Uninsured/Underinsured Motorist Coverage In Maine

Transcription

1 Uninsured/Underinsured Motorist Coverage In Maine Louise K. Thomas Pierce Atwood LLP One Monument Square Portland, ME (207) Copyright 2009 Pierce Atwood LLP. All rights reserved. This work may not be modified, publicly displayed or reproduced in any form or by any means without the written permission of Pierce Atwood LLP. expectreachdepthresults

2 Table of Contents I. Analytical Framework For Uninsured Motorist Claims 1 One Page Cheat Sheet For Determining The Uninsured Motorist 2 Coverage Available To Your Client II. Basic Elements Of Uninsured Motorist Claims -The Insuring Clause 3 A. Is The Injured Person An Insured? 4 1. The named insured or you 4 2. Family member or resident relative of named insured 5 3. Any person occupying the covered auto 7 4. Any person for damages that person is entitled to recover 8 because of bodily injury to which this coverage applies 5. Statutory requirement that UM coverage track liability 9 coverage 6. Finding all the policies under which the claimant is an 10 insured is the key to obtaining the most UM coverage B. Were The Injuries Caused By An Uninsured Motor Vehicle? Is the Motor Vehicle uninsured? Exhaustion Does the land motor vehicle fall within exceptions? 13 C. Is The Insured Legally Entitled To Recover Damages From 14 The Uninsured Motorist? III. Exclusions And Set-Offs 16 A. Other Owned Vehicle Exclusion 16 B. Reduction For The Amounts Paid By The Tortfeasor 17 C. No-Consent To Settlement Exclusion 18 D. Workers Compensation Benefits 20

3 1. Workers compensation exclusion Set off in limits of liability provision Immunity 21 IV. Underinsured Motorist Coverage 22 A. Determining The Amount Of Underinsured Motorist 22 Coverage General Rule B. Limits to Limits v. Actual Payment Comparison Mullen v. Liberty UM statute amended for multiple claimant situations 23 C. Multiple Tortfeasors, Some Insured And Some Uninsured 24 Or Underinsured V. Miscellaneous 26 A. Jurisdiction 26 B. Choice Of Law 26 C. Bifurcation 26 D. Statute Of Limitations 26 E. Notice Of Accident 27 F. Prejudgment And Postjudgment Interest 27 G. Punitive Damages 27 H. Arbitration 27 I. Maine Insurance Guaranty Association (MIGA) 28 VI. Recent Trends 29 Molleur v. Dairyland, 942 A.2d 1197 (Me. 2008) 29 Pease v. State Farm, 931 A.2d 1072, 1074 (Me. 2007) 30 Hall v. Patriot Mut. Ins. Co., 942 A.2d 663 (Me. 2008) 31 Ryder v. USAA Gen. Indemnity, 938 A.2d 4 (Me. 2007) 33 Jipson v. Liberty Mutual, 942 A.2d 1213 (Me. 2008) 34 VII. Conclusion 36

4 PAGE 1 I. ANALYTICAL FRAMEWORK FOR UNINSURED MOTORIST CLAIMS. Uninsured motorist (UM) coverage is mandated by statue, 24-A M.R.S.A. 2902, and governed by the applicable policy language and case law. All three sources of law the statute, the policy and the case law need to be consulted to determine the correct analysis of whether and how much coverage your client has available. For example, the particular policy language may provide less UM coverage than the statute mandates, and thus, your client will have the statutorily required language imputed into the policy. Alternatively, a carrier may provide more coverage in the terms of its particular policy than the UM statute mandates, giving your client the benefit of the broader language. Or, your client s particular policy language may be different from the language the Law Court interpreted in a similar, but not identical policy, and thus, your client may have greater coverage than what may be your general understanding of UM law. The interaction among these three sources of law and the variations among UM policies is what often perplexes us when trying to determine whether a client has UM coverage and in what amount. However, it is the creative use of the policy language, statutory language and case law which will provide the ability to advocate for coverage that results in more dollars for your client s total damages than the insurance company is willing to offer. The steps proposed here break down the UM requirements into smaller parts, thereby making the analysis easier to manage and also assuring that no step is missed. In many ways, the analysis is similar to building a Lego model with your child: 1) you put all the pieces in front of you; 2) you follow the instructions in order, focusing on each small task; and 3) only at the end of that process can you see the model built in a way you can use. Perhaps much of the confusion lawyers experience in dealing with insurance is that they look at the picture on the box to build their case instead of following the directions contained in the insurance policy language. Although it may seem like looking at the picture is the quickest way to reach completion, that approach generally results in many mistakes and, ultimately, so much frustration that you throw the pieces back in the box to build another day. We suggest a different analysis which hopefully will put more money in the client s pocket.

5 PAGE 2 ONE PAGE CHEAT SHEET FOR DETERMINING THE UNINSURED MOTORIST COVERAGE AVAILABLE TO YOUR CLIENT 1. Identify All Possible Auto Policies That May Apply To The Accident and Determine Whether The Client is Within The Insuring Clause of Any UM Coverage Part a. Determine whether the injured person is an insured b. Determine whether the accident was caused by the owner or operator of an uninsured motor vehicle; and, c. Determine whether the client is legally entitled to recover damages from the uninsured motorist. 2. Identify Any Exclusions Which Limit Or Prevent Recovery Under Each Policy The most common exclusions are: a. The Other Owned Vehicle exclusion which prevents stacking of policies issued to the insured and his family members; b Tortfeasor s payment or limit of liability; c. The No-Consent to Settlement exclusion which may be triggered if the insured released his claims against a tortfeasor without the UM insurer s consent; and d. Workers compensation benefits exclusions and set-offs. 3. Calculate Underinsured Motorist Coverage a. Add all UM coverages available to insured b. Subtract all liability coverages available to tortfeasor c. Remainder: The amount of available underinsured motorist coverage 4. Consider Special Rules With Multiple Tortfeasors And Multiple Claimants 5. Review Miscellaneous Provisions Which Could Affect Coverage

6 PAGE 3 II. BASIC ELEMENTS OF UNINSURED MOTORIST CLAIMS THE INSURING CLAUSE As with all insurance policy analyses, the first step is to see if the claim falls within the insuring clause of the policy. If the claim is not within the insuring agreement, the exclusions and other policy conditions are irrelevant. There can be no UM claim. The standard insuring clause of an uninsured motorist policy 1 tracks the requirements of the UM statute. 2 Three basic elements must be proved by the insured to bring the claim within the general scope of coverage: 1. The injured person must be an insured under the uninsured motorist portion of the policy; 2. The accident must have been caused by the owner or operator of an uninsured motor vehicle; and 3. The insured must have been legally entitled to recover damages from the uninsured motorist. The first and most important step in any effort to find UM coverage for your client is to identify all the UM policies which might be in play. Although you may ultimately conclude that one or more of the UM policies you have identified doesn t apply to the injury, the key to maximizing recovery is to analyze each policy to see if there is any argument that the second or third or fourth (if you are really lucky) policy may apply to the injury. 1 The standard insuring clause provides: We will pay compensatory damages which an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury : 1. sustained by an insured; and 2. caused by an accident. The owner s or operator s liability for these damages must arise out of the ownership, maintenance or use of the uninsured motor vehicle. ISO Policy PP , Part C, Uninsured Motorists Coverage. Please note that the ISO Personal Auto Policy PP to which we will refer generally includes a state specific endorsement attempting to incorporate state specific requirements into the general ISO form. Thus, for insurers using the ISO policy forms in Maine, there is usually an additional endorsement to the policy called: Amendment of Policy provisions Maine ISO PP This endorsement includes Maine specific changes to all the various coverages provided by the auto policy, including without limitation, Part C Uninsured Motorist Coverage. Both the general and state specific forms must be reviewed to determine the complete UM policy language. 2 [Any automobile liability policy must provide coverage] for the protection of persons insured under the policy who are legally entitled to recover damages from owners or operators of uninsured, underinsured or hit-and-run motor vehicles, for bodily injury, sickness or disease, including death, sustained by an insured person resulting from the ownership, maintenance or use of such uninsured, underinsured or hit-and-run motor vehicle. 24-A M.R.S.A. 2902(1).

7 PAGE 4 Below is an in-depth discussion of how your client might be an insured under various automobile policies. While admittedly a tedious process, if you don t look at all possible auto policies, you will not have all the potential pieces of the puzzle in front of you and you could leave money on the table. A. Is The Injured Person An Insured? Most policies have a Who is Insured section which lists various categories that may make an injured person an insured. 3 For each policy that may apply to your client, the first step is to try to put your client into one of the categories of insured. Each of those categories, along with Maine case law interpreting the category, is discussed below. However, if the injured person is not an insured in your first read of the potential policy, don t give up. Consider whether case law has interpreted that particular definition of insured ; the court may have found that the insured policy language provision is ambiguous and ambiguity generally results in broader coverage. See, e.g., Apgar v. Commercial Union Ins. Co., 683 A.2d 497 (Me. 1996)(even though named insured was corporation, you could include individual owner of the corporation). Consider also whether the UM policy s definitions of insured are as broad as the mandated coverage in the UM statute. 24-A M.R.S.A requires that the UM coverage in the policy provide the same coverage as the auto liability coverage; if your client is an insured under the liability portion of the auto policy, she must be an insured under the UM coverage. See LaMontagne v. North American Specialty, 353 F. Supp 129 (D. Me. 2005) (because the liability coverage of the policy covered the insured, the court may read into the UM policy a category of insured that provides the coverage mandated by statute). 1. The named insured or you Being the named insured is the most obvious way to qualify as an insured. The general policy definitions define you as the named insured shown in the declarations or the spouse, if a resident of the same household. Thus, if your client s name appears in the policy declarations or she is the spouse of the person named in the declarations, she is the named insured or you. 3 B. Insured as used in this Part means: 1. You or any family member 2. Any other person occupying your covered auto 3. Any person for damages that person is entitled to recover because of bodily injury to which this coverage applies sustained by a person described in 1. or 2. above. ISO Policy PP , Part C, Uninsured Motorists Coverage.

