OKLAHOMA UNINSURED MOTORIST COVERAGE

Transcription

1 OKLAHOMA UNINSURED MOTORIST COVERAGE 7.1 INTRODUCTION This paper is designed to provide assistance and guidance to claims professionals while handling Oklahoma uninsured motorist claims. That being said, a brief history and background is in order. During the early infancy of the automobile in our society, those who could afford a car usually had the financial resources to pay damages if they injured someone. Cars became affordable, due to Henry Ford s introduction of mass production, and came into widespread use. Cars were oftentimes purchased by people who could afford neither insurance nor damages caused by their fault. Beginning at the end of World War II, the number of cars on the road skyrocketed. A great number of these were uninsured. The number of people injured by financially irresponsible motorists increased drastically. A number of solutions to the problem began emerging as many states adopted the first financial responsibility laws that required liability insurance after accidents initially; followed by mandatory automobile liability insurance, but many motorists were able to avoid the effect of these laws due to loopholes. In the 1920s, insurance companies began to offer unsatisfied judgment coverage which ended up being not feasible inasmuch as irresponsible, uninsured motorists did not defend their cases and large judgments and losses resulted. A number of states set up unsatisfied claim funds funded by motor vehicle registration taxes. The bureaucratic nature of state management inhibited the success of these funds. Beginning in the mid-1950s, insurance companies began to offer uninsured motorist coverage. The idea being that the injured insured be placed in the position that he would have been had the uninsured motorist complied with financial responsibility laws. Most states have now adopted uninsured (and/or underinsured) motorist coverage statutes. Pierce Couch Hendrickson Page 1

2 7.2 OKLAHOMA UNINSURED MOTORIST STATUTE Oklahoma adopted its first uninsured motorist laws in 1968, at Title 36 Okla. Stat. 3635, 3636, Only 3636 and 3637 have been amended defines a motor vehicle under the uninsured motorist statutes as means and includes a self-propelled land motor vehicle designed for use principally upon public roads and streets, but does not mean crawler or farm-type tractors, farm implements, and, if not subject to motor vehicle registration, any equipment which is designed for use principally off public roads and streets. 3637, as amended in 2004, excepts from the Act policies on motor trucks operated by a motor carrier where the insured s employees are covered by workers compensation comprises the meat of the statute and has been amended a number of times. The current statute went into effect November 1, Subsection (A) provides that no policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be issued, delivered, renewed, or extended in this state with respect to a motor vehicle registered or principally garaged in this state unless the policy includes the coverage described in subsection B of this section. Subsection (B) provides that The policy referred to in subsection A of this section shall provide coverage therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-andrun motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom. Coverage shall be not less than the amounts or limits prescribed for bodily injury or death for a policy meeting the requirements of Section of Title 47 of the Oklahoma Statutes, as the same may be hereafter amended; provided, however, that increased limits of liability shall be Pierce Couch Hendrickson Page 2

3 offered and purchased if desired, not to exceed the limits provided in the policy of bodily injury liability of the insured. The uninsured motorist coverage shall be upon a form approved by the Insurance Commissioner as otherwise provided in the Insurance Code and may provide that the parties to the contract shall, upon demand of either, submit their differences to arbitration; provided, that if agreement by arbitration is not reached within three (3) months from date of demand, the insured may sue the tort-feasor. Subsection (C) provides that for the purposes of this coverage the term "uninsured motor vehicle" shall include an insured motor vehicle where the liability insurer thereof is unable to make payment with respect to the legal liability of its insured within the limits specified therein because of insolvency. For the purposes of this coverage the term "uninsured motor vehicle" shall also include an insured motor vehicle, the liability limits of which are less than the amount of the claim of the person or persons making such claim, regardless of the amount of coverage of either of the parties in relation to each other. Subsection (D) provides that an insurer's insolvency protection shall be applicable only to accidents occurring during a policy period in which its insured's uninsured motorist coverage is in effect where the liability insurer of the tort-feasor becomes insolvent within one (1) year after such an accident. Nothing herein contained shall be construed to prevent any insurer from according insolvency protection under terms and conditions more favorable to its insured than is provided hereunder. Subsection (E) provides there is no coverage for any insured while occupying a motor vehicle owned by, or furnished or available for the regular use of the named insured, a resident spouse of the named insured, or a resident relative of the named insured, if such motor vehicle is not insured by a motor vehicle insurance policy. Pierce Couch Hendrickson Page 3

