Topics covered:

Introduction

The meaning of uninsured and underinsured

Position of various states on exhaustion of recovery

Position of states on auto contact requirement

Position of states on consent to settle

UM stacking

Offset

PIP protection

Conclusion

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Introduction

 In keeping with my geographic location, that is, very close to New Orleans, DRI has asked me to cover a gumbo (or mixture, for non-Cajuns) of several issues relevant to the heart of automobile uninsured motorists (UM) coverage. Briefly stated, they are: the UM Formula and what does it mean to be uninsured and underinsured; UM Stacking (stacking is a legal concept wherein an injured motorist may stack coverages for the car in which that person is driving, along with the UM coverage that person maintains on her own vehicles); offset; and personal injury protection (PIP) coverage.

 The Meaning of Uninsured and Underinsured

 Mississippi, like many states, defines an uninsured motorist as someone who (a) has no auto liability insurance at all, (b) or someone who had auto liability insurance, but the insurer went insolvent or is denying coverage, or (c) that motorist is unknown, with a physical contact requirement, or (d) the uninsured motorist is immune from liability under applicable torts claims acts; Miss. Code Ann. §83-11-103 (2014). Ohio uses the same definitions as Mississippi, adding diplomatic immunity as another reason a vehicle may be uninsured; ORC Ann. 3937.18(B) (2014). The California Insurance Code uses the same definitions in determining what constitutes an uninsured motorist; Calif. Ins. Code. §11580.2 (2014).

 New York defines its own UIM formula as a strict comparison between the limits of automobile liability insurance which the other party has, versus the UM coverage limits available to the potential insured; see De Stasi v. Nationwide Mut. Ins. Co., 522 N.Y.S. 2d 340, 343 (N.Y. App. Div. 1987). However, as the New York Appellate Division noted, with UM stacking, the limits available to an insured once an insured meets the UM formula may be higher than the amounts available when determining whether a situation involves uninsured motorists.

 Texas has split its definitions of uninsured and underinsured motorist coverage; Tex. Ins. Code §1952.102 (2014) (defining uninsured as a motorist whose auto liability insurer has gone insolvent, and a motorist with no liability insurance at all, should the Commissioner of Insurance agree); Tex. Ins. Code. §1952.103 (2014) (defining underinsured as a motorist whose auto liability policy, either before or after payments of claims, is less than the UM benefits available to the UM insured).

 The next question is what, if any, UM/UIM policies are stacked, meaning having the insured's own UIM coverage added to other coverages for the purpose of determining whether someone is entitled to UIM coverage. In California, the courts review strictly the policies available to the injured UIM insured from the at-fault driver's liability policy, and the underinsurance limits available to the UIM insured. If the UIM limits are more, then there is UIM coverage; see Explorer Ins. Co. v. Gonzalez, 79 Cal. Rptr. 3d 893, 898 (Calif. Ct. App. 2008). Connecticut holds to the same principle; see Doyle v. Metropolitan Prop. & Cas. Ins. Co., 743 A.2d 156, 160 (Conn. 1999). West Virginia does likewise, noting that it is the insured's own UIM policies which are to be compared with the auto liability policy limits, and not others, in determining whether UIM exists; see Alexander v. State Auto Mut. Ins. Co., 415 S.E.2d 618, 621 (W.V. 1992). Illinois holds likewise, noting that under its statutory definitions, UIM is defined through a comparison of the auto liability policies or bonds available for recovery against an at-fault driver with the UIM insurance policy limits provided the insured under the UIM policy; see Martin v. Illinois Farmers' Ins., 742 N.E.2d 848, 852 (Ill. App. Ct. 2000).

 In Mississippi, an UIM insured is entitled to stack her own personal UIM coverage with the UIM coverage of the vehicle in which she is riding to determine her UIM limits; see Wickline v. United States Fidel. & Guar. Co., 530 So. 2d 708, 713 (Miss. 1988).

 Thus, it appears that there is a consensus here among states that UIM is determined by comparing the auto liability limits held by the tortfeasor with the UIM policy limits for the policy owned by the UIM insured, with a few exceptions. There is a separate question regarding whether reduction in those liability benefits which arise because of payments or settlements should be considered. Some states do consider them in lowering the auto liability policy amount within the UIM equation.

