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
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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
• PENDING UM LEGISLATION
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RECENT AMENDMENTS TO
RC. 3937.18
AMENDMENT
S.B. 20
DATE
10/20/94
H.B. 261
9/3/97
S.B. 57
9/24/99
CHANGE
UIM COV.
NOT EXCESS
DEFINES “MO.
VEH. LIAB.
INS. POLICY”
DEFINES
“UMBRELLA
POLICY”
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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.
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UM COVERAGE BY
OPERATION OF LAW
• Homeowners, Renters, Farmowners Policies
• General Commercial Liability Policies
• Employers’ Auto/Commercial Policies
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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.”
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HOMEOWNERS-TYPE
POLICIES
IMPLICATION:
Non-owned recreational vehicles used on
an insured location are not excluded.
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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.
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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.
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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.
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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.
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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 insured’s
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.
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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.”
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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.
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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 employee’s household
are covered under employer’s UM policy).
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APPLICATION OF
AMENDMENTS TO
R.C. 3937.18
• Are the UM “flood gates” opened or
closed?
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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
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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.
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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.”
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APPLYING POLICY
ENDORSEMENTS THAT
CONFORM TO R.C. 3937.18
• Townsend v. State Farm Mut. Auto. Ins. Co.
(Aug. 14, 1998), Sandusky App. No. S-97059, unreported
• 1/25/94 Policy first issued
1/25/95 Endorsement added (S.B. 20)
8/23/95 DOL
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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.”
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APPLYING POLICY
ENDORSEMENTS THAT
CONFORM TO R.C. 3937.18
• Wolfe v. Wolfe (2000), 88 Ohio St.3d 246
•
•
•
•
•
12/12/83
12/12/93
10/20/94
12/12/94
4/2/95
Policy first issued
Policy renewed
S.B. 20 Effective
Policy renewed
DOL
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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
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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?
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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
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Implication of Wolfe v. Wolfe #3
• Wolfe dicta:
– “Were we to adopt the appellee’s (insurer’s)
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!
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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?
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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.”
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OHIO LEGISLATURE AT WORK
• March 16, 2000:
– S.B. 267 introduced in Ohio Senate, which
seeks to legislatively “overrule” Moore and
Wolfe.
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AUTO INSURERS AT WORK
• Effective May 15, 2000:
– 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
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LIMITING WD CLAIMS TO
“PER PERSON” LIMITS
• May 3, 2000:
– Ohio Supreme Court accepted for review 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?
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“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?
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“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
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“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 Court—maybe.
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“AVAILABLE FOR PAYMENT”
• Currently pending before Ohio Supreme Court:
– Karr v. Borchardt, Sup. Ct. No. 99-219
• Issues: Sexton and “Available for Payment”
• Oral argument cancelled after Holcomb
(Sexton only) oral argument
– Stickney v. State Farm, Sup. Ct. No. 98
• Issue: “Available for Payment” (only)
• Stayed pending Karr
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IS S.B. 20 CONSTITUTIONAL?
• Currently pending before Ohio Supreme Court:
– Cicco v. Stockmaster, Sup. Ct. No. 99-85,
accepted April 28, 1999, oral argument
November 16, 1999
– Leisure v. State Farm, Sup. Ct. App. No. 982481, accepted March 3, 1999, oral argument
December 14, 1999
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