Insurer justified in denying coverage in uninsured motorist case
This case is the latest in a string of ongoing lawsuits challenging uninsured and underinsured motorist provisions.
The U.S. Court of Appeals for the 10th Circuit found Progressive Northern Insurance Co. didn’t breach the duty of good faith in denying an uninsured motorist (UM) coverage. This was just the latest in a string of court cases dealing with provisions limiting or excluding uninsured and underinsured motorists as attorneys across the country continue challenging these auto insurance policy terms.
The U.S. District Court for the Western District of Oklahoma previously sided with Progressive in Lane v. Progressive Northern Insurance, but the plaintiff’s attorney, Rex Travis of Travis Law Office, appealed to the 10th Circuit. The appellate court first asked the Oklahoma Supreme Court to certify the question because of the “unsettled nature of the applicable state law.”
In a 5-3 decision in June, the state Supreme Court found that Progressive’s policy violated state regulation and was unenforceable because “of the sweeping nature of the UM exclusion,” or insurance companies seeking to avoid the UM coverage that the policyholder paid for.
The ruling left the federal appellate court to consider whether the insurance company acted in good faith in denying coverage in Lane.
“They ruled against [the plaintiffs] on the bad-faith issue, which is probably proper. I think they’re right,” Travis told Law.com, a PropertyCasualty360.com sister site.
These suits will continue
Still, Travis said he doesn’t think this will be the last time the issue reaches the court.
“This means that the court’s going to need to take another look at a bunch of exclusions that at least appear to me to violate the rule that you can’t just write exclusions that take away the coverage which the statute requires,” he said.
State precedent in Hartline v. Hartline and the indeterminate language of state law “gave Progressive ‘some justifiable’ reason to include the UM exclusion in its policy of insurance,” which precludes a finding that Progressive breached the duty of good faith and fair dealing, Tenth Circuit Judge Bobby R. Baldock wrote on behalf of a three-judge panel that included Judges Harris L. Hartz and Allison H. Eid.
The lawsuit stemmed from a single-vehicle crash that left two teenager passengers severely injured after a nonparty minor took a curve too fast and rolled the car, according to Travis. The vehicle was insured by Progressive with both liability and UM coverage in the amount of $100,000 per person, and a $300,000 limit per accident.
Both injured victims recovered the $100,000-per-limit liability limit, but their damages exceeded that amount. In light of their extensive injuries, the two girls sought additional uninsured motorist coverage from Progressive.
But the company denied their claims under the UM exclusion, which offset provisions in the limits of liability section.
It’s a topic Travis expects to see more of, especially considering he has another case pending before the appellate court involving a fatal crash in a company vehicle. Travis said that a company employee was driving the vehicle and apparently fell asleep at the wheel, sending the car off a mountain road.
Travis’ client was killed in the crash, but the insurance company declined to pay because the company only covers an officer or director of the company, he explained.
“I think the same thing will happen, pretty much,” Travis said about the upcoming case compared to the decision in the Lane case.
Recently, similar cases have come before other Western state courts. The New Mexico Supreme Court ruled in Crutcher v. Liberty Mut. Ins. that insurance companies must adequately disclose limitations on minimum UM or underinsured motorist coverage. If not, they aren’t permitted to charge a premium for it.
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