5/24/2010

Keeping the Reins Short on UM

It’s only a rare case in which courts are loosening the definitions and applicability of uninsured motorist coverage.

By Patrick K. Biggins, J.D.

With the wave of a pen, a court can make an insurance policy cover an event for which an insurer never intended to provide coverage. When courts change existing case law precedents, insurers sometimes have to scramble to respond with new policy language, new underwriting standards, or new claims practices. The good news for insurers is that case law over the past three years generally upholds the standard definitions for uninsured motorist coverage.

Contact Hit-and-Run Cases
Recent case law in hit-and-run and physical contact cases suggests the courts aren't significantly expanding coverage. Courts are taking a serious look at the details, though, particularly of specific wording and its clarity or ambiguity.

In Zarder v. Humana Ins. Co., the court examined the meaning of "run" in the context of a hit-and-run claim. The insured was a minor who was hit by a car while riding his bicycle. The driver stopped, but the minor told him he was unhurt. The driver then left the scene. After an injury was discovered, the insured presented an uninsured motorist claim. The court held that the word "run" included a vehicle that stopped at the time of the accident but then left the scene without the driver providing any identifying information to the victim. Because the word was ambiguous in this context, it had to be construed in the insured's favor.

Wisconsin courts examined two contact cases involving flying objects or parts of vehicles. In Tomson v. American Family Mut. Ins. Co., the insured's vehicle was struck by a wheel assembly from a truck that had been propelled by another vehicle. In Progressive Northern Ins. Co. v. Phillips, a chunk of sand flew out of a semi and struck a motorcyclist. In the first case, the court held that the uninsured motorist statute required coverage when a detached piece of an unidentified motor vehicle was propelled into the insured's vehicle by an identified vehicle. In the second case, however, the court held that the chunk of sand was not an integral part of the semi and, therefore, there was no physical contact between the semi or a part of it and the motorcycle that would support uninsured motorist coverage.

A Kentucky decision, Baldwin v. Doe, also involved a flying object. The insured was injured while dismounting from his truck in order to remove a tarp that had flown from an unknown flatbed truck and landed on his vehicle. The court held that the insured was entitled to an uninsured motorist recovery because the impact of the tarp with his vehicle satisfied the policy's physical contact requirement.
Occupying a Vehicle
Over the years, many courts have applied their own standards to hold that persons outside of a vehicle are "occupying" it. Some courts have required only physical contact with a vehicle while others have looked at whether a claimant was "vehicle-oriented" at the time of injury. The definition of the word "occupying" is central to coverage in many cases, and in more than one, that definition has been expanded.

In one extreme example, Kentucky Farm Bur. Mut. v. McKinney, the person was as much as 130 feet away from the vehicle, but the court still held she was occupying it. That was not the case in Severino v. Malachi, in which the two decedents were struck by an uninsured motorist. The claimants had already exited the vehicle and were several feet away from it at the time they were struck. There was no evidence that either of them was leaning upon or touching the vehicle at the time. The court noted that they were not in or getting out of the vehicle at the time of the accident. They had not left the vehicle with its lights on or engine running in order to perform some essential task. The court considered their journey to the driver's apartment concluded when the driver parked the car and turned off the engine. Even though they intended to return to the car at some point, their use and occupancy of the vehicle had ended when they sustained their fatal injuries. As a result, the court concluded that the decedents were not occupying the vehicle at the time they were struck.

In Maryland Auto. Ins. Fund v. Baxter, the insured vehicle struck and killed a pedestrian. The pedestrian's estate argued that the deceased was "upon" the vehicle, but the court held that she was not "upon" it and, thus, wasn't occupying it. The court focused on whether or not the pedestrian was performing an act normally associated with the immediate use of the vehicle, as required by Maryland precedents. Because the pedestrian was not doing so, she was not "upon" it as per precedent.

In one decision of note, the court essentially created a new category of claimants—those in "virtual physical contact" with a vehicle at the time of a loss. The judgment represents a potential expansion of uninsured motorist coverage.

The case at hand, DeSaga v. West Bend Mut. Ins. Co., concerned the death of a motorist who was hit and killed while he was apart from his vehicle. The insured had pulled over to pick up pieces of iron that had fallen from his truck, partially blocking the roadway. He left the engine running, turned on the hazard lights, exited the truck and began moving the pieces of iron to the side of the road. As he was picking up debris in the roadway, an underinsured motorist struck and killed him. The court held that, although the driver did not have actual physical contact with the covered vehicle at the time of the accident, based on the facts before it, the driver had "virtual physical contact" with the vehicle. The driver's virtual physical contact was sufficient to find that he was occupying the vehicle and should receive uninsured motorist coverage.

Some courts have already imposed this concept to assess if a claimant is occupying a vehicle, and there could be further application of this case as a precedent.
Who or What Is Insured?
Courts repeatedly examine if uninsured motorist coverage should apply to various specific categories of persons and vehicles. Findings have been consistent in this area, and courts have strictly interpreted coverage under the policies' language or the statutory provisions.

In State Farm Mut. Auto. Ins. Co. v. Brown, the daughter of divorced parents with joint custody was injured in an auto accident. The daughter resided primarily with the mother and attended a local high school. Seeking coverage under the father's policy, the daughter claimed to be an "unmarried and un-emancipated child away at school." The court held that the phrase "away at school" had to be interpreted as a reasonable person in the policyholder's position would have understood the common, everyday meaning of the phrase. Therefore, a child whose primary residence was not the father's residence and who was attending a local high school was not "away at school" under any reasonable interpretation.

In another case, the adult son of the insured parents was injured in an accident, but the nonresident son was not an insured under the policy. The court in Bush v. State Farm Mut. Auto. Ins. Co. held that the parents could not recover uninsured motorist benefits when they had sustained no bodily injury themselves and the son was not an insured under the policy.

Finally, in Boniey v. Kuchinski, Boniey was injured while a passenger on an ATV owned by Kuchinski. After Kuchinski's insurer denied liability coverage, Boniey sought uninsured motorist coverage under her own policy. Her policy stated that an uninsured motor vehicle did not include a vehicle designed for use mainly off public roads, except while on public roads. The court examined the purpose of the uninsured motorist statute. The statute was designed to protect innocent victims from motorists who failed to comply with the state's financial responsibility requirements. It decided that precluding uninsured motorist coverage for an ATV that did not have to be registered and was not subject to financial responsibility requirements did not violate the statute's purpose.

The overall trend is to keep the reins short on uninsured motorist coverage. Other than the Illinois case, in which the court found a claimant was in "virtual physical contact" with a vehicle, the prevailing trend observed in more recent case law is toward strict interpretation of policy terms and statutory language.
Patrick K. Biggins, J.D. is counsel for the Liability Insurance Research Bureau (LIRB) and can be reached at pbiggins@lirb.org.


Patrick K. Biggins, J.D. is counsel for the Liability Insurance Research Bureau (LIRB).

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