Court found the policy ambiguous because one could reasonably interpret the ‘excess coverage’ language as providing coverage for a vehicle that the insured did not own, while the ‘excess coverage’ language could also be interpreted as providing underinsured coverage in excess to amounts recovered from tortfeasor. 

This Court held that an objective examination of the ‘excess’ language of the “Other Insurance” clause suggests that the language might reasonably be interpreted by an average lay person to mean underinsured coverage was excess to amounts recovered from the tortfeasor.  It also could be interpreted to mean that the ‘excess’ language prevailed over the conflicting language contained in the Policy’s definition of an underinsured and Limits of Liability sections. 

 The trial court’s grant of summary judgment was reversed and remanded.

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. 

The court states: 

To now say that an insurance company may exclude UM coverage from a resident insured because a specific vehicle, Mr. Morris's Freightliner semi, did not include UM coverage in its specific policy, violates the line of cases holding that UM coverage follows the person, not the vehicle. Mr. Morris was entitled to rely on this Court's previous holdings in his decision to include UM coverage for his automobiles but not to purchase a separate UM policy for his semi.



Apparent Authority to reject UM?

In Traders Insurance v. Johnson, the question was whether the daughter, not a named insured, had authority to reject UM (uninsured motorist) coverage on a policy issued to her parents. The answer is “maybe.” Oklahoma’s UM statute limits the right to reject UM to named insureds and applicants. (36 O.S. § 3636 (G)) The daughter was neither, so the court found summary judgment to the insurer was properly denied. Fact issues as to whether the daughter acted as an apparent agent of her parents in signing the UM rejection precluded summary judgment in favor of the insureds. So, the whole case was remanded.

This result surprised me as I would have guessed that the statutory enumeration of who may reject UM coverage would have been considered exclusive, such that agents of the insureds would not be able to reject UM for the insureds.

No UM where Insured settled for less than tortfeasor's limits

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.

Family member who rejects UM not entitled to coverage

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. 


Choice of Law and UM coverage

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.


No UM for injuries occuring during car theft

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.  

Insurers limit UM coverage by their definitions of "insured"

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.