8 PAGE 5 The named insured is covered if his injuries are negligently caused by an uninsured motorist. There is no requirement that the vehicle insured under the policy must be involved in the accident. Thus, a named insured injured by a hit and run driver while a pedestrian is entitled to UM coverage under his own policy. While this category is straightforward when the named insured is an individual, the question becomes more complex when the named insured is a corporation and the claimant is an owner or employee of that corporation. Some have argued that employees are included as insureds under the UM coverage when the named insured in the declarations is a corporation. Federal District Judge Hornby rejected this argument, finding that if the named insured is a corporation, the employees are not considered you. Seaco v. Davis-Irish, 180 F. Supp 235 (Me. 2001), aff d, 300 F.3d 84 (1st Cir. 2002); see also Smith v. Reliance, 2000 WL (D. Me. Sept. 18, 2000) (member of church group is not insured when policy names only the group as the named insured). In other circumstances, courts have found the policy ambiguous as to who is covered when a corporation is the named insured. In Apgar v. Commercial Union Ins. Co., 683 A.2d 497 (Me. 1996), the declarations named the claimant s small corporation as the insured. However, the declaration pages of the policy also described the form of the named insured's business as "INDIVIDUAL" and the named insured's business as "PERSONAL USE." Reversing summary judgment, the Court found it was ambiguous whether the owner was an insured within meaning of the term you. 2. Family member or resident relative of named insured The most common way to find additional policies which insure persons who are not named insureds is through the family member or resident relative category. By virtue of being a relative residing in the named insured s household, the injured person becomes an insured under the named insured s UM coverage. Like a named insured, there is no requirement that the injured family member be injured in an accident involving the insured vehicle. See Dufour v. Metropolitan Property & Liability Ins. Co., 438 A.2d 1290 (Me. 1982) (Nine-year-old child of the named insured struck and injured by an uninsured motor vehicle while she was walking across road); Murphy v. Allstate Ins. Co., 2003 WL (Me. Super. Ct., Jan 27, 2003) (Mead, J.) (minor child of named insured struck while riding a bicycle). Different policies define family member or resident relative in different ways, but there are always two tests: 1) the injured person must be related to the named insured; e.g. blood, marriage or adoption ; and

9 PAGE 6 2) be a member of the named insured s household or reside with the named insured. The ISO PP policy we have been quoting here uses: You or any family member. Family member is defined as: A person related to you by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child. The ISO policy does not include a definition of household, which leaves room for creativity (see below). Carriers which do not use ISO forms (notably State Farm and Allstate) may have a different formulation. For example, the Allstate personal auto form includes as an insured You and any resident relative. You is defined as: the policyholder named on the declarations page and that policyholder's resident spouse. Resident is defined in the Allstate policy as the physical presence in your household with the intention to continue living there. 4 See Jack v. Tracy, 722 A.2d 869, 870 (Me. 1999). You must look at the particular policy s definition of family member or resident relative to assess whether the injured party qualifies as an insured. Case law may help you stretch the definition, but the starting point must be the actual language of the policy. The first requirement is straightforward: the claimant either is or is not related by blood, marriage or adoption. While creativity is often rewarded, it was not in Langer v. U.S. Fidelity & Guar. Co., 552 A.2d 20 (Me. 1988). There, the Court found that the family coverage provision of State's business automobile policy covering its fleet of motor vehicles did not cover a ward of the State injured in an automobile involving no State employee, no State vehicle, and no State supervision. The disagreements concerning the family category most often arise over what it means to be a member of the named insured s household. In Dechert, the Law Court determined that household is an ambiguous term in a homeowner s policy using a similar definition of insured. Usually, the term household refers to a collection of persons as a single group, with one head, living together, a unit of permanent and domestic character, under one roof; a collective body of persons living together, within one curtilage, subsisting in common and directing their attention to a common object, the promotion of their mutual interest and social happiness. Leteff v. Maryland Cas. Co., 91 So.2d 123, 130 (La.Ct.App.1956). Not all of these elements are essential, however, in a given case. For example, a temporary absence may not terminate the status of resident in the household, and much will depend on the subjective or declared intent of the individual. Nor is it essential that the household be housed under a single roof or supported by a single head. 4 Some policies also provide: Unmarried dependent children while temporarily away from home will be considered residents, if they continue to live in your household.

10 PAGE 7 Dechert v. Maine Ins. Guar. Ass n, 711 A.2d 1290, (Me. 1998). The Court went on to discuss some of the factors that should be considered in whether an adult child had stopped being a member of his parent s household (the parents were the names insureds): When, if ever, he ceased to be a resident in the household depends on a factual determination influenced by such questions as: What was Irving's subjective or declared intent when he moved to the trailer? What was the nature of his tenancy? What, if any, belongings did Irving leave with his parents? What was Irving's practice in regard to returning home? Did Irving retain a key? What was the extent of Irving's financial dependency on his parents? [N]o one factor is, in itself, determinative; instead, each factor must be balanced and weighed with the others. Workman v. Detroit Auto. Inter-Ins. Exch., 274 N.W.2d at 379. Critical to the weighing process is the necessity of evaluating the credibility of the witnesses. See VanVoorhees v. Dodge, 679 A.2d 1077, 1080 (Me. 1996). Id. At See also Cambridge Mut. Fire Ins. Co. v. Vallee, 687 A.2d 956 (Me. 1996) (the term residence is like a slippery eel ). There are a variety of Maine cases interpreting the meaning of family member or resident relative in different policies (notably homeowners) and in the application of exclusions (notably the other insured vehicle exclusion). When researching whether someone is a family member, it is important to distinguish between the family exclusion cases which may use the phrase, residing in the same household (which narrowly interpret the exclusion) and the cases construing the definition of insured which create coverage (which broadly interpret the phrase). As the Court pointed out in Dechert, [b]ecause we find the words ambiguous in the circumstances of this case and because they are words of inclusion of persons covered, we interpret the words liberally to the extent they can reasonably provide coverage to Irving. Dechert, 711 A.2d at What you need to remember is that the Dechert Court, by finding ambiguity, created an opportunity for advocacy when trying to squeeze your claimant into the family member category of insured. As we will discuss in the exclusions section, the other owned vehicle exclusion undermines the usefulness of being a family member of the named insured in many cases. However, it is still necessary to go through the family member analysis because in some cases (notably when the injured person is a traveling in a non-owned vehicle) being a family member provides significant stacking opportunities. Further, because adding an additional UM policy to the analysis can make the difference between whether there is underinsured status or not, the family member category is rich soil to till. 3. Any person occupying the covered auto UM coverage for the vehicle in which the claimant was riding when the accident occurred will insure the claimant if he or she is not a named insured. If the driver of the vehicle in which the claimant was riding was also negligent, there may be some twists in the

11 PAGE 8 policy language which prevent your client from recovering under both the liability portion and the UM portion; however, your claimant may still be an insured under the UM coverage for the purposes of determining underinsured status. Occupying is defined as in, on, getting into, out of or off the covered car. The Law Court in Genthner v. Progressive Casualty Ins. Co., 681 A.2d 479 (Me. 1996), found the definition of occupying ambiguous and construed it against the insurer in a case in which a passenger walked approximately one hundred feet away from the covered car to obtain the license plate number of a second car involved in a prior collision. The Court determined that it was a reasonable reading of the policy to find that the plaintiff was occupying the vehicle. The Court reasoned that the plaintiff was a passenger in the vehicle at the time of the prior collision and but for the collision would have remained in the car. His effort to obtain the license number was only a temporary interruption of his trip and was directly related to the operation and use of the covered car. But see Denault v. Holton, 2004 WL (Me. Super. Ct., Apr. 13, 2004) (Fritzsche, J.), (finding that the deceased was not occupying the vehicle when she had exited the vehicle to walk to a mailbox without any apparent intention of getting back into the vehicle). The insurance carrier cannot limit the UM coverage to insureds occupying a motor vehicle. In Murphy v. Allstate, 2003 WL (Me. Super. Ct., Jan. 27, 2003) (Mead, J.), for example, the insured was riding a bicycle when struck by an uninsured motorist. The court found that an exclusion which limited UM/UIM coverage to insureds who were occupying a car or were a pedestrian when injured was contrary to the statute s mandate and required the carrier to provide UM coverage for the family member riding a bicycle. 4. Any person for damages that person is entitled to recover because of bodily injury to which this coverage applies. This definition of insured status demonstrates the continuing interplay between particular policy language, case law and statutory requirements. In Jack v. Tracy, 1999 Me 13, 722 A.2d 869, a divorced father was found entitled to collect under his UM policy for the wrongful death of his daughter (not an insured ) because the father was legally entitled to recover from the uninsured tortfeasor under Maine s Wrongful Death Act. The policy at issue in Jack did not contain provisions limiting recovery for bodily injury to that sustained by another insured. UM policies issued by some other carriers do contain the limiting language sustained by another insured. However, in Butterfield v. Norfolk, 2004 ME A.2d 861, the Court held that such a policy restriction violates the UM statute when it limits UM recovery to injuries sustained by named insureds. See also Murphy v. Allstate, 2003 WL (Me. Super. Ct., Jan. 27, 2003) (Mead, J.) (insurance provider required to provide coverage to insured who is legally entitled to recover, even though that insured was not injured). Note, however, that the Jack/Butterfield line of cases was essentially overruled by the Legislature in Public Laws of 2005 c. 591, 1, subsec. 1. The UM statute now requires that the bodily injury be sustained by an insured person. 5 5 The version of 2902 in effect at the time of the Butterfield decision only required a bodily injury, and had no requirement that the bodily injury be sustained by an insured. Who are legally entitled to recover damages from owners or operators of uninsured, underinsured or hit-and-run motor vehicles, for bodily injury, sickness or disease, including death, resulting from the ownership, maintenance or use of such uninsured, underinsured or hit-and-run motor vehicle. The 2005 amendment added in the blank: sustained by an insured person.

12 PAGE 9 The bodily injury sustained by an insured may include the separate emotional distress of bystanders. In Ryder v. USAA Gen. Indem. Co., 2007 ME 146, 938 A.2d 4, the Court found that family members who witnessed the death of daughter/sister could be separate insureds if the distress was serious and a diagnosable sickness or disease. 5. Statutory requirement that UM coverage track liability coverage Another way that a policy may insure your client is through the UM statutory mandates of coverage. The first clause of 2902(1) defines what policies are required to provide UM coverage: [n]o policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle shall be delivered or issued for delivery in this State with respect to any such vehicle registered or principally garaged in this State, unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder. 24-A M.R.S.A. 2902(1). Historically, the UM statutory mandate to create insured status has been used when an employee is operating his own vehicle in the scope of employment, but he is not an insured under the employer s UM policy. In Laroche v. State Farm, 2003 WL (Me. Super. Ct. 2003) (Brennan, J.), the named insured was the Visiting Nurses Corporation for which the injured person worked. The liability provisions of the policy included as insureds employees acting within the course of their employment. The Court held that the UM statute required persons insured under the liability coverage to also be insured under the UM coverage, even though the UM provisions did not include employees of the named insured in its definitions of UM insureds. Judge Carter followed the same theory in LaMontagne v. North American Specialty, 353 F. Supp. 129 (D. Me. 2005), in which the employee was driving her own car during the course of employment when she suffered injury as a result of a collision with an underinsured motorist. An endorsement to the employer s policy added as insureds to the liability coverage: Any employee of yours is an insured while using a covered auto you don t own, hire or borrow in your business or your personal affairs. Judge Carter denied summary judgment to the insurer on the basis that, if the endorsement provided liability insurance to the employee, the UM statute mandates that the employee is also provided with UM coverage. It is less likely that this theory will work currently in light of a 2000 amendment to the UM statute which seems to have exempted commercial auto liability policies from the mandatory UM coverage. Most policies in which the named insured is the employer are Business or Commercial Auto policies, not Personal Auto policies, and different rules govern commercial rather than personal auto policies. Under the old UM statute, any policy providing motor vehicle liability coverage was required to provide UM coverage. 6 Public Laws of 1999, c. 663, 1, added subsection 2, which limited the UM mandate to private passenger auto policies subject to the Maine Automobile Insurance Cancellation Control Act: 6 No policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle..

