1 EMERGING ISSUES IN OHIO UM/UIM LAW MAY 14, 2009 Robert W. Kerpsack, Esq. ROBERT W. KERPSACK CO., L.P.A. 655 Metro Place South, Suite 255 Columbus, OH Telephone: (614) Facsimile: (614)

2 EMERGING UM/UIM ISSUES TOPICS: LIFE WITHOUT MANDATORY UM OFFER/REJECTION – SNYDER V. AM. FAMILY INS. CO. –ENFORCEABILITY OF UM COV. EXCLUSIONS STATUS OF COVERAGE BY OPERATION OF LAW “AMOUNT AVAILABLE FOR PAYMENT” REVISITED “BECAUSE OF” VS. “FOR” BODILY INJURY ENFORCEABILITY OF NON-DUPLICATION CLAUSES

3 S.B. 97 (EFFECTIVE OCT. 31, 2001) Highlights of S.B. 97 amendments to R.C : –Removal of mandatory offering of UM coverage –Authorization of the inclusion of policy conditions and exclusions not expressly listed in UM statute –Elimination of requirement that insureds be "legally entitled to recover" from an uninsured tortfeasor –Elimination of mandatory UM coverage for immune tortfeasors, but immune tortfeasors added to UM statute’s definition of an “uninsured motorist”

4 SNYDER V. AM. FAM. INS. CO., 114 Ohio St.3d 239, 2007-Ohio-4004 Snyder facts: –Officer Snyder (on foot) struck by a police cruiser tortfeasor immune (fellow-employee immunity) –Snyder’s post-S.B. 97 Am. Fam. policy excluded UM coverage when tortfeasor is immune and required the insured to be "legally entitled to recover" from an uninsured motorist. –Am. Fam. denied UM coverage, arguing that Snyder was not "legally entitled to recover“ from the immune tortfeasor.

5 SNYDER V. AM. FAM. INS. CO. (con’t) Snyder holding: –In upholding the insurer’s denial of UM coverage, the Snyder Supreme Court noted that the current UM statute provides insurers with “considerable flexibility” in devising specific UM cov. restrictions. –The Snyder Court also noted that the current statute neither requires nor prohibits the inclusion of a "legally entitled to recover“ UM coverage restriction. –The Snyder Court also noted that the current statute expressly permits the contracting parties to agree to conditions/exclusions not enumerated in statute.

6 SNYDER V. AM. FAM. INS. CO. (con’t) Citing Snyder, lower courts are now holding that the UM statute authorizes any UM conditions/exclusions “agreed to” by the contracting parties. –UM conditions/exclusions already upheld by courts: Intra-family/other-owned-auto exclusions Narrow definitions of “uninsured motor vehicle” Narrow definitions of “insured” / “insured auto” Narrow contractual limitations periods The policy language “trumps” the UM statute!

7 UM COVERAGE BY OPERATION OF LAW No auto policy issued in Ohio after October 31, 2001 (effective date of S.B. No. 97) is going to provide UM coverage by operation of law. The two-year coverage guarantee of R.C (A) does not delay the application of S.B. 97 to existing policies. See Advent v. Allstate Ins. Co., 118 Ohio St.3d 248, 2008-Ohio –Insurers have the option of making policy changes at any six-month renewal or at the beginning of a two- year guarantee period. See Smith v. Speakman, 2008-Ohio-6610 (10th District).

8 UM COV. BY OPERATION OF LAW (con’t) But..., –After S.B. 97, insurers are still required to provide notice of policy changes to insureds in order to effectuate changes to UM coverage under existing policies. –However, most insureds who receive notice of policy changes “agree” to such changes by paying their premium without objection.

9 PRE-S.B. 97 POLICIES Some pre-S.B. No. 97 policies (issued prior to Oct. 31, 2001) may still provide UM/UIM coverage by operation of law. –However, most “form over substance” arguments were eliminated by Hollon v. Clary, 104 Ohio St.3d 526, 2004-Ohio-6772 (once a signed, written rejection of UM coverage is produced, the elements of the offer may be demonstrated by extrinsic evidence).

