Sorting Out Uninsured Motorist Coverage
Written by Daniel G. Kagan
The Unisured Motorist Statute, UM stacking principles, multiple UM policies and split limits all help in confusing the issue. As a lawyer, you have much to investigate and compare, and anticipate the arguments the insurers will make in trying to minimize or avoid coverage entirely.
The Unisured Motorist statute’s objective
One of the most vexing areas for lawyers and insurance adjusters involves uninsured motorist coverage. Sorting out apparently conflicting coverage, while keeping sight of the UM statute’s objective – “to permit the injured party to recover the same amount he would have received had the tortfeasor been insured to the same extent as the injured party” – has proven troublesome for the Law Court.
UM “stacking” principles
Some UM “stacking” principles are easily understood. An injured party can collect from multiple separate UM policies for the same accident. For example, a person injured riding as a passenger in another person’s separately insured automobile can collect on the UM policy for that vehicle as well as the UM policy covering their own vehicle. Policy language providing UM coverage only if the insured is not covered by any other UM policy has been ruled void by the Law Court. Westcott v. Allstate Insurance, 397 A.2d 156 (Me. 1979).
On the other hand, policy language prohibiting stacking UM coverage from two vehicles covered under the same policy has been upheld. Dufour v. Metropolitan Property & Liability, 438 A.2d 1290 (Me. 1982).
If you have a child injured by an uninsured motorist, and their parents have separately insured vehicles, the child may be covered by stacked UM limits from each policy. But the insurer can draft language limiting the UM coverage – in Moody v. Horace Mann, 634 A.2d 1309 (Me. 1993), the Law Court upheld such language where the parents had each purchased separate coverage for their vehicles, but from the same insurer.
Clarifying UM “stacking” principles
A low point in the development of UM law in Maine occurred with the Law Court’s decision in Mullen v. Liberty Mutual Insurance, 589 A.2d 1275 (Me. 1991). In Mullen, there were multiple victims of an underinsured motorist. The victims split an insufficient policy, with each receiving a smaller sum than was justified by the injuries. One of the victims, Mullen, sued her own insurer to recover her UM policy. She had a $50,000 UM policy, and received only $5,000 in the settlement agreement from the tortfeasor’s $100,000 policy. She therefore sued to recover $45,000, the difference between her UM limits and her actual recovery from the tortfeasor’s policy. The Law Court, however, ruled she had to compare her UM limits with the tortfeasor’s policy limits rather than her actual recovery from those limits.
The Mullen decision denies insureds the benefit of the bargain they reach with their insurers. In purchasing UM coverage, the insured buys certainty that a certain amount of coverage will be available to pay for her tortiously-caused injuries, regardless of other claimants. Mullen interjects arbitrary limitations on that agreement, with bizarre results. For example, as Justice Collins pointed out in the dissent, Mullen would have been better off if the tortfeasor had been uninsured rather than underinsured!
The effect of multiple UM policies
The Law Court again took up the issue of comparing multiple UM policies in McGillivray v. Royal Insurance, 675 A.2d 524 (Me. 1996). As in Mullen, the decision went against the UM insured. A tortfeasor with $300,000 liability limits injured the plaintiffs, the occupants of two other vehicles. Each of those vehicles carried $300,000 UM limits. Plaintiffs argued that the two UM policies should be combined and then compared with the available liability limits, resulting in $300,000 available UM coverage. The Law Court disagreed, citing Mullen. The Court emphasized that the two plaintiff vehicles had no connection with one another, there were no relatives in common, no residents or occupants of the same household, and no other factors that would have triggered “stacking” of the available UM policies. The comparison is “policy to policy,” not total UM coverage available.
Mullen’s “policy to policy” comparison in determining coverage also applies where there are multiple tortfeasors. In Tibbetts v. Maine Bonding & Casualty, 618 A.2d 731 (Me. 1992), two tortfeasors combined to cause a significant injuries . One driver paid his $300,000 limits. The other driver had the minimum 20/40 policy. Plaintiffs had $300,000 in UM coverage. The victims’ UM carrier argued that the two tortfeasor’s policy limits are combined, then compared with the UM limits to determine available UM coverage. Since total liability coverage was $340,000, they argued that the UM policy of $300,000 did not apply. The Law Court disagreed, comparing UM limits with each tortfeasor’s liability policy separately. This meant that the UM carrier was exposed for an additional $260,000 in coverage.
The effect of split limits
What if the UM policy carries split limits? This was addressed most recently in Botting v. Allstate Insurance Co., 1998 ME 58. Plaintiffs were three family members all covered by an Allstate policy with 100/300 UM limits. They were injured by a motorist with a $100,000 single limit policy. Plaintiffs took the tendered $100,000 policy, splitting it 40/35/20, with the last $5000 paid for property damage. With $95,000 paid for bodily injury from the tortfeasor’s policy, plaintiffs sought $205,000 in coverage from the $300,000 Allstate UM policy. Allstate denied coverage, citing Mullen and McGillivray to support the position that the tortfeasor’s $100,000 liability limits should be compared with the $100,000 “per person” limit in the Allstate UM policy. The tortfeasor was therefore not underinsured, according to Allstate.
Declining to follow Mullen and McGillivray, the Law Court instead looked to the language of the Allstate policy and the UM statute’s legislative history.
According to the Allstate policy, the per-accident $300,000 limit is the “total limit for all damages arising out of bodily injury to two or more persons in any one motor vehicle accident.” Three Allstate-insured plaintiffs were injured in the accident. Therefore the limits to be compared were the $300,000 UM policy limit per accident with the $100,000 tortfeasor liability limit. The Law Court noted that this result was consistent with legislative history, in that it would “permit the insured injured person the same recovery which would have been available to him had the tortfeasor been insured to the same extent as the injured party.” Had the plaintiffs been injured by an uninsured motorist, each would have been entitled to recover up to $100,000 from Allstate, or a total of $300,000 in available coverage.
The short answer is that there is no short answer when it comes to determining UM coverage. The best you can do for your client is to find out what policies are available, read them, compare them with one another, and anticipate the arguments the insurers will make in trying to minimize or avoid coverage entirely.