13 PAGE With respect to motor vehicle insurance policies subject to the Maine Automobile Insurance Cancellation Control Act [24-A M.R.S.A et seq.] and policies in the assigned risk plan established pursuant to section 2325 securing private passenger auto insurance coverage The Maine Automobile Insurance Cancellation Control Act, 24-A M.R.S.A et seq., applies only to auto policies issued to individuals or family members resident in the same household: Policy. Policy means an automobile insurance policy providing bodily injury liability, property damage liability, medical payments, uninsured motorist coverage, physical damage coverage, or any combination thereof, delivered or issued for delivery in this State, insuring a single individual or one or more related individuals resident in the same household, as named insured and insuring vehicles Although there is no Maine case squarely holding that Commercial Auto or Business Auto policies are exempt from the UM mandate, we predict that a court will read the 2000 amendment as exempting the usual business auto policies from section 2902 s requirements. However, because many employers opt to buy UM coverage under their commercial auto policies, it is always worth looking at the declarations sheet of the employer s commercial auto policy to determine if there is UM coverage listed. 6. Finding all the policies under which the claimant is insured is the key to obtaining the most UM coverage. It is the claimant s status as an insured under multiple insurance policies that permits the insured to stack policies. For example, a claimant occupying the vehicle involved in the accident is insured under the vehicle policy as an occupant and he may also be an insured as a family member under his parent s UM coverage. Because the claimant qualifies as an insured under two policies, he may be allowed to stack the two policies. As will be explained in the exclusions section, Maine permits stacking but enforces anti-stacking provisions. As discussed above, the courts sometimes accept creative arguments to put your claimant within the definition of insured in multiple UM policies. Accordingly, you should consider each of these types of policies when determining which and how many policies could apply to the particular motor vehicle collision at issue. 1. The policy of the vehicle the injured person was occupying at the time of the accident. 2. All auto policies in which the injured person is a named insured. 3. All auto policies for family members of the injured person. Note, however, that there is an exclusion for injuries sustained while occupying a vehicle owned by the insured or a family member, but not insured under the policy. (See infra Part III.A.).

14 PAGE Auto policies issued to the employer of the injured person. If the accident occurred during the course of employment, the employer s uninsured motorist policy may apply. The fact that the employer or the compensation carrier may exercise its lien against the UM benefits does not mean that one can ignore the employer s uninsured motorist coverage; the additional uninsured motorist coverage may significantly affect the availability of coverage from other uninsured motorist carriers. 5. The umbrella policy of an insured. While umbrella policies generally are not required to have UM/UIM coverage, if an umbrella policy is an endorsement to a policy otherwise subject to the requirement (as opposed to being a separate policy), then the umbrella portion of the policy is subject to the statute and the UM/UIM coverage must take into account the umbrella limit of liability. See Outram v. Onebeacon Ins. Group, 2007 WL (Me. Super. Ct., Cumb. Cty., Oct. 5, 2007) (Warren, J.). After that exhaustive examination of the first part of the insuring clause (Is the claimant an insured?), we turn to the second and third steps of analysis under the Insuring Clause steps which are hopefully much simpler. B. Were the injuries caused by an Uninsured Motor Vehicle? The usual policy definition of an uninsured motor vehicle breaks down into two parts: a) the definition of uninsured; and b) the definition of motor vehicle. 1. Is the motor vehicle uninsured? In plain English, there are four ways that a motor vehicle may be uninsured : 1) if there is no liability insurance at all or the liability limits are less than the financial responsibility statutory minimum ($50,000/$100,000 required by 29-A M.R.S.A. 1605);. 2) if there is liability insurance but the liability limits are less than the claimant s UM coverage limits (underinsured); 3) it is a hit-and-run accident; or 4) the vehicle has liability insurance but the carrier has denied coverage or is insolvent. 7 7 Under Maine ISO PP , as amended specific to Maine, and the standard PP definitions, the relevant provision states: C. Uninsured motor vehicle means a land motor vehicle or trailer of any type: 1. To which no bodily injury liability bond or policy applies at the time of the accident. 2. To which a bodily injury liability bond or policy applies at the time of the accident. In this case its limit for bodily injury liability must be less than the limit of liability for this coverage. 3. Which is a hit-and-run vehicle whose operator or owner cannot be identified and which hits or which causes an accident resulting in bodily injury without hitting: a. You or any family member ; b. A vehicle which you or any family member are occupying ; or c. Your covered auto If there is no physical contact with the hit-and-run vehicle the facts of the accident must be proved. We will only accept competent evidence which may include the testimony, under oath, of a person making claim under this or any similar coverage. 4. To which a bodily injury liability bond or policy applies at the time of the accident but the bonding or insuring company: a. Denies coverage; or b. Is or becomes insolvent.

15 PAGE 12 All of these definitions have been mandated by the UM statute (except underinsured) since the adoption of the UM statute. See Public Laws of 1969, c. 132, We will discuss the definition of underinsured in more detail in the underinsurance section below. There is relatively little case law interpreting the uninsured definition, but all of it makes clear that the insurance carrier cannot narrow the definition of uninsured status to create less coverage than the statute mandates. In Lanzo v. State Farm Mutual Auto. Ins. Co., 524 A.2d 47 (Me. 1987), for example, the Court held that there is no need for physical contact in order to qualify as a hit-and-run vehicle. There, the UM policy language imposed the requirement that the hit-and-run vehicle strike the insured. Because the UM statute had no requirement of physical contact between the vehicles, the Court invalidated the striking requirement in the policy. Note, however, that even though no physical contact is required, the insured must still prove that there was a vehicle which negligently caused the accident. See Waycott v. Northeast Ins. Co., 465 A.2d 854 (Me. 1983) (determining that it was totally speculative that there was a vehicle which left accident scene, let alone that such vehicle was negligent ). 2. Exhaustion The Maine Amendments to the ISO policy contain some additional language which attempts to impose an exhaustion requirement as part of the definition of uninsured : With respect to coverage under Section 2. of the definition of uninsured motor vehicle, we will pay under this coverage only if 1. or 2. below applies: 1. The limits of liability under any bodily injury liability bonds or policies applicable to the uninsured motor vehicle have been exhausted by payment of judgments or settlements; or 2. A tentative settlement has been made between an insured and the insurer of the uninsured motor vehicle and we: a. Have been given prompt written notice of such tentative settlement; and b. Advance payment to the insured in an amount equal to the tentative settlement within 30 days after receipt of notification. Essentially, this provision states a priority rule: the insured cannot recover from the UM carrier until the tortfeasor s liability carrier has paid its full limits. Whether the insured must exhaust any liability coverage available to the underinsured tortfeasor (or all the tortfeasors) or whether the insured may recover from his own UM insurance carrier, without going to the tortfeasor at all, has been the subject of vigorous debate across the nation. See Widiss, Uninsured and Underinsured Motorist Insurance 44.2 (2nd ed.). Some states statutes specify that any applicable liability policy must be exhausted before the insured may make a claim against his UM carrier. Other jurisdictions hold that exhaustion clauses are invalid because the purpose of the UM statute is to assure that a claimant has the opportunity to recover at least what he could have recovered from the tortfeasor if the tortfeasor carried as much insurance as the insured does and

16 PAGE 13 the insured should not have to wait until the tortfeasor s insurance carriers resolve their disputes to be made whole. Maine s statute is silent on exhaustion. 8 The only Maine case discussing exhaustion requirements is Curtis v. Allstate Ins. Co ME 9, 787 A.2d 760. There, the insured claimed that the UM insurer had violated the Unfair Claims Settlement Practices statute, 24-A M.R.S.A A, in many ways, including inter alia, that it should have paid the entire limits of UM coverage before there had been a settlement with the tortfeasors. The insurer had paid the undisputed amounts before settlement with the tortfeasors and ultimately the full amount after the insured executed an assignment of his claims against one of the tortfeasor s carriers. The Court found no unfair claims practice and characterized the exhaustion requirement as a time of payment provision. Distinguishing Greenvall v. Maine Mut. Fire Ins. Co., 715 A.2d 949 (Me. 1998), the Court said: [Greenvall s] holding does not invalidate a contract provision, such as the one at issue here, providing that payment of damages is triggered upon the exhaustion of the tortfeasor's policy liability limits by settlement or judgment. On its face, Curtis v. Allstate seems to bless an exhaustion requirement that is simply a timing of payment provisions. It does not get into the thorny issues of what is required of the insured in order to exhaust. In light of the Court s holding in Tibbetts v. Me. Bonding & Cas. Co., 618 A.2d 731 (Me. 1992) and the recent affirmance of the Tibbetts reasoning in Molleur v. Dairyland Ins. Co., 2008 ME 46, 942 A.2d 1197, at a minimum, the exhaustion requirement will only be applied to the underinsured motorist s liability coverage and not the liability coverage of other better insured tortfeasors. 3. Does the land motor vehicle fall within exceptions? Under the ISO PP , Part C, Uninsured Motorist coverage, as specifically amended for Maine ISO PP , certain land motor vehicles are excluded from the definition of uninsured motor vehicle. [U]uninsured motor vehicle does not include any vehicle or equipment: 1. Owned by or furnished or available for the regular use of you or any family member. 2. Owned or operated by a self-insurer under any applicable motor vehicle law, except a self-insurer which is or becomes insolvent. 8 Consider, however, whether section 6 of the statute dealing with multiple claimants expresses a legislative intent to require exhaustion of liability limits before claiming UM benefits: 6. When 2 or more persons are legally entitled to recover damages from a particular owner or operator of an underinsured motor vehicle, the amount of underinsured vehicle coverage applicable to each injured person is determined by subtracting any payments actually made to the injured person from any bodily injury liability insurance coverage applicable to the particular owner or operator of the underinsured motor vehicle from the injured person's, operator's or owner's underinsured vehicle coverage policy limits if applicable to that person. The amount of underinsured motor vehicle coverage must be further reduced by the amount by which the bodily injury liability insurance coverage applicable to the particular owner or operator of the underinsured motor vehicle exceeds all payments from that coverage to all persons legally entitled to recover damages from that particular owner or operator of the underinsured motor vehicle.

