Progressive’s Uninsured Motorist Exclusion Not Lawful

Oklahoma’s maximum court not long ago located that an insurer’s uninsured motorist exclusion violates condition

Oklahoma’s maximum court not long ago located that an insurer’s uninsured motorist exclusion violates condition legislation.

The Oklahoma Supreme Court docket came to that summary in answering a certified dilemma from the U.S. Court docket of Appeals for the Tenth Circuit about the UM exclusion in a non-public automobile coverage from Progressive Coverage Co.

According to the Oklahoma Supreme Court’s written impression delivered June 29, the 10th Circuit Court questioned: “Does Progressive’s UM Exclusion — which operates to deny uninsured motorist protection to insureds who recuperate at the very least the statutorily mandated bare minimum in the form of liability coverage — contravene Oklahoma’s Uninsured Motorist Statute, codified at 36 O.S. § 3636?”

The Oklahoma Supreme Court docket answered “yes.”

The query arose in Lane v. Progressive Northern Coverage Co., a circumstance involving two passengers who were seriously injured in a single-vehicle rollover incident in 2017. The coverage policy on the vehicle experienced been issued by Progressive Northern to the mothers and fathers of the driver, who was a small at the time of the accident and is not a celebration to the lawsuit.

The court’s view explained the fundamental scenario: “Premiums had been compensated for the two liability and uninsured-motorist protection. The driver’s plan offered legal responsibility coverage of $100,000 for each individual, with a $300,000 limit per incident (labeled underneath the coverage as Portion I — Liability to Many others). Also, the coverage furnished uninsured-motorist protection of $100,000 for each particular person, with a $300,000 restrict for every incident (specified in the plan as Component III — Uninsured Motorist Protection). Both equally Lane and Stone recovered the $100,000-per-particular person liability restrict — but their injuries have been sizeable, and their damages exceeded $100,000. In light-weight of their considerable accidents, Lane and Stone sought more uninsured-motorist coverage from Progressive. Relying on an exclusion in the policy — referred to herein as the UM Exclusion — Progressive denied their claims.”

In Oklahoma, vehicle insurers are necessary to provide uninsured motorist coverage along with regular liability coverage, although policyholders may possibly drop the UM coverage.

“Where a policyholder has picked to obtain uninsured-motorist protection and the insurer has provided it in the insurance policies deal in accord with part 3636 — as listed here — our public coverage necessitates defense up to the contracted-for limitations,” the Oklahoma Supreme Court’s viewpoint states.

The “sweeping” UM exclusion in Progressive’s coverage allows the company to stay away from delivering the coverage necessary by the statute, the court docket said. “Progressive’s UM Exclusion states that uninsured-motorist coverage will not apply to ‘bodily injuries sustained by an insured human being exactly where legal responsibility protection for bodily injuries in an amount of money equal to or bigger than the minimal boundaries of legal responsibility expected by the motor vehicle economical obligation regulation of Oklahoma is accessible for stated bodily injuries under Section I—Liability to Others.’”

This provision violates community plan by depriving the policyholder of the UM protection they paid out for, efficiently erasing “its policyholder’s preference to acquire that coverage in the to start with position,” the feeling states.

Relying on its UM exclusion, Progressive denied Lane and Stone uninsured motorist coverage because both equally had recovered “$100,000 beneath the policy’s liability protection — which is larger than the Oklahoma statutory minimum of $25,000,” the courtroom stated.

Lane and Stone sued Progressive in federal district court for breach of contract and undesirable faith. They asserted that the UM exclusion upon which the insurance provider relied in denying coverage “is void as a issue of community policy less than state regulation.”

The federal district court docket observed issues differently, nevertheless, and dominated in Progressive’s favor, getting that the UM exclusion is permitted under condition law.

Lane and Stone appealed to the 10th Circuit Court docket, which, in turn licensed the concern of legitimacy of the exclusion to the Oklahoma Supreme Court docket.

Justice Gurich, producing for the bulk, pointed out that the relevant statute “plainly differentiates concerning liability and uninsured-motorist coverage.” It also does not intend for the coverages to be mixed. Until the insured precisely declines UM coverage, “the insurance provider should supply both equally the uninsured-motorist protection and the legal responsibility coverage,” Gurich wrote.

The circumstances of the situation are undisputed — that Lane and Stone are coated less than the insured’s coverage, their “damages exceed the policy’s $100,000-per-particular person legal responsibility limit. The vehicle concerned in the accident fulfills the definition of an uninsured motor vehicle below the phrases of equally the insurance policy policy and section 3636,” and the UM coverage was picked and paid out for, the viewpoint states.

Hence, the court reasoned, the policyholder would be proper in assuming the coverage would be offered “in the celebration of an vehicle accident resulting in significant accidents to their insureds in excess of the policy’s legal responsibility boundaries.”

Liability protection is not the very same as UM protection and is not a substitute for it, the court wrote. As these types of, “we maintain that Progressive’s UM Exclusion contravenes Oklahoma’s strong general public policy in favor of broadly out there uninsured-motorist coverage,” the the vast majority feeling states.

The ruling was not unanimous. 3 justices — Kane, Rowe and Winchester — dissented.


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