 The Position of Various States on Exhaustion of Recovery

 Texas holds in its UIM definitional statute that if the automobile insurance liability policy proceeds are reduced by recovery through payments of claims, the reduced value, and not the face value, of the policy is considered in comparing the auto liability limits to the uninsured motorist policies' face values; Tex. Ins. Code. §1952.103 (2014). On the other hand, other states strictly hold to the comparison of the face value of the auto liability policy versus the face values of the uninsured motorists policies.

 New York has held likewise, noting that it has two insurance statutes, one for uninsured motorist and the other for underinsured motorist coverage, and in circumstances where the automobile liability insurance proceeds are exhausted, the purpose of the underinsured statute is to constitute the liable driver as underinsured, so that the UM/UIM insured could recover; see Passaro v. Metropolitan Prop. & Liab. Ins. Co., 487 N.Y.S.2d 1009, 1011-12 (N.Y. Supr. Ct. 1985). In New Jersey, it is an absolute requirement that all automobile liability coverages be exhausted financially before a UM claim arises; see Malmendier v. Ins. Corp. of Hannover, No. A-5291-06T3, 2008 N.J. Super. Unpub. LEXIS 905 at *18-*19 (N.J. Super. Ct. 2008). In West Virginia, the partial or total exhaustion of the auto liability policy and the claimant's damages are relevant in determining whether the accident is covered under UIM benefits, in that the UIM insured is entitled to compare her damages with the amount still available under the at-fault driver's auto liability policy. If her damages exceed the auto liability proceeds that are available, that difference is the amount recoverable as UIM benefits up to the policy limits of the UIM policy; see Pristavec v. Westfield Ins. Co., 400 S.E.2d 575, 478 (W.V. 1990).

 Massachusetts has held simply that if the actual damages of the UM insured do not exceed the combined auto liability coverages available, the insured may not recover UIM proceeds; see Gleed v. Aetna Cas. & Sur. Co., 637 N.E.2d 224, 225-27 (Mass. 1994). This approach eschews a comparison of insurance coverages, or even whether the coverages are exhausted, and focuses instead on whether the damages exceed the auto liability coverages.

 In contrast, in several states, it is immaterial whether the automobile liability limits are exhausted by settlement or by judgment in comparing the auto liability proceeds to the potential UM recovery. Virginia courts hold, in construing their uninsured motorist statute, that it is the applicable policy limits, and not the amount actually available in those limits, that is the amount one uses to determine whether a situation is UIM, and how much the UIM insured can recover see National Union v. Johnson, 709 F. Supp. 676, 678 (E.D. Va. 1989). Mississippi, which has only one UM/UIM statute, looks to compare the policy limits as they are (UM v. auto liability), without reference to whether the auto liability limits are exhausted by prior payment; see Washington v. Georgia American Ins. Co., 540 So. 2d 22, 25-26 (Miss. 1989). Michigan courts appear to follow this principle, comparing policy limits to policy limits without consideration of policy exhaustion to determine whether UIM benefits would apply, even if that principle led to the result that a UIM insured is in a worse position than if the at-fault driver had no coverage at all; see Lotoszinski v. State Farm Mut. Auto. Ins. Co., 331 N.W.2d 467, 470-71 (Mich. 1982).

 Position of States on Contact Requirement

 This issue deals with some states' requirement that there be some physical contact between the vehicles in order to trigger UM coverage. This rule applies when the at-fault driver is unknown, which occurs in hit and run cases. The intent of this rule is to preclude phantom driver recovery, which would, if not regulated, allow for recovery for UM in one-car accidents.

 Ohio law permits recovery in those circumstances, but there must be independent corroborative evidence to support a finding that a phantom driver caused the accident to the UM insured; ORC Ann. 3937.18(B) (2014). In Florida, phantom drivers are considered uninsured motorists as a matter of law, apparently leaving to a jury the issue of whether there is enough proof to determine the hit and run driver caused the accident; see Protective Ins. Co. v. Palma, 507 So. 2d 649, 649 n.1 (Fla. Dist. Ct. App. 1987). Mississippi courts, while holding such a finding is harsh, nevertheless uphold a physical contact requirement with a hit and run driver, even when the insured is injured avoiding the accident; see Massachusetts Bay Ins. Co. v. Joyner, 763 So. 2d 877, 881 (Miss. 2000).