17 PAGE Owned by any governmental unit or agency. 4. Operated on rails or crawler treads. 5. Designed mainly for use off public roads while not on public roads. 6. While located for use as a residence or premises. None of these exceptions are mentioned in the UM statute; however, the current limitation of the UM statute to motor vehicle insurance policies governed by the Maine Automobile Cancellation and Control Act does give more credence to some of the exceptions. The Court has repeatedly held that the exclusion for vehicles owned by government units or agencies is void as unlawfully limiting the statute s scope. See Young v. Greater Portland Transit District, 535 A.2d 417 (Me. 1987); Pease v. State Farm Mut. Auto. Ins. Co., 2007 ME 134, 931 A.2d 1072, ( We note with disapproval that State Farm continues to include a government vehicle exclusion in its UM policy, despite our holding twenty years ago in Young v. Greater Portland Transit Dist., 535 A.2d 417, 420 (Me. 1987), invalidating the same. ). In Young, the Court also rejected the notion that the solvency of the uninsured owner was not a sanctioned exception to the UM mandate. In Lane v. Hartford Ins. Group, 447 A.2d 818 (Me. 1982), the Court held that an uninsured crane did not qualify as an uninsured vehicle. However, in Hare v. Lumbermens Mutual Casualty Co., 471 A.2d 1041 (Me. 1984), the Court held that whether a farm tractor qualified was a question for the jury. The bottom line is: if the uninsured vehicle involved in the collision is excepted by the policy, don t accept the exclusion at face value. C. Is the Insured Legally Entitled To Recover Damages From The Uninsured Motorist? driver: In essence, the insured must prove a standard negligence case against the uninsured a. The uninsured driver was negligent. b. The insured s negligence was less than the uninsured s driver s negligence. c. The insured suffered damages that were proximately caused by the uninsured driver. See Waycott v. Northeast Ins. Co., 465 A.2d 854 (Me. 1983) (father failed to sustain his burden of proving negligence of another driver caused accident in which his son was killed); LeClair v. Commercial Union Ins. Co., 679 A.2d 90 (Me. 1996) (plaintiff failed to establish negligence of tortfeasor); Kay v. Hanover Ins. Co., 677 A.2d 556 (Me. 1996) (jury verdict of negligence by tortfeasor supported in record); Rowe v. Mather, 2000 WL (Me. Super. Ct., Nov. 28, 2000) (Marden, J.); Kline v. OneBeacon, 2003 WL (Me. Super. Ct., Aug. 5, 2003)

18 PAGE 15 (Crowley, J.); Dionne v. Progressive, 2000 WL (Me. Super. Ct., Apr. 13, 2000) (Cole, J.) (driver is not negligent for waving-on insured. Waving-on yields right of way, does not indicate all clear ). For an example of how evidence may be evaluated for purposes of summary judgment, see Mills-Stevens v. Travelers, 2004 WL (Me. Super. Ct., Aug. 13, 2004) (Marden, J.). See also Ford v. Nationwide, 2003 WL (1st Cir. Apr. 8, 2003). If the insured fails to prove a negligence case against the uninsured driver in a separate action, the insured will be estopped in her claim against her uninsured motorist carrier. See French v. Willman, 599 A.2d 1151 (Me. 1991) (holding that an insured s claim against his uninsured motorist carrier was subject to collateral estoppel principles when the jury found that the uninsured tortfeasor was not negligent.) A default judgment against the tortfeasor in a proceeding in which the UM carrier had no opportunity to participate will not estop the UM carrier from contesting liability on the UM claim. See LaPlante v. York Mutual Ins. Co., No. CV (Me. Super. Ct., Pen. Cty., Mar 16, 1995) (Marden, J.).

19 PAGE 16 III. EXCLUSIONS AND SET-OFFS While there are several exclusions and set-offs in the UM Policy, we focus on four: a) other owned vehicle; b) no consent to settlement; c) workers compensation; and d) payments by the tortfeasor. A. Other Owned Vehicle Exclusion The following is a commonly used anti-stacking provision in uninsured motorist coverage policies: We do not provide Uninsured Motorist Coverage for... bodily injury sustained while occupying or when struck by any motor vehicle owned by the insured or a family member which is not insured for this coverage under this policy. This exclusion is typically applied when the insured or his family owns two or more vehicles and the insured attempts to aggregate the uninsured limits on all the vehicles. This exclusion prevents the insured from recovering from the policy(ies) under which he is an insured but the policy does not insure the vehicle in which the accident occurred. Insurers defend the anti-stacking provisions on the grounds that uninsured motorist coverage on one of a number of vehicles owned by an insured does not extend the benefits of such coverage, for no premium, to all other vehicles owned by that insured. The UM statute in Maine, unlike some other states, does not affirmatively take a position on stacking. The Court has concluded the absence of provisions mean that stacking is permitted but anti-stacking exclusions are not prohibited. Thus [t]he Legislature could have, but has not, limited recovery to payment under a single policy and expressly prohibited stacking. Molleur v. Dairyland Ins. Co., 2008 ME 46, 11, 942 A.2d 1197, On the other hand, the Law Court has repeatedly enforced anti-stacking provisions so long as the anti-stacking provisions do not conflict with the UM statutory mandate. See Cash v. Green Mountain Ins. Co., Inc., 644 A.2d 456 (Me. 1994); Bear v. U.S.F. & G., 519 A.2d 180 (Me. 1986); Gross v. Green Mountain Ins. Co., 506 A.2d 1139 (Me. 1986); Brackett v. Middlesex Ins. Co., 486 A.2d 1188 (Me. 1985); Hare v. Lumbermens Casualty Co., 471 A.2d 1041 (Me. 1984); Bourque v. Dairyland Ins. Co., 1999 ME 178, 12, 741 A.2d 50, 54 (an exclusion that defines a vehicle insured by the insurer, under the same policy, as not uninsured for UM/UIM purposes is permissible under Maine law); Maurice v. State Farm, 235 F.3d 7 (1st Cir. 2000); Daigle v. Hartford Casualty Ins. Co., 573 A.2d 791 (Me. 1991)(a motorcycle is a motor vehicle for purposes of this exclusion). Although the other owned vehicle exclusion is generally enforced, in Hall v. Patriot Mut. Ins. Co., the Court found the Dairyland other owned vehicle exclusion ambiguous and did not apply the exclusion. The exclusion applied to anyone occupying a motor vehicle owned by you or furnished by your regular use and not insured under this insurance. The Court explained that anyone could be interpreted to mean any individual occupant of the vehicle. It could also be interpreted more expansively to include you which would apply to the non-occupant spouse who was seeking coverage.

20 PAGE 17 Because the provision was ambiguous, the Court construed it in favor of the insured and declined to apply the exclusion. Whether that case is confined to the wrongful death area and the peculiar Dairyland language remains to be seen. See also Pease v. State Farm, 207 ME 134, 931 A.2d 1072 (regular-use anti-stacking provision does not apply when vehicle had been stolen and was being unlawfully operated when it injured the party seeking coverage). A variation on the other owned vehicle exclusion is a provision limiting a carrier s liability to the highest limit of liability of two or more policies issued by that carrier: If two or more policies issued by us to you apply to the same accident, the total limit of liability under all such policies shall not exceed that of the policy with the highest limit of liability. Such a provision was enforced by the Law Court in Moody v. Horace Mann Ins. Co., 634 A.2d 1309 (Me. 1993). See also Tibbetts v. Worcester, 2007 WL (Me. Super. Ct., Penob. Cty., Nov. 5, 2007) (Hjelm, J.); Rowe v. Mather, 2000 WL (Me. Super. Ct., Nov. 28, 2000) (Marden, J.) (injured party cannot recover under both her underinsured motorist provision and the tortfeasor s underinsured motorist provision when both policies are provided by the same insurer). The other owned vehicle anti-stacking provision appears in some form in most personal auto policies and in most cases is enforced. As a consequence, it is generally difficult to stack multiple policies issued to different cars owned by the same family. The stacking opportunities are more profitable when the claimant is injured while in a car not owned by a family member, as is discussed below. B. Reduction For The Amounts Paid By The Tortfeasor Most UM coverage limit of liability provisions reduce the amount payable by the amounts paid by the tortfeasor. An example of such a provision: B. Any amounts otherwise payable for damages under this coverage shall be reduced by all sums: 1. Paid because of the bodily injury by or on behalf of persons or organizations who may be legally responsible. The Court has consistently enforced this provision, finding that insurers may offset the amount of coverage available in UM policies by the tortfeasor s limits of liability. While other states may set off the amount of the tortfeasor s payment from the total damages awarded by the jury, Maine does not. In Levine v. State Farm Mut. Auto. Ins. Co., 843 A.2d 24, 29 (Me. 2004), the Court emphasized that the entire statutory scheme makes it evident that underinsured vehicle coverage is in the nature of gap coverage, not a substitute for primary coverage. Holding that the claimant s UIM benefits were reduced by the amount of the tortfeasor s coverage (which had become unavailable by the passage of time), the Court found that underinsured vehicle coverage fills the gap left by an underinsured tortfeasor and is designed to permit the insured injured person the same recovery which would have been available to him had the tortfeasor been

