1. UN/UNDERINSURED MOTORISTS COVERAGE UPDATE
Robert W. Kerpsack, Esq.,
ROBERT W. KERPSACK CO., L.P.A.
21 East State Street, Suite 300
Columbus, OH
Telephone: (614)
Facsimile: (614)

2. 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
CIRCUMVENTING UM LEGISLATION

3. RECENT AMENDMENTS TO RC. 3937.18
DATE
CHANGE
S.B. 20
10/20/94
UIM COV.
NOT EXCESS
H.B. 261
9/3/97
DEFINES “MO. VEH. LIAB. INS. POLICY”
S.B. 57
9/24/99
DEFINES “UMBRELLA POLICY”

4. RECENT AMENDMENTS TO RC. 3937.18
S.B. 267 (EFFECTIVE 9/21/00):
INSURED WD BENEFICIARY MUST SUSTAIN BODILY INJURY
POLICY CHANGES RE: STATUTE AMEND OKAY DURING 2-YR GUAR PD
NO NEED TO RE-OFFER UM/UIM COVERAGE AT RENEWAL OF POLICY
“OTHER-OWNED AUTO” EXCLUSION VOID

5. 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.

6. TWO-YEAR UM/UIM COVERAGE GUARANTEE
R.C :
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.”

7. APPLYING POLICY ENDORSEMENTS THAT CONFORM TO R.C. 3937.31(A)
Townsend v. State Farm Mut. Auto. Ins. Co. (Aug. 14, 1998), Sandusky App. No. S , unreported
1/25/94 Policy first issued
1/25/95 Endorsement added (S.B. 20)
8/23/95 DOL

8. 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
HELD: “The language of the policy establishes that the renewals constitute one continuing contract for insurance during the two-year guarantee period.”

9. APPLYING POLICY ENDORSEMENTS THAT CONFORM TO R.C. 3937.31(A)
Wolfe v. Wolfe (2000), 88 Ohio St.3d 246
12/12/83 Policy first issued
12/12/93 Policy renewed
10/20/94 S.B. 20 Effective
12/12/94 Policy renewed
4/2/95 DOL

10. Wolfe v. Wolfe OH Supreme Court Held:
R.C (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

11. 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?

12. 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

13. 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 (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!

14. 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?

15. BUT . . . S.B. 267 (EFFECTIVE 9/21/00) ADDED R.C. 3937.18(E):
INSURERS ARE PERMITTED TO CHANGE THEIR POLICIES DURING THE TWO-YEAR GUARANTEE PERIOD SO LONG AS THOSE CHANGES ARE IN ACCORDANCE WITH SUBSEQUENT STATUTORY CHANGES

16. BUT . . . S.B. 267 ALSO CHANGES R.C. 3937.18(C):
ELIMINATES THE REQUIREMENT OF AN ADDITIONAL MANDATORY OFFERING/EXPRESS REJECTION (OR REDUCTION) OF UM/UIM COVERAGE

17. UM COVERAGE BY OPERATION OF LAW
Homeowners, Renters, Farmowners Policies
General Commercial Liability Policies
Employers’ Auto/Commercial Policies

18. 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.”

19. HOMEOWNERS-TYPE POLICIES
IMPLICATION:
Non-owned recreational vehicles used on an insured location are not excluded.

20. 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

21. 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

22. 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.

23. 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.

24. 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

25. 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.”

26. 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.

27. 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).

28. APPLICATION OF AMENDMENTS TO R.C. 3937.18
Are the UM “flood gates” opened or closed?

29. 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 , which contains no subrogation clause

30. UM COVERAGE BY OPERATION OF LAW
Myers v. Safeco Ins. Co.:
Accepted 7/19/00 by Ohio Supreme Court on discretionary appeal and certified conflict
Briefing stayed pending decision in Davidson

31. UM COVERAGE BY OPERATION OF LAW
R.C (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 (A)(2) does not include any subrogation clauses, anti-stacking clauses, or “other insurance” clauses.

32. 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 (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.”

33. OHIO LEGISLATURE AT WORK
S.B. 267 (EFFECTIVE 9/21/00):
LEGISLATIVELY “OVERRULES” MOORE
POLICIES WRITTEN AFTER 9/21/00:
INSURED MUST SUSTAIN BODILY INJURY

34. AUTO INSURERS AT WORK RUMOR:
Effective 5/15/00, some 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

35. LIMITING WD CLAIMS TO “PER PERSON” LIMITS
CURRENTLY BEFORE OH SUP CT:
Clark v. Scarpelli, S. Ct. No
Issue: Whether an automobile insurer may limit recovery in a wrongful death claim to the per person limits of UM coverage?
ORAL ARGUMENT: 11/29/00

36. “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?

37. “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

38. “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.

39. “AVAILABLE FOR PAYMENT”
AUGUST 2, 2000:
Littrell v. Wigglesworth (March 13, 2000), Butler App. Nos. CA , CA , unreported
Accepted 8/2/00 by OH Supreme Court on discretionary appeal and certified conflict

40. IS S.B. 20 CONSTITUTIONAL?
ALL OHIO SUPREME COURT CASES WITH THIS ISSUE HAVE EITHER BEEN RESOLVED ON OTHER GROUNDS OR ORDERED STAYED PENDING A DECISION IN LITTRELL
S.B. 20 IS PROBABLY HERE TO STAY!