4 Subsection (F) provides that the insurer making such payment shall not be entitled to any right of recovery against such tort-feasor in excess of the proceeds recovered from the assets of the insolvent insurer of said tort-feasor. Provided further, that any payment made by the insured tortfeasor shall not reduce or be a credit against the total liability limits as provided in the insured's own uninsured motorist coverage. Provided further, that if a tentative agreement to settle for liability limits has been reached with an insured tort-feasor, written notice shall be given by certified mail to the uninsured motorist coverage insurer by its insured. Such written notice shall include: 1) Written documentation of the pecuniary losses incurred; and 2) Written authorization or a court order to obtain reports from all employers or medical providers Subsection G provides that A named insured or applicant shall have the right to reject uninsured motorist coverage in writing. The form signed by the insured or applicant which initially rejects coverage or selects lower limits shall remain valid for the life of the policy and the completion of a new selection form shall not be required when a renewal, reinstatement, substitute, replacement, or amended policy is issued to the same-named insured by the same insurer or any of its affiliates. Any changes to an existing policy, regardless of whether these changes create new coverage, do not create a new policy and do not require the completion of a new form. Subsection H includes an uninsured motorist coverage form that is to be provided to the proposed insured in writing separately from the application. When plaintiff settled with the tortfeasor for less than the liability-policy limits and discharged the tortfeasor from further liability when she executed the settlement agreement, she cannot prove the conditions precedent to recovery of UM benefits Pierce Couch Hendrickson Page 4

5 under 36 O.S Porter v. State Farm Mutual Auto. Ins. Co., 2010 OK CIV APP 8, 231 P.3d 691. Minimum Limits Minimum UM coverage shall not be less than minimum limits. Minimum uninsured motorist coverage is $25,000 per person/$50,000 per occurrence for all policies after April 1, UM CLAIMS HANDLING Factors to consider in assessing liability/damages In order to ascertain whether UM coverage is triggered, one must investigate liability and injures, and, coupled with knowledge of comparative negligence law and elements of damages, reach reasonable conclusions as to liability and damages. Oklahoma is a modified comparative negligence state meaning that if plaintiff is more negligent than defendant(s), no recovery can be had. If plaintiff is 50% or less negligent than defendant(s), plaintiff s damages are proportionately reduced. Where a blameless plaintiff is injured due to the combined negligence of more than on tortfeasor, the tortfeasors are jointly and severally liable. This simply means that plaintiff may collect all damages from any tortfeasor (leaving that tortfeasor with rights of contribution to seek reimbursement from other tortfeasors for any proportionate overpayment). Plaintiffs can then seek to collect their damages from the deep-pocket tortfeasor. The most extreme example being a blame-free plaintiff collecting all his damages from a tortfeasor that was assessed 1% negligence, leaving that tortfeasor to chase the other negligent tortfeasor(s) for recoupment of the 99% overpayment. In the even plaintiff is comparatively negligent (50% or less), then generally negligent defendant(s) have several liability, meaning they are only responsible to pay their proportionate amount of plaintiff s damages; however, there are two exceptions wherein a joint torfeasor remains jointly and severally liable (1) when the joint tortfeasor is over 50% at fault; and (2) when the joint tortfeasor acts recklessly or with willful and wanton conduct. Pierce Couch Hendrickson Page 5