21 PAGE 18 insured to the same extent as the injured party. The Court reiterated this reasoning again in Jipson v. Liberty Mut. Fire Ins. Co., 2008 ME 57, 942 A.2d Jipson contended that the UM statute requires the carrier to pay the full amount of its UM coverage without setoff when the damages exceeded the available coverage. The court rejected the notion that UM coverage was excess and concluded that Maine's UM law is a gap-filling statute and therefore the carrier is only liable up to its policy limits for the amount by which the UM coverage exceeded the coverage paid by the tortfeasor. See also Collins v. MMG Ins., 2004 WL (Me. Super. Ct., Feb. 18, 2004), in which Judge Brennan parses out exactly how the calculation should be done. One frequently asked question is whether this exclusion is an offset or a reduction of limits by the amounts paid by the tortfeasor. In Jipson, the Court enforced a reduction provision stated in a Limit of Liability provision: LIMIT OF LIABILITY B. Any amounts otherwise payable for damages under this coverage shall be reduced by all sums: 1. Paid because of the bodily injury by or on behalf of persons or organizations who may be legally responsible. In Molleur v. Dairyland Ins. Co., 2008 ME 46, 942 A.2d 1197 (Me. 2008) a case decided 10 days before Jipson, the Court found an offset provision invalid as contrary to the UM statute. The amount of damages payable under this insurance will be reduced by the amount paid by or on behalf of anyone responsible for your injury. This includes any amount paid under the liability insurance of this policy and any amount paid or payable under any workers' compensation law, disability benefits law or any similar law-exclusive of any state non-occupational disability law. The Court distinguished this provision, which creates an impermissible offset of UM/UIM coverage, is qualitatively different from an exclusion that defines a vehicle insured by the insurer, under the same policy, as not uninsured for UM/UIM purposes; such an exclusion is permissible under Maine law. See Bourque v. Dairyland Ins. Co., 1999 ME 178, 12, 741 A.2d 50, 54. For this reader, the effect of the provisions, whether labeled as a definition, a limits offset or offset, seem remarkably similar. The lesson, however is that the characterization of the clause may be critical to your success. C. No-Consent To Settlement Exclusion. Under 24-A M.R.S.A. 2902(4), the insurer is granted subrogation rights up to the amount it pays against any person legally responsible for the bodily injury. Because the insurer s subrogation rights are only as good as the insured person s rights, settlement of the insured s claims against the tortfeasor destroys the insurer s statutorily granted subrogation right. Hence, all UM policies have provisions prohibiting the insured from settling with the tortfeasor without

22 PAGE 19 the insurer s consent. There are several versions of the no consent to settlement exclusion. An older standard form provides a flat prohibition: We do not provide Uninsured Motorist Coverage for bodily injury sustained by any insured : If that insured or the legal representative settled the bodily injury claim without our consent. ISO PP While historically insurers have tried to treat no consent to settlement as a condition of coverage, without regard to prejudice, the courts enforcing the exclusion are much more interested in whether the insurer s subrogation rights have been impaired. In Greenville v. Maine Mut. Fire Ins. Co., 715 A.2d 949 (Me. 1998), the Court found that an insurer must demonstrate prejudice before relying on the insured's breach of the no consent to settlement provision to deny coverage. The Court adopted the reasoning of a Florida court, quoting with approval, A judgment against [an impecunious tortfeasor] would not have been worth the paper it was printed on and no reasonable person would have expended the costs, let alone the attorney's fees, it would have required getting it. When [insurer] lost the opportunity to secure the judgment, it lost nothing. Under our law, a technical and illusory loss of this kind cannot result in the forfeiture of insurance coverage. As a result, some current versions of the UM policies frequently incorporate a prejudice requirement in the no consent to settlement exclusion: We do not provide Uninsured Motorist Coverage for bodily injury sustained by any insured : If that insured or the legal representative settles the bodily injury claim and such settlement prejudices our right to recover payment. ISO PP In addition to the prejudice requirement, if the insurer denies coverage prior to the insured s settlement, the failure to obtain the insurer s consent will not bar recovery. Where the insurer fails or refuses to indemnify the insured, no subrogation rights can arise. Basinet v. Concord General Mutual Ins. Co., 513 A.2d 279 (Me. 1986). Further, the no consent to settlement exclusion does not apply to a settlement with a party other than the uninsured or underinsured tortfeasor. Wescott v. Allstate Ins. Co., 397 A.2d 156 (Me. 1979). At least in cases where liability is disputed, the UM insurer may refuse to consent to settlement and instead agree to defend and indemnify the tortfeasor up to the amount of UM coverage. In Tait v. Royal Ins. Co., 913 F. Supp. 621 (D. Me. 1996), the Court ruled as a matter of law that the UM insurer did not breach its duty of good faith and fair dealing to its insured by refusing to consent to settle and instead defending the tortfeasor and agreeing to pay up to the UM limits of liability. 9 The so-called Amendment of Policy Provisions PP has a slightly different formulation: However, the [consent to settlement exclusion] does not apply: a) if such settlement does not prejudice our right to recover payment; or b) to a settlement made with the insurer of a vehicle described in Section 2 of the definition of uninsured motor vehicle.

23 PAGE 20 D. Workers Compensation Benefits The interplay between worker s compensation and uninsured motorist benefits occurs at two different policy provisions: (1) the worker s compensation exclusion; and (2) the limit of liability provision which seeks to offset UM benefits by the amount paid to the claimant in workers compensation. 1. Workers compensation exclusion: The worker s compensation exclusion to the standard UM policy provides: This coverage shall not apply directly or indirectly to benefit any insurer or self insurer under a workers compensation or disability benefits law. In Wallace v. City of South Portland, 592 A.2d 1076 (Me. 1991), in the context of a worker s compensation proceeding, the Court enforced the employer s statutory lien, 39-A M.R.S.A. 107, and permitted the employer to recover uninsured motorist benefits paid to police officer under city's business auto policy. The Court found that the lien does not extend to UM recovery paid under an auto policy paid for by the employee. The Court did not discuss the UM exclusion. See also Mellott v. Prudential, 2000 WL (Me. Super. Ct., May 26, 2000). 2. Set off in limits of liability provision There are various types of limits of liability provisions which seek to reduce the amount of UM benefits by workers compensation benefits. The most blunt instrument is a direct set-off: Any amounts otherwise payable for damages under this coverage shall be reduced by all sums:... Paid or payable because of the bodily injury under any of the following or similar law: a) workers compensation law or b) disability benefits law. ISO PP Most courts around the country took a dim view of such provisions and so the newer set-off provisions are more narrowly worded: D. We will not pay for any element of loss if a person is entitled to receive payment for the same element of loss under any of the following or similar law: 1. Workers compensation law; or 2. Disability benefits law. There is a split in jurisdictions regarding enforceability of a set-off to the UM benefits based on worker s compensation benefits. Although the Maine courts have not directly dealt with a set-off similar to the policy provision above, recent decisions on other set-off provisions provide excellent arguments that the set-off violates the UM statute. In Molleur v. Dairyland Ins. Co., 2008 ME 46, 942 A.2d 1197, Dairyland tried to set off payments made by a second insured tortfeasor based on the following provision:

24 PAGE 21 The amount of damages payable under this insurance will be reduced by the amount paid by or on behalf of anyone responsible for your injury. This includes any amount paid under the liability insurance of this policy and any amount paid or payable under any workers' compensation law, disability benefits law or any similar law-exclusive of any state non-occupational disability law. While the trial court accepted Dairyland s argument, the Law Court reversed, finding the offset contrary to the UM statute s mandate: Our longstanding rule controls: the availability of uninsured coverage is determined by comparing the injured party's UM/UIM coverage with the liability coverage available under the tortfeasor's policy. The fact that the insurer may have made liability coverage payments reflecting the principal insured's exposure does not relieve it from its statutory obligation to provide UM coverage for other tortfeasors under the same policy. Moelleur, 2008 ME 46, 17, 942 A.2d at 1202 (citations omitted). Given the current Court s aversion to set-off provisions, the worker s comp set-off may also be vulnerable. 3. Immunity In Gilbert v. Hodgkins, 2006 WL (Me. Super. Ct., Mar. 16, 2006), Liberty Mutual, the employer s auto carrier, tried to avoid paying the employee s claim for UM benefits based on the employer s statutory immunity from suit by the employee. Liberty was also the worker s compensation carrier, which paid the worker s comp benefits to the employee and argued that because insurer and employer are treated as one entity, the immunity of the worker s compensation statute should apply to its liability under the auto policy. Judge Crowley rejected the indemnity argument.

25 PAGE 22 IV. UNDERINSURED MOTORIST COVERAGE A. Determining The Amount Of Underinsured Motorist Coverage - General Rule The amount of underinsured motorist benefits available is the difference between all available uninsured motorist coverage and all of the liability coverage available to the tortfeasor: Add all UM coverages available to insured Subtract all liability coverages available to tortfeasor Remainder: The amount of available underinsured motorist coverage. See Connolly v. Royal Globe Ins. Co., 455 A.2d 932 (Me. 1983); York Ins. Co. of Maine, Inc. v. Bowden, 2004 ME 112, 855 A.2d When multiple policies provide liability coverage for the accident involving the vehicle at issue, the limits of those liability policies are to be aggregated for comparison against the underinsured vehicle policy limits. In single limit liability policies with combined property damage and business interruption coverages, do not subtract the property damage coverage when determining whether a party is underinsured. Day v. Allstate Ins. Co., 1998 ME 278, 721 A.2d 983. B. Limits To Limits v. Actual Payment Comparison 1. Mullen v. Liberty Mutual Casualty Insurance Company Prior to 2000 and the change in the UM statute by Laws 1999, c. 663, 2, the amount of underinsured motorist coverage available to the UM insured was determined in a limit to limit comparison and without regard to the amounts that the UM insured actually received for the tortfeasor. In Mullen v. Liberty Mutual Casualty Ins. Co., 589 A.2d 1275 (Me. 1991), multiple persons were injured and the tortfeasor s $100,000 coverage was divided among the four claimants. Mullen had two UM policies totaling $45,000 in limits and argued that she was underinsured by $40,000 ($45,000 less the $5,000 paid to her by the tortfeasor). The Law Court rejected Mullen s argument, holding that the comparison for determining underinsured motorist benefits is the difference between the limits of the applicable UM coverages and the limits of the applicable liability coverages, without regard to whether the insured actually received less than the liability limits from the tortfeasor. The tortfeasor s $50,000/$100,000 liability limits were greater than the $45,000 of UM benefits available to Mullen and therefore Mullen was not underinsured. The Mullen rule derives from the structure of the Maine UM statute as a gap filling benefit whereby the UM insured is put in the same position he would have been in if the tortfeasor had the same liability limits as his UM limits. In a gap filling methodology, it is irrelevant whether limited liability insurance is divided among multiple claimants, reducing the amount of liability coverage available to each one. The goal of the original Maine UM statute is not to provide the UM insured with full recovery but only to fill the gap. Some states UM statutes express an excess methodology whereby the UM benefit is used to pay the damages

