Okla. Supreme Court Voids Progressive’s ‘Furtive’ UIM Coverage Exclusion

An exclusion included to an uninsured motorist coverage issued by Progressive Northern Insurance policies Co.

An exclusion included to an uninsured motorist coverage issued by Progressive Northern Insurance policies Co. is void simply because it contravenes state law, a divided Oklahoma Supreme Court docket dominated on Thursday.

In a 5-3 conclusion, the higher court docket claimed that an Oklahoma insurance company “cannot deprive its policyholder of uninsured-motorist coverage for which a high quality has been compensated as a result of an exclusion that effectively erases its policyholder’s selection to obtain that protection in the initially spot.”

The lawful obstacle to Progressive’s plan exclusion arrived to the Supreme Courtroom immediately after the driver of a car total of young adults dropped handle of her car while driving in Canadian County exterior of Oklahoma Town. The automobile spun 180 levels, struck a tree, rolled about and landed upside down.

The September 2017 crash seriously injured Elissa Lane and Kyle Stone, who were being amongst four travellers in the car or truck. The driver and all of the occupants were explained in court papers as young adults.

The driver’s car or truck was insured by her mothers and fathers by way of Progressive. The carrier paid out its legal responsibility restrict of $100,000 to the two victims, but refused to release an additional $100,000 in uninsured-motorist protection.

The parents had ordered insurance coverage to go over damages by uninsured or underinsured motorists, but the plan excluded protection to any insured human being who is paid out an sum equal or greater than the bare minimum statutory limit for legal responsibility coverage. Because Lane and Stone were being each and every paid extra than the state’s $25,000 minimal liability limit previously, no underinsured coverage was available, Progressive contended.

The plaintiffs’ attorneys argued that Progressive collected rates for uninsured motorist coverage but then additional an exclusion that effectively took protection away from any “class 2 insured” travellers who are wounded in an incident. These an exclusion contravened the reason of the point out state statute that enables insurers to present optional uninsured motorist coverage, they reported.

U.S. District Judge Stephen P. Friot dominated that the insurer was within its legal rights to deny the claim. He claimed in his purchase that though the Supreme Courtroom experienced made a decision that some exclusions in uninsured motorists procedures are not authorized by condition law, the courtroom under no circumstances ruled that no exclusions are allowed.

Lane and Stone appealed. Rather than guessing at Oklahoma condition regulation, the federal 10th Circuit Court docket of Appeals despatched the state’s Supreme Court a accredited query: Does Progressive’s exclusion contravene the state’s uninsured motorist statute?

Certainly it does, 5 justices made a decision.

The vast majority opinion suggests Oklahoma public policy is to assure that policyholders get all of the protection for which they compensated rates.

“It is entirely acceptable for an Oklahoma relatives to foresee the disagreeable chance that their beginner driver may possibly acquire out the family auto, get into an automobile accident, and injure her travellers,” the view states. “It is commendable to look for out and obtain insurance that provides defense over and above a policy’s basic legal responsibility restrictions in the occasion of that key damage.”

Even the a few dissenting justices said Progressive’s exclusion “may border on furtiveness.” Justice Dustin Rowe wrote a dissenting belief, joined by Justices M. John Kane IV and James R. Winchester, that saidOklahoma’s uninsured motorist statute does not checklist any exclusions that are permitted or not permitted.

“If the Legislature had intended to disallow this type of exclusion, it could have effortlessly accomplished so–or can do so in the upcoming,” Rowe wrote.

That argument introduced a solid rebuke from Justice Yvonne Kauger. She wrote an feeling concurring with the greater part and drew attention to the dissenters’ use of the term “furtive.” Kauger stated that suggests “characterized by stealth therefore sly secret thieving as a furtive look…”

“An insurance policy agreement need to be open up and transparent,” Kauger wrote. “Neither the Legislature intent nor our extant jurisprudence authorizes or approves the implementation of a border-line theft.”

Lawyers for Progressive did not answer to a request for remark.

Want to keep up to day?

Get the latest coverage information
despatched straight to your inbox.