10 PRE-S.B. 97 POLICIES (con’t) Ohio appellate district courts are split: –Whether extrinsic evidence of an insured’s intent to reject UM coverage, coupled with the insured’s “ working knowledge ” of the premium savings in rejecting UM coverage, is sufficient to establish the Linko elements of a meaningful offer/rejection of UM coverage under pre-S.B. 97 policies.

11 PRE-S.B. 97 POLICIES (con’t) Citing Hollon, a rejection of UM coverage under former R.C (C) made after the policy period commences but before the accident date has been declared to be valid. See Peters v. Tipton, Ohio-1524 (7th District). However, Ohio courts are probably not going to uphold a UM rejection made after the policy period commences and after the accident date (invites fraud in commercial auto policies).

12 “AMOUNT AVAILABLE FOR PAYMENT” In Webb v. McCarty, 114 Ohio State3d 292, Ohio-4162, the Ohio Supreme Court held—once again—that the “amount available for payment” under a UIM policy is the amount of BI coverage actually paid to an insured, not the total BI limits. –The Webb Supreme Court rejected a strict “limits- to-limits” comparison, particularly in multiple claimant situations [following Littrell v. Wigglesworth (2001), 91 Ohio St.3d 425].

13 “AMOUNT AVAIL. FOR PAYMENT” (con’t) Ohio courts continue to subscribe to the general rule that a UIM claimant’s recovery should never exceed the amount that would have been recovered if the tortfeasor was uninsured.

14 “BECAUSE OF” VS. “FOR” BODILY INJURY In Lager v. Miller-Gonzalez, 120 Ohio St.3d 47, Ohio-4838, the Ohio Supreme Court upheld an auto policy that provided wrongful death UM coverage “because of bodily injury” and contained an other- owned-auto exclusion that excluded UM coverage “for bodily injury.” –The Lager Court found nothing ambiguous, uncertain, or unclear about the meaning of the policy’s other-owned-auto exclusion, even when applied to a UM claim arising from a wrongful death.

15 “BECAUSE OF” VS.“FOR” BODILY INJ.(con’t) Justice Pfeifer offered the following dissent in Lager : "For" and "because of'' are not synonymous; for example, people do not read legal opinions or insurance contracts "because of'' hours, but they can read them "for" hours. And yet this court sees only the "mere potential for ambiguity" between "for" and "because of." I readily admit that "for" and "because of'' can mean the same thing, as in "void for vagueness" and "void because of vagueness." But "for" and "because of'' do not always mean the same thing, and there is no way to know whether they do in this insurance contract. (* * *)

16 NON-DUPLICATION CLAUSES Some auto policies contain non-duplication clauses, which preclude the payment of medical expenses under the UM coverage that have already been paid under the med pay coverage. Prior to S.B. 97, insurers were not permitted to deduct amounts paid under med pay coverage from the mandatory UM/UIM coverage.

17 NON-DUPLICATION CLAUSES (con’t) After S.B. 97, however, UM/med pay non-duplication clauses are enforceable because insurers are now expressly authorized by the UM statute to include clauses that limit or exclude coverage. See Shenyey v. Glasgow, 2009-Ohio-1366 (March 26, 2009, 8 th District). But see Wayne Mut. Ins. Co. v. Bradley, 2006-Ohio (5 th District), which held that an insurer cannot subrogate against its own insured under a policy that does not contain a non-duplication clause.

18 CONCLUSION Since the 2001 enactment of S.B. 97, Ohio UM/UIM law has been governed largely by the “ intent of the contracting parties,” not by R.C The Ohio Supreme Court’s decision in Snyder v. Am. Family Ins. Co. ushered in a new era of UM/UIM law in which Ohio’s UM statute is trumped by “ negotiated ” policy conditions, exclusions, and limitations.