26 PAGE UM Statute amended for multiple claimant situations The Legislature overruled Mullen s method of determining underinsured motorist benefits in multiple claimant situations by adding a new section 6 in the UM statute. Public Laws 1999, c. 663, 2. Section 6 calculates underinsured motorist benefits by the amounts actually paid to the multiple claimants, rather than on a limit to limit basis: 6. When 2 or more persons are legally entitled to recover damages from a particular owner or operator of an underinsured motor vehicle, the amount of underinsured vehicle coverage applicable to each injured person is determined by: a. subtracting any payments actually made to the injured person from any bodily injury liability insurance coverage applicable to the particular owner or operator of the underinsured motor vehicle. b. from the injured person's, operator's or owner's underinsured vehicle coverage policy limits if applicable to that person, and c. the amount of underinsured motor vehicle coverage must be further reduced by the amount by which the bodily injury liability insurance coverage applicable to the particular owner or operator of the underinsured motor vehicle exceeds all payments from that coverage to all persons legally entitled to recover damages from that particular owner or operator of the underinsured motor vehicle. Laws 1999, c. 663, 2, (formatting changed). In simpler terms, underinsured motorist coverage in multiple claimant cases is determined by taking the injured person s total UM limits and subtracting the amount actually recovered from the tortfeasor. In the event that the tortfeasor s liability limits are not exhausted by payments to the multiple claimants, then the underinsured benefits are further reduced by the remaining liability coverage. In essence, section 6 changes the Maine UM statute to more of an excess structure in multiple claimant situations whereby the UM benefit is reduced only by the actual amount paid by the tortfeasor. The UM insured is allowed to recover the full amount of his damages up to the UM limits, subtracting only the amounts paid by the tortfeasor and not the limits of liability. However, the Legislature did not change the statute s gap filling methodology in the single claimant situation. See Jipson v. Liberty Mut. Fire Ins. Co., 2008 ME 57, 942 A.2d Section 6 was applied in Budd v. GEICO General Ins. Co., 2006 WL (Me. Super., 2006) to find underinsured benefits when the UM coverage was only $100,000/$300,000 and the tortfeasor had a $350,000 combined limit liability policy. Husband and wife were injured by the tortfeasor and his liability limits were allocated by paying $345,000 to wife and $5,000 to husband as compensation for his loss of consortium claim.

27 PAGE 24 Husband was insured under a GEICO UM policy with $100,000/$300,000 limits of liability. Under Mullen s limit to limit test, husband was not underinsured because the tortfeasor s $350,000 limits of liability was greater than his UM limits of $100,000/$300,000. However, relying on section 6 quoted above, Husband argued the $100,000 limit under his underinsured motorist policy was more than the amount he actually received from the tortfeasor and therefore he was entitled to UM benefits. GEICO responded that 2902(6) cannot be applied because the first phrase of this subsection, known as the trigger clause, requires the tortfeasor to first have been defined as underinsured pursuant to 2902(1). The Court rejected GEICO s argument pointing out that the purpose of 2902(6) is to ensure that in certain cases where more than one person is injured in an accident... [every] person is covered to the full extent of the underinsured motorist coverage purchased. L.D. 2043, Summary (119th Legis. 1999). C. Multiple Tortfeasors, Some Insured And Some Uninsured Or Underinsured In Peerless v. Progressive, 2008 ME 66, 822 A.2d 1125, the Court was faced with a three car collision caused by the negligence of two of the drivers, one insured by Progressive and one uninsured. The UM carrier for the innocent third driver, Peerless, and the liability carrier, Progressive, paid the innocent driver and agreed to litigate between themselves as to how to allocate the damages. [This case is a good example to give carriers to help get the UM insured paid promptly and leave the carriers to fight about allocation after the victim is compensated.] In the ensuing trial, the uninsured driver was found 75% negligent and the Progressive insured 25% negligent. Progressive argued that because Peerless, the UM carrier, stood in the shoes of the uninsured driver, Peerless should pay 75% of the damages. The trial court disagreed and found Progressive liable for 100% of the damages as the liability carrier for one tortfeasor who was jointly and severally liable. The Law Court agreed. The Court reasoned that the first line of defense in compensating a victim for damages is the tortfeasor(s)' liability insurer(s). Joint and several liability of the tortfeasors means that the liability carrier was 100% liable for all the damages, even if the uninsured motorist was 75% liable. Section 2902(4) is clear and unambiguous, plainly stating that the UIM insurer that pays its injured claimant is entitled to the proceeds of any settlement or recovery from any person legally responsible for the bodily injury as to which such payment was made A M.R.S.A. 2902(4) (emphasis added). The plain language of section 2902(4) supports Peerless s right to recover from Progressive the money Peerless paid to Haskell. Peerless, 2003 ME 66, 10, 822 A.2d at The Law Court in Tibbetts v. Maine Bonding & Casualty Co., 618 A.2d 731 (Me. 1992) held that a plaintiff was entitled to underinsured motorist coverage even though one tortfeasor had liability coverage equal to the available UM coverage because the other joint tortfeasor was underinsured. The Court construed 2902 to require that each tortfeasor be looked at separately to determine whether there was an underinsured situation. The Court also held that the UM carrier s right of subrogation granted under 2902 does not authorize a reduction for proceeds received from an insured joint tortfeasor.

28 PAGE 25 The right of subrogation applies only to proceeds received from, or on behalf of, the operator of the underinsured vehicle. If, however, the tortfeasor has sufficient coverage to compensate the plaintiff fully for her injuries, the tortfeasor s insurer, and not the UM carrier, is responsible for 100% of the damages awarded to the plaintiff. There are two reasons for this result. First, the UM carrier s obligations are contractual in nature and flow only for the benefit of the insured no tortfeasor could make a direct claim against the UM carrier for contribution based on the purported negligence of the uninsured motorist(s). There can be no apportionment of negligence between the UM carrier and the tortfeasor defendants because the UM carrier is not a joint tortfeasor. Second, the policy language generally provides that amounts payable under the UM coverage are reduced by the limits available to any person found legally responsible for the accident. Provisions such as this are void if the tortfeasor(s) liability limits are insufficient to compensate the plaintiff fully for her injuries. Tibbetts, 618 A.2d at 733, n.3 ( policy provisions purporting to reduce the insurer s liability by amounts received in settlement from third parties are void to the extent that the insured is not fully indemnified ) (emphasis added). If, however, the tortfeasor(s) limits are sufficient, the reduction language should be enforceable. The law in York stated: Neither argument prevails. Whether insurance coverage is available through coverage of the vehicle, the owner, or the driver is immaterial. If the result is insurance coverage for the damage done by the vehicle driven by the tortfeasor, the amount of that coverage must be used in the calculus of determining whether the vehicle is underinsured. See Levine v. State Farm Mut. Auto. Ins. Co., 2004 ME 33, 11, 843 A.2d 24, 28 (stating that underinsured vehicle coverage is in the nature of gap coverage ). When multiple policies provide liability coverage for the accident involving the vehicle at issue, the limits of those policies are to be aggregated for comparison against the underinsured vehicle policy limits. See McGillivray v. Royal Ins. Co., 675 A.2d 524, 526 (Me. 1996) (holding that the insurance applicable to the tortfeasor's vehicle must be compared to the underinsured vehicle policy limits to determine whether a vehicle is underinsured); Mullen v. Liberty Mut. Ins. Co., 589 A.2d 1275, (Me. 1991) (holding that the amount of coverage determines whether a vehicle is underinsured); Connolly v. Royal Globe Ins. Co., 455 A.2d 932, 935 (Me. 1983) (holding that policies must be aggregated to determine underinsured status). York Ins. Co. of Maine, Inc. v. Bowden, 2004 ME 112, 7, 855 A.2d at 1159

29 PAGE 26 V. MISCELLANEOUS A. Jurisdiction When insureds sue insurers for UM coverage, Maine courts have personal jurisdiction over insurers who offer policies to customers the insurers know will travel in Maine. By offering coverage to such drivers, that course extends to events in Maine, and the Court has had the insurer availing itself of the benefits of doing business in Maine. See Trenholm v. Madore, 2002 WL (Me. Super. Ct., May 3, 2002) (Hjelm, J.). Actions by an injured insured against his own insurance carrier under uninsured motorist provisions of the applicable policy do not constitute direct actions under the statute, and so diversity jurisdiction is not defeated. Lamontagne v. Nationwide, 345 F. Supp. 2d 1 (D. Me. 2004). B. Choice Of Law Rights and duties under a casualty insurance contract, absent an express choice of law provision in the contract, are determined by the law of the state which the parties understood to be the principal location of the insured risk, unless some other state has a more significant relationship with respect to the specific issue involved. Baybutt Construction Co. v. Commercial Union Ins. Co., 455 A.2d 914 (Me. 1983); Allstate Ins. Co. v. Walsh, 155 Misc.2d 907, 454 N.Y.2d 774 (1982); State Farm Mutual Automobile Ins. Co. v. Olson, 406 So.2d 1109 (Fla. 1981); Andrews v. Continental Ins. Co., 444 So.2d 479 (Fla. 1982); Flaherty v. Allstate, 822 A.2d 1159 (Me. 2003). See also Nelson v. CGU Ins. Co., 2003 WL (D. Me. Apr. 10, 2003) (Kravchuk, Magis.) (forum selection clause in a policy delivered outside the United States was enforceable because there was no evidence of fraud or overreaching and because nothing in Maine s UM laws reflects a strong public policy against forum-selection clauses in such policies), report and recommendation of magistrate adopted, 2003 WL (D. Me. May 3, 2003) (Singal, Chief J.). C. Bifurcation Most judges try uninsured motorist cases as if they were a claim against the uninsured driver, deciding liability and damages together. At least one judge has held that an insurer is entitled to a bifurcated trial in order to separate issues of coverage and damages. Cookson v. Employers Fire Ins. Co., 2002 WL (Me. Super. Ct., Aug. 14, 2002) (Marden, J.). D. Statute Of Limitations The contract statute of limitations applies to an insured s claim against his insurer. Young v. Greater Portland Transit District, 535 A.2d 417 (Me. 1987). The Maine statute of limitations for breach of contract is six years. See M.R.S.A. 752 (1980). The limitations period begins to run from the time the insured s uninsured motorist carrier denies coverage, not from the time of the insured s injury. See Palmero v. Aetna Cas. Surety Co., 606 A.2d 797 (Me. 1992); Doughty v. State Farm, 2006 WL (Me. Super. Ct., Sept. 6, 2006) (Cole, J.) (while absolute refusal