 California will permit an UM action with a phantom driver, but imposes requirements such as the reporting of the accident to a law enforcement agency within 24 hours, with additional reporting to the insurer within 30 days; Calif. Ins. Code. §11580.2 (2014). In contrast, Pennsylvania judicially struck down a physical contact requirement in its policy with an UM insured as repugnant to the intent of the UM Act; see Webb v. United Services Auto. Ass'n, 323 A.2d 737, 744 (Penn. Super. Ct. 1973) (recognizing most states uphold physical contact requirements on varying grounds).

 Position of States on Consent to Settle

 Several states have struggled with the issue of how to respond when a UIM insured settles with the at-fault driver without the consent of the carrier. Related to this point is whether the UIM carrier should be able to offset in UIM recovery from the face value of the auto liability policy, or the amount in liability coverage actually received by the UIM insured.

 Maryland courts conclusively hold that an UIM insured must comply with the statutory notice under Section 19-511 of the Insurance Article of the Maryland Code to the UIM carrier before it settles with the at- fault driver's carrier; see Morse v. Erie Ins. Exch., 90 A.3d 512, 518 (Md. Ct. Spec. App. 2014). Failure of the insured to do so will permit an UIM carrier to disclaim and the UIM carrier is not required to show prejudice in order to disclaim coverage. Kentucky likewise requires an UIM insured to notify her carrier prior to settlement with the tortfeasor, to give that carrier the opportunity to protect its subrogation interests; see Coots v. All- state Ins. Co., 853 S.W.2d 895, 900 (Ky. 1993).

 In contrast, other states hold that a lack of notification does not bar recovery against the UIM insurer.

 North Carolina follows this principle, finding that to do otherwise would harm the remedial philosophy behind UIM insurance, and holding consent to settle clauses are disfavored in North Carolina law; see Silvers v. Horace Mann Ins. Co., 367 S.E.2d 371, 377-78 (N.C. Ct. App. 1988). Hawaii took a middle-of-the line approach, upholding the consent-to-settle provision, but holding that it was satisfied so long as the UIM carrier knew of the proposed settlement before the settlement was effectuated, and was thus not prejudiced; see Government Empl. Ins. Co. v. Dizol, 176 F. Supp. 2d 1005, 1023 (D. Hawaii 2000).

 Florida courts take a third position, stating that if an insured violates the consent to settlement clause by settling with the at-fault driver, prejudice to the insurer is presumed which would destroy UIM recovery from that carrier; see Yablon v. North River Ins. Co., 654 So. 2d 1033, 1035 (Fla. Ct. App. 1995). However, Florida courts permit the UIM insured to recover anyway, if that insured can rebut the presumption of prejudice, showing that carrier was not prejudiced after all.

 Thus, needless to say, there are a number of state law responses to the consent-to-settle requirements found in UIM policies.

 The next question is whether the UIM carrier is entitled to offset the entire face value of the at-fault driver's policy, or only the amount received by the insured.

 New Jersey holds that where an UIM insured settles with an at-fault driver for less than the policy limits of the liability policy, the UIM carrier is entitled to an offset of the entire face value of the policy; see Ohio Cas. Ins. Co. v. Bornstein, 814 A.2d 1170, 1172 (N.J. Super Ct. 2003). In contrast, in Mississippi, a UIM carrier may only offset the auto liability insurance payments actually received by the UIM insured; see Fidelity & Guar. Underwriters v. Earnest, 699 So. 2d 585, 592 (Miss. 1997).

 UM Stacking

 UM Stacking is a commonly-used term to determine what UM policies are available for recovery after the situation is determined to be one in which UM/UIM is applicable. The concept of uninsured motorist stacking is defined in Kansas, for example, as follows: Stacking, in connection with uninsured motorist coverage, refers to the right to recover on two or more policies in an amount not to exceed the total of the limits of liability of all policies up to the full amount of the damages sustained; see Walker v. State Farm Mut. Auto. Ins. Co., 973 F.2d 634, 637 n.8 (4th Cir. 1992) (citing Kansas statutory definitions). In some states, such as Kansas, UM stacking is there because the legislature enacted it. In other states, such as Mississippi, the concept of UM stacking is the exclusive creation of the judiciary, written by the courts into the contract as a "judicial gloss"; see United States Fid. & Guar. Co. v. Ferguson, 698 So. 2d 77, 79 (Miss. 1997).

 The next question that arises is determining what UM coverages may stack in order to determine the aggregate UM coverage available to an insured.

 In New York, the only UM coverages available for stacking to an insured would arise from the policies that insured paid the premium for herself, where she is expressly covered under that policy; see De Stasi v. Nationwide Mut. Ins. Co., 522 N.Y.S. 2d 340, 343 (N.Y. App. Div. 1987).

