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