30 PAGE 27 to pay is not necessary to trigger running of the statute, when State Farm could have easily made a clearer rejection, the statute did not start to run). See also Pelletier v. OneBeacon, 2005 WL (Me. Super. Ct., Feb. 3, 2005) (Studstrup, J.). Even if an insurer does not unequivocally deny liability, its rejection of the claimant s demand and subsequent counteroffer is sufficient to start the statute of limitations running. Whitten v. Concord General Mut. Ins. Co., 647 A.2d 808 (Me. 1994) E. Notice Of Accident The general provisions of the policy provide that the insured must give prompt notice or reasonable notice of the accident to the insurer. In Ouellette v. Maine Bonding & Casualty Co., 495 A.2d 1232 (Me. 1985), the Law Court held that the insurer must show a breach of this policy provision and prejudice to the insurer caused by the delay in providing notice in order to avoid liability under the policy. See also State Farm Mut. Auto. Ins. Co. v. Lucca, 838 F. Supp. 670 (D. Me. 1993). See also Van Haaren v. State Farm Mutual Auto. Ins. Co., 989 F.2d 1 (1st Cir. 1993); Me. 1993); Van Haaren v. State Farm Mutual Auto. Ins. Co., 989 F.2d 1 (1st Cir. 1993); Smith v. Reliance, 2000 WL (D. Me. Sept. 18, 2000). The Law Court in Home Ins. Co. v. Horace Mann Ins. Co., 603 A.2d 860 (Me. 1992), hinted that the insurer may no longer have to show prejudice in order to defeat a claim on lack of notice grounds. But in light of Greenvall v. Maine Mut. Fire Ins. Co., 715 A.2d 949 (Me. 1998), prejudice probably is required. F. Prejudgment And Postjudgment Interest The uninsured motorist carrier is not liable for prejudgment interest beyond the policy limit. Simpson v. Hanover Insurance Company, 588 A.2d 1183 (Me. 1991); Moholland v. Empire, 746 A.2d 362 (Me. 2000) (but post-judgment interest and costs are not a form of damages, and so are not subject to the policy limits). Prejudgment interest begins to run upon notice to the tortfeasor (rather than upon notice to the UM/UIM carrier), to further the purpose of UM/UIM coverage providing the injured party with the same coverage she would have received if the tortfeasor had been insured to the same extent. Michaud v. Hanover Ins. Co., 2008 WL (Me. Super. Ct., Penob. Cty., Jan. 25, 2008) (Cuddy, J.). G. Punitive Damages There can be no recovery of punitive damages against uninsured motorist coverage. Braley v. Berkshire Mutual Ins. Co., 440 A.2d 359 (Me. 1982). Most current policies expressly exclude punitive or exemplary damages from coverage. H. Arbitration The policy provides that questions of liability and damages can be determined by arbitration. Note, however, that the Maine Uniform Arbitration Act, 14 M.R.S.A et seq., which makes agreements to arbitrate enforceable, specifically exempts uninsured motorist arbitration clauses from its provisions. See 14 M.R.S.A Under the statute, a UM carrier probably cannot require an insured to go to arbitration. Whether the insurance carrier,

31 PAGE 28 which inserted the arbitration clause into the policy can use the statute to avoid arbitration is an open question in Maine. See Widiss, Uninsured and Underinsured Motorists Coverage, 2313 (discussing enforcement of the arbitration provisions by a claimant). I. Maine Insurance Guaranty Association (MIGA) MIGA can offset its liability (on behalf of an insolvent insurer) by the amount the injured party receives from his UM/UIM coverage. Purcell v. Mehlhorn, 2007 WL (Me. Super. Ct., Cumb. Cty., Nov. 5, 2007) (Crowley, J.). See also LePage v. Collins, 2007 WL (Me. Super. Ct., Cumb. Cty., Mar. 21, 2007) (Crowley, J.). If an injured party settles for less than the limits of an applicable solvent policy, he has not exhausted solvent policies, and therefore may not recover from MIGA. Maine Ins. Guar. Ass n v. Kelly, 2004 WL (Me. Super. Ct., Apr. 20, 2004) (Jabar, J.).

32 PAGE 29 VI. RECENT TRENDS The Maine Law Court has decided several UM cases in favor of the insured in the last year demonstrating the court s willingness to carefully scrutinize UM policy language and find a way to compensate the injured person. In four of the cases, the Law Court vacated a Superior Court judgment in favor of the insurance company, and found that UM benefits were available to the insured. However, in its latest decision, Jipson v. Liberty Mut. Fire Ins. Co., 2008 ME 57, 942 A.2d 1213, the Court made clear that its ability to find ways to compensate the injured person is ultimately constrained by the Legislative structure of the UM statute; absent amendment to the UM statute, the Court cannot significantly broaden the UM benefits paid to injured person not otherwise compensated. Some of these decisions sounded like a return to the first major UM decision in 1979, Wescott v. Allstate, 397 A.2d 156 (Me. 1979) which articulated a very liberal policy of interpretation in favor of full recovery for the injured person. During the ensuing thirty years, the Court retreated from Wescott s liberal interpretation and enforced many policy exclusions and anti-stacking provisions which limit the injured person s UM recovery. These new UM cases suggest that there is renewed vitality in the Wescott reasoning and therefore, we recommend that counsel representing an injured person not fully compensated for his injuries try creative arguments and pursue more aggressive interpretations of UM policies than they might have done previously. Ultimately, however, only the Legislature can change the Maine UM statute from a gap filling structure in which recovery for injured persons is limited to the difference between the tortfeasor s liability limits and the injured person s UM limits, to an excess structure in which the injured person can recover damages greater than the insured's UM coverage limit. Molleur v. Dairyland - Offset provision in UM Policy Found Unenforceable The most significant of the recent UM decisions is Molleur v. Dairyland Ins. Co., 2008 ME 46, 942 A.2d 1197 (Me. 2008). This case demonstrates that offsets and exclusions in UM policies may be more vulnerable to attack than we previously thought. Here, Dairyland denied UM benefits to an injured motorcycle passenger on the grounds that it had already paid some of her damages under the liability provisions of the policy. Although the passenger had not been fully compensated for her injuries, Dairyland asserted that its policy offset for liability payments barred any recovery under the UM coverage. The Law Court disagreed. In Molleur, the wife was injured while a passenger on a motorcycle operated by her husband and insured by Dairyland. Multiple tortfeasors caused the accident, and their liability carriers paid the wife. Dairyland, the husband s liability insurer, paid her $80,000. Because one of the tortfeasors had only $15,000 in liability coverage, the wife asserted a UM claim under the Dairyland UM coverage, asserting that underinsured coverage of $35,000 was available (i.e., the difference between the Dairyland per person limit of $50,000 and a tortfeasor s $15,000). See Tibbetts v. Me. Bonding & Cas. Co., 618 A.2d 731 (Me. 1992). Dairyland argued that the wife was not underinsured because the offset provision in the UM policy reduced her UM limit of $50,000 by the amount Dairyland paid her under the liability coverage of the policy on behalf of her husband (i.e., $80,000).

33 PAGE 30 The Superior Court (Brennan, J.) agreed with Dairyland and enforced the following offset language which appears in most UM policies: The amount of damages payable under this insurance will be reduced by the amount paid by or on behalf of anyone responsible for your injury. This includes any amount paid under the liability insurance of this policy and any amount paid or payable under any workers' compensation law, disability benefits law or any similar law - exclusive of any state non-occupational disability law. The Law Court vacated the Superior Court s decision on the grounds that the Dairyland offset provision conflicted with the Maine UM statute and therefore was void and unenforceable. Writing for a unanimous court, Justice Mead laid the foundation for the decision with the basic principle that the protections of the UM statute are to be interpreted liberally in favor of insureds and narrowly against insurers and therefore any doubts regarding whether an insured is legally entitled to recover under a policy should be resolved in favor of the insured. Molleur, 2008 ME 46, 10, 942 A.2d at From that starting point, the Court reasoned that an offset provision has the effect of eliminating the statutory minimum UM coverage, and therefore conflicted with the UM statutory requirements: Since the statute requires that each policy must supply the required minimum underinsured vehicle coverage, an offset provision that limits that coverage is contrary to statute and therefore void and unenforceable. The fact that the insurer may have made liability coverage payments reflecting the principal insured's exposure does not relieve it from its statutory obligation to provide UM coverage for other tortfeasors under the same policy. Id. at 11, 17. The Court s reasoning in Molleur bodes well for counsel trying to avoid other offset provisions and other limitations in UM policies that might otherwise prevent their clients from fully recovering for their injuries. Pease v. State Farm: Exclusion Does Not Apply After the Vehicle Has Been Stolen In Pease v. State Farm Mut. Auto. Ins. Co., 2007 ME 134, 931 A.2d 1072, the UM exclusion at issue was furnished for regular use which excludes from the definition of uninsured motor vehicle vehicles furnished for the insured s regular use but not insured under the policy. Some form of this exclusion appears in most UM policies: An uninsured motor vehicle does not include a land motor vehicle:. 2. furnished for the regular use of you, your spouse or any relative.... In Pease, the insured was a deputy sheriff and he was injured when a suspect stole his patrol vehicle and ran over him. Finding that the patrol vehicle was furnished for the insured s regular use, the Superior Court (Cole, J.) enforced the exclusion and entered judgment for State Farm. In vacating the Superior Court s judgment, the Law Court held that, once stolen, the patrol car ceased to be furnished for the deputy s regular use:

34 PAGE 31 In interpreting this policy provision, both parties fail to address what meaning, if any, to ascribe to the fact that [the suspect] stole the patrol vehicle from [the deputy] before injuring him with it. We find this fact to be dispositive. At the moment [the suspect] stole the vehicle, it stopped being a vehicle furnished for the deputy's use, and was simply a stolen vehicle. Pease, 2007 ME at 9, 931 A.2d at In reaching this conclusion, the majority opinion (Mead, J.) relied upon the general principles articulated in Wescott: We find that a construction of the policy that excludes vehicles stolen from the insured from the regular use exclusion is consistent with the legislative intent... to benefit all insured motorists by throwing the burden of compensating for injuries which would otherwise go without redress from the individual victim to the insurance industry for a premium. Id., 2007 ME at 10, 931 A.2d at 1075 (quoting Wescott, 397 A.2d at 166). Thus, harkening back to the principles underlying Wescott, the Law Court clawed back for the insured some of the ground gained by UM insurers over the past three decades. Justice Silver writes separately to advocate that all offset provisions in a UM policy are void In a concurring opinion, Justice Silver argued that any restriction in a UM policy that limits the ability of a victim to obtain full compensation violates the UM statute: Maine courts have repeatedly held that insurers may not limit UM coverage by adding restrictive language to their UM policies. Policy exclusions have thus been invalidated if they restrict the right of an insured to recover damages under the UM statute.... Construing the UM statute broadly to prohibit such exclusions follows the legislative intent to close coverage gaps rather than endorse patchwork policies that leave responsible, insured consumers without the protection they have paid for. As the majority notes, [t] he legislative intent is to benefit all insured motorists by throwing the burden of compensating for injuries which would otherwise go without redress from the individual victim to the insurance industry for a premium. Pease, 2007 ME at 13, 16, 931 A.2d at 1077 (Silver J., concurring) (quoting Wescott, 397 A.2d at 166). Although Justice Silver s take on UM exclusions did not garner support from the other members of the Court, he obviously feels strongly enough to write separately about his position. If you need to attack the validity of a UM offset or exclusion in order for your client to be fully compensated, Justice Silver s concurrence indicates that you will have at least one ally in the fight at the Law Court. Hall v. Patriot Mut. Ins. Co.: Other Owned Vehicle Exclusion Construed for Insured Since 1984, the Law Court has regularly enforced other owned vehicle exclusions which prevent stacking of multiple policies on different vehicles owned by the insured.