 In Mississippi, UM stacking is more complicated. Mississippi separates UM insureds into Class I and Class II insureds for various policies. Class I insureds are those who purchase the UM policy from which they are seeking coverage. Class II insureds are those who only qualify for UM coverage because they are riding in a coverage vehicle, but did not pay for the coverage. In Mississippi, a UM insured may stack all of the vehicles' coverages for which they paid, along with the vehicle's coverage for which they are a passenger; see Deaton v. Mississippi Farm Bur. Cas. Ins. Co., 994 So. 2d 164, 167 (Miss. 2008). An insured could have both coverages, a Class I coverage for the UM policies she owns, and Class II coverage for the covered vehicle in which she is riding. A Class II coverage only allows stacking with the vehicle in which the insured is a rider, but not all of the vehicles under that coverage. Pennsylvania uses a similar distinction in classes between the insured and her family as insureds, and an insured who only qualifies as such by being a passenger in a vehicle in which someone else procured the coverage; see O'Connor-Kohler v. State Farm Ins. Co., 113 Fed. Appx. 472, 473-74 (3rd Cir. 2004). Alabama follows these distinctions; see Lambert v. Liberty Mut. Ins. Co., 331 So. 2d 260, 264-65 (Ala. 1976). Without using the terminology of classes, Oklahoma held that the status of a mere passenger did not enable that person to stack UM coverage on all of the vehicles in the fleet insurance policy; see Widmann v. Acceptance Ins. Co., 63 P.2d 23, 25-26 (Okla. Ct. Civ. App. 2002).

 The third question is whether states permit insurers to eliminate stacking of UM policies through anti- stacking clauses in a policy. Many states, such as Nevada, do permit anti-stacking clauses to bar stacking, if the clause is clear and unambiguous; see Nationwide Mut. Ins. Co. v. Coatney, 42 P.3d 265, 267 (Nev. 2002), citing Nev. Rev. Stat. §687B.145(1). Missouri follows suit in allowing the prohibition of stacking through clear and unambiguous language; see Daughtree v. State Farm Mut. Auto. Ins., 743 F.3d 1128, 1131-32 (8th Cir. 2014). Montana follows this principle, as courts also examine the premiums which reflect the limiting of the coverage to a one-car recovery, as opposed to stacking recovery, comparing it to their anti-stacking statute; see Jarecke v. American Nat'l Prop.& Cas. Co., No. CV 13-146-BLG-CSO, 2014 U.S. Dist. LEXIS 80268 at *16-17 (D. Mont. 2014).

 In Florida, the option is provided insureds to select an UM stacking option, presumably for a higher premium; see Brannan v. Geico Indemn. Co., 569 Fed. Appx. 724, 726 (Fla. 2014), citing Fla. Stat. §627.727(9)(e).

 In Kentucky, courts deny UM stacking if there is a single premium paid for all of the vehicles under the policy, if the policy language explains this is only one policy, and the coverage was created for all vehicles under the policy at the same time; see Atlantic Mut. Ins. Co. v. Yates, 497 Fed. Appx. 451, 460-61 (6th Cir. 2012).

 Offset

 This paper has previously discussed the various means in which a UIM carrier can offset a UIM.

 insured's recovery on those benefits, based the automobile liability recovery made by UIM insureds against the at-fault driver. This section analyzes the various states' approaches to permitting offset for other sources of recovery, such as workers compensation benefits.

 In Massachusetts, courts permit the reduction of UIM recovery on a policy by the amount of workers compensation benefits paid by the insured up to the point in time the insured receives a verdict on UIM recovery; see Commonwealth Mut. Ins. Co. v. Umanzio, No. 02-00412, 2002 Mass. Super. LEXIS 261 at *9 (Mass. Super. Ct. 2002). Maryland courts also permit offset of workers compensation benefits paid by an insured, in this case, because the Maryland Code required such an offset; see Blackburn v. Erie Ins. Group, 971 A.2d 368, 370 (Md. Ct. Spec. App. 2009). Oregon courts hold likewise, in that a similar offset provision exists in their own insurance code; see Pitchford v. State Farm Mut. Auto. Ins. Co., 934 P.2d 616, 620 (Ore. Ct. App. 1997).

 Pennsylvania courts have, reluctantly, taken an expansive approach, allowing offset on a wide variety of disability payments made to the UIM insured, so long as those providers do not have a subrogation right, because the intent of the legislature clearly demonstrates such a wide scope of offset; see Tannenbaum v. Nationwide Ins. Co., 992 A. 2d 859, 869 (Pa. 2010). Tennessee also requires offset of workers compensation benefits and a wide variety of disability benefits. However, the courts note that the UIM insured can pay back the workers compensation lien and make a full claim for UIM benefits; see Bayless v. Pieper, No. M2008-01073-COA-R3-CV, 2009 Tenn. App. LEXIS 573 at *6-*11 (Tenn. Ct. App. 2009).

 Other courts hold that UIM carriers may offset recovery from its own medical payments coverages, because in that case, the UIM insured is obtaining a full recovery; see Fickbohm v. St. Paul Ins. Co., 63 P.3d 517, 523 (N.M. Ct. App. 2002). However, Texas prohibits reduction in recovery for medical payments benefits; see Mid- Century Ins. Co. v. Kidd, 997 S.W. 2d 265, 269-70 (Tex. 1999).

 In contrast, in Mississippi, the Mississippi Supreme Court specifically rejected the attempt by a UIM carrier to offset UIM recovery by workers compensation benefits, stating that to do such would reduce the benefits which that insured legally purchased through her premiums; see Nationwide Mut. Ins. Co. v. Garriga, 636 So. 2d 658, 664-65 (Miss. 1994).

 PIP Protection

 Personal injury protection, or PIP coverage, as defined by Florida statute, is a mandatory coverage requirement which affords a set level of medical, disability and death benefits when an insured is injured or killed, regardless of fault; Fla. Stat. §627.736 (a -c) (2014). PIP coverage is mandatory in 18 states. For those states adjacent to PIP states, or in states which feature both PIP and UM/UIM coverages, the interaction between the two coverages raise questions of offset which result in varying holdings.

 There appears to be a consensus that dollar for dollar offset of UIM proceeds from the insured's receipt of PIP benefits is impermissible. However, offset is permitted where the UIM benefits duplicate specific payments by PIP (for such things as medical benefits).

 Texas has held that a person cannot recover both PIP proceeds, and UIM proceeds, where such recovery would result in making the insured more than whole; see Mid-Century Ins. Co. v. Kidd, 997 S.W. 2d 265, 277 (Tex. 1999). In contrast, Colorado holds that UM proceeds cannot be offset by PIP recovery for general damages; see Blue Cross of Western New York v. Bukulmez, 736 P.2d 834, 841 (Colo. 1987). The Colorado Supreme Court held that an insured should not be penalized by an offset if she pays separate premiums for each coverage; instead, she should be entitled to collect under both policies, having paid both premiums. However, Colorado does permit offset of UM by PIP payments made to medical providers, if the UM payment is also going to pay for medical provider payments, because the law prohibits double recovery.

 New York has an identical offset provision, permitting offset against UM coverage to the extent of economic losses, such as medical bills, but precluding offset where the damages to be covered are pain and suffering damages, which are not covered by PIP policies; see Aetna Cas. & Sur. Co. v. Jackowe, 468 N.Y.S.2d 153, 157 (N.Y. App. Div. 1983). Kansas holds that since separate premiums are being paid by the insured for separate coverages between UM and PIP, offset for non-duplicative payments made under each policy is not permitted; see Rich v. Farm Bur. Mut. Ins. Co., 824 P.2d 955, 959 (Kan. 1999). In Oregon, courts also prohibit a general offset of UIM payments by PIP coverage, but do permit offset where the payments would be duplicative. Oregon courts reach this conclusion by comparing the insured's total damages to the UIM and PIP benefits available. If the damages exceed the combined coverage limits, offset is not permitted; see Farmers Ins. Co. v. Conner, 182 P.3d 878, 888-89 (Ore. Ct. App. 2008).

 Conclusion

 With the exception of what it is to be uninsured, and what is permitted in offsetting UM proceeds with PIP benefits, the major concept to take away from this discussion is that there is no consistent principle on any of these issues through all of the states as a whole. Because of articulated political principles, such as protection of the insureds, conflicting with other such principles, such as keeping premiums low, states have adopted a wide variety of approaches to handling the issues in UM and UIM law discussed in this paper. The best approach in reaching conclusions on these matters is to do direct research on that state to determine the answer. This approach can be met by either researching the issue through electronic or other sources, or contacting counsel who are cognizant and understanding of how that state has resolved the issue presented here.