6 Damages evaluations must be made due to personal injuries sustained by the UM insured. In addition to liability assessments, the claims handler should be familiar with the personal injury elements of damages. These include past and future medical bills, past and future mental/physical pain and suffering, disfigurement, physical impairment, whether injuries are permanent or not, lost earnings, impaired earning capacity, loss of consortium, loss of household services, etc. Who is insured under the UM policy? Typically, the named insured and members of insured s family which reside with insured are covered as well as others who are riding in the auto with insured. Review the policy language including definitions of you, resident, and/or household member. Family member is defined as a household resident and has been held to include the named insured s step-brother. Filton v. Equity Fire & Cas., 1992 OK 2, 824 P.2d Generally, UM coverage follows the named insured and resident relatives (called Class I insureds). One must look at the policy s insuring language and definitions to determine insured status. Occupants are covered. Occupying is broad and can include a person who had already stepped out of his vehicle to help repair insured s car at the side of the road, even though he was not actually in the car at the time. The issue is to be determined on a case-by-case basis analysis depending on the circumstances of the accident and use of the insured vehicle. Wickham v. Equity Fire & Cas., 1994 OK CIV APP 148, 889 P.2d The definition of an insured under the UM endorsement to a commercial auto policy was challenged as being ambiguous. Specifically, the policy was issued to a closely-held corporation, with one shareholder. The shareholder s son was injured while riding a friend s uninsured all-terrain vehicle. The shareholder claimed the insuring language was ambiguous so as to provide UM coverage to his son. Pierce Couch Hendrickson Page 6

7 The policy listed Hillcrest Pharmacy as the sole named insured and listed the form of business as a corporation. The insuring language covered you and if you are an individual, any family member. Holding: the insured definition was not ambiguous and the son was not a UM insured under the policy. American Economy Ins. Co. v. Bogdahn, 2004 OK 9, 89 P.3d UM Coverage Triggers In addition to investigating and evaluating liability and damages, the claims professional should attempt to ascertain the tortfeasor s liability limits. Should all the tortfeasor(s) have separate liability limits sufficient to compensate the UM insured for damages, then UM is not triggered. On the other hand, if any tortfeasor has insufficient liability coverage limits to cover the UM insured s damages, then UM coverage is triggered. The following examples illustrate whether or not UM coverage is triggered: No comparative negligence. One tortfeasor with $25,000 liability limits; UM insured fault-free and damages assessed at $15,000. UM COVERAGE NOT TRIGGERED No comparative negligence. One torfeasor with $25,000 liability limits; UM insured fault-free and damages assessed at $30,000. UM COVERAGE TRIGGERED (subject to limits of liability) Comparative negligence. One tortfeasor with $25,000 liability limits; UM insured 50% negligent and damages assessed at $30,000 (before %0% reduction due to comparative negligence). UM COVERAGE NOT TRIGGERED (UM insured legally entitled to recover damages from tortfeasor in the amount of $15,000 which is less than tortfeasor s liability limits) Comparative negligence. One tortfeasor with $25,000 liability limits; UM insured 30% negligent and damages assessed at 50% (before comparative negligence reduction). UM Pierce Couch Hendrickson Page 7

8 COVERAGE TRIGGERED (UM insured legally entitled to recover $35,000 in damages from tortfeasor). Comparative negligence. One tortfeasor with $25,000 liability limits; UM insured 60% at fault. UM COVERAGE NOT TRIGGERED Multiple Tortfeasors If any of multiple tortfeasors has insufficient liability limits with respect to his/her legal liability to the UM insured, UM coverage is then triggered. The following examples are illustrative of whether or not UM coverage is triggered: Joint and several liability. Two tortfeasors with $25,000 and $50,000 liability coverage limits, respectively; UM insured fault-free and damages assessed at $15,000. UM COVERAGE NOT TRIGGERED. Joint and several liability. Two tortfeasors with $25,000 and $50,000 liability coverage limits, respectively; UM insured fault-free and damages assessed at $30,000. UM COVERAGE TRIGGERED (UM insured legally entitled to recover damages which exceed one torfeasor s limits). Joint and several liability. Tortfeasor 1 with $25,000 limits, 51% at fault; Tortfeasor 2 with $50,000 limits, 30% at fault; UM insured 19% at fault and damages assessed at $60,000. UM COVERAGE TRIGGERED (Torfeasor