35 PAGE 32 Uninsured motorist coverage on one of a number of vehicles owned by an insured does not extend the benefits of such coverage, for no premium, to all other vehicles owned by that insured. Bear v. U.S. Fid. & Guar. Co., 519 A.2d 180, (Me. 1986); see also Gross v. Green Mountain Ins. Co., 506 A.2d 1139, (Me. 1986); Hare v. Lumbermens Mut. Cas. Co., 471 A.2d 1041, 1043 (Me. 1984); and Cash v. Green Mountain Ins. Co., 44 A.2d 456, 457 (Me. 1994). In Hall v. Patriot Mut. Ins. Co., 2007 ME 104, 942 A.2d 663 (Me. 2008), the Court veered from this straight course and took advantage of ambiguous language to avoid applying the other owned vehicle exclusion. In Hall, husband was killed in a motorcycle collision with a car that had only $100,000 of liability coverage. Following the reasoning in Jack v. Tracy, 1999 ME 13, 772 A.2d 869, the surviving spouse asserted claims against several UM policies insuring other vehicles owned by husband or wife. The Dairyland policy at issue insured a different motorcycle than the one on which the husband was riding when the fatal collision occurred. Dairyland asserted, and the Superior Court (Hjelm, J.) agreed, that because the husband was fatally injured while riding an owned vehicle not insured under the Dairyland policy, the exclusion applied. The Dairyland exclusion stated: A. We do not provide Uninsured Motorists Coverage for bodily injury sustained by: Anyone occupying a motor vehicle owned by you or furnished by your regular use and not insured under this insurance isn't protected by this insurance. The Law Court vacated the Superior Court s judgment for Dairyland on the grounds that the wife s claims against the estate for loss of consortium were not barred by the other owned vehicle exclusion. Writing for a unanimous Court, Chief Justice Saufley reasoned that the phrase anyone was ambiguous as applied to the surviving spouse who was not present at the scene of the fatal accident: Viewed one way, the term anyone would be interpreted to mean any individual occupant of the vehicle. Because [the surviving spouse] was not an individual occupant of the vehicle, the exclusion would not apply to her. Under a competing view, anyone would be interpreted to include the plural you defined in the policy - that is, the named insured and the spouse sharing the insured's residence. Following this interpretation, [the surviving spouse] would be deemed to have occupied the vehicle because she and [her deceased husband] would be considered as a single you for purposes of the policy. Hall, 2007 ME at 20. Construing the ambiguity against Dairyland, the Court held that the other owned vehicle exclusion did not bar the surviving spouse s claim, even though the deceased spouse was injured while occupying an other owned vehicle. In the same opinion, the Court did affirm the Superior Court s judgment for Patriot based on a slightly different other owned vehicle exclusion:

36 PAGE 33 A. We do not provide Uninsured Motorists Coverage for bodily injury sustained: 1. By an insured while occupying, or when struck by, any motor vehicle owned by that insured which is not insured for this coverage under this policy. Id. at 15. The lesson learned here is that the Court is willing to entertain coverage distinctions based on slight variations of language. So, counsel for the victim needs to be creative and try a variety of potential interpretations of the policy before concluding that there is no UM coverage available for their client. Ryder v. USAA General Indemnity: Bodily Injury Includes Emotional Distress of Bystander Ryder v. USAA Gen. Indem. Co., 2007 ME 146, 938 A.2d 4, is another recent decision in which differences in policy language dictated whether a policy provided UM coverage. There, a nineteen month old infant was run over and killed by a driver who had $50,000/$100,000 limits of liability. The infant s mother and brother witnessed the fatal accident and made bystander distress claims against two UM policies, one issued by Progressive and the other by USAA. The question was whether the bystander claims were separate bodily injury claims from the bodily injury of the deceased child; if they were separate claims, there would be UM coverage. First, the limitation of liability language in the policies differed in important ways. The Progressive policy defined the $50,000 each person limit as including not only the total of all claims made for bodily injury to a person but also all claims of others derived from such bodily injury, including, but not limited to, emotional injury or mental anguish resulting from the bodily injury of another or from witnessing the bodily injury to another... Accordingly, the Progressive policy s limitation of liability for each person included the mother s and brother s bystander distress claims in the deceased child s claim. Because there was only one claim, the Progressive UM policy limit was $50,000. In the USAA UM coverage, on the other hand, the limitation of liability section used different language: [Bodily injury] sustained by any person in any one auto accident. Thus, the question under the USAA policy was whether the mother s and brother s psychic injuries of bystander distress constituted bodily injury as defined by the policy or whether bodily injury encompassed only physical injuries. The USAA policy defines bodily injury as bodily harm, sickness, disease or death.

37 PAGE 34 The Superior Court (Hjelm, J.) held that, under the policy s definition of bodily injury, physical harm or compromise to the body was required. Because the psychic damage of a claim for bystander emotional distress involved no physical harm, the Superior Court entered judgment for USAA. In vacating the Superior Court s judgment, the Law Court performed some significant linguistic gymnastics to conclude that the USAA definition of bodily injury was ambiguous and could include bystander emotional distress. The Court started with decisions in other jurisdictions which hold that bodily injury is unambiguous and encompasses only physical harm. Those courts interpreted the phrase: bodily injury [or harm], sickness or disease. Writing for the Court, Justice Levy distinguished these overwhelming majority of cases because the USAA policy contained a different definition of bodily injury. To underscore the difference between the two definitions: bodily harm, sickness or disease vs. bodily harm, sickness, disease or death. Ryder, 2007 ME at 16, 17, 938 A.2d at 7-8 (emphasis added by Law Court). The Court concluded that USAA s addition of the word death to the definition of bodily injury created the ambiguity: The phrase bodily death, although relevant in the spiritual realm, carries little meaning in the secular world of insurance contracts. Given the grammatical structure employed in this definition, it is unclear whether bodily is intended to modify all of the nouns that follow it. We therefore find the policy's definition of bodily injury ambiguous. Id., 2007 ME at 17, 938 A.2d at 8. The Court went on to conclude that bystander psychic or emotional distress may constitute a sickness or disease under the UM coverage. However, to recover, the mother and brother must show both that they suffered emotional distress that was serious, [and] they must also demonstrate that the distress constitutes a diagnosable sickness or disease in order for coverage to exist. Id., 2007 ME at 21, 938 A.2d at 9. Ryder underscores the importance of asserting creative arguments that ambiguity exists in the UM policy to maximize your clients chances of receiving full compensation for their injuries. Jipson v. Liberty Mut. UM coverage will only fill the gap In Jipson v. Liberty Mut. Fire Ins. Co., 2008 ME 57, 942 A.2d 1213, the insured contended that the UM statute requires the carrier to pay the full amount of its UM coverage without setoff for the tortfeasor s coverage when the damages exceed the available coverage. 10 The court rejected the notion that UM coverage was excess and concluded that Maine's UM law is a gapfilling statute and therefore the carrier is only liable up to its policy limits for the amount by which the UM coverage exceeded the coverage paid by the tortfeasor. 10 There was a Jipson I, which was dismissed on the grounds that it failed to present a justifiable controversy. Jipson v. Liberty Mut. Fire Ins. Co., 2007 ME 10, 912 A.2d 1250.

38 PAGE 35 Judge Silver wrote the opinion and it follows Maine precedent. We have long held that insurers may offset the amount of coverage available in UM policies to the insured by the amount actually paid by the tortfeasor. See, e.g., Botting v. Allstate Ins. Co., 1998 ME 58, 2, 7, 707 A.2d 1319, 1320, 1322; Saucier v. Allstate Ins. Co., 1999 ME 197, 3-4, 12, 742 A.2d 482, There is no Maine authority to support Jipson's contention that an insured injured by a single tortfeasor may recover a total that is greater than the insured's UM coverage limit. Unlike the other cases discussed above, the Court did not accept the alternative reading of the offset provision in the policy: The offset provision provides: Any amounts otherwise payable for damages under this coverage shall be reduced... Contrary to Jipson's contention that the language could reasonably be interpreted as an offset from amounts payable by verdict or from the agreed upon value of the claim, the offset clearly embodies the provision of section 2902 that grants insurers the right to reduce or offset the amount owed to an insured by the amount the insured recovers from the responsible party. We agree with Liberty Mutual that the plain language of under this coverage to modify the aforementioned phrase indicates the insurer's clear intent to offset coverage by damages paid. The phrase under this coverage explains, modifies, limits and controls the phrase amounts otherwise payable for damages. The policy is not reasonably susceptible to any interpretation other than that the offset be taken from the $100,000 coverage limit, e.g. the amounts otherwise payable for damages under this coverage, and is therefore unambiguous. The Jipson holding was not remarkable. It can be read as signal from the Law Court that it is willing to entertain flexible arguments but it is ultimately constrained by the gap filling structure of UM benefits in the UM statute.

39 PAGE 36 VII. CONCLUSION The important message for counsel is that recently the Law Court s recent decisions indicate it is willing to go to considerable effort to find UM coverage for the uncompensated victim. Counsel for the insurer will likely argue that these cases were decided on narrow grounds that are unlikely to serve as precedent for any attack on different UM policy language. We come to a different conclusion: While the actual holdings of these cases may not put any money in your client s pocket, the reasoning employed by the Court demonstrates a new willingness to find UM coverage if any plausible interpretation of the policy might create an ambiguity, which will then be interpreted against the insurer. The Court seems to be reluctant to go all the way with Justice Silver and find that exclusions are invalidated if they restrict the right of an insured to recover damages under the UM statute. And it would take an act of the Legislature to change UM coverage in Maine from gap coverage to excess coverage that makes the insured whole for his damages. However, the Court is willing to go to considerable lengths to find ambiguity and open the door for the underinsured victim to recover. In this atmosphere, if the UM carrier denies on what appears to be well-settled principles, give the case a second look. While parsing the policy language and probing for ambiguities may be tiresome and definitely confusing, these recent decisions convince us that creative and aggressive interpretations just might get your client the money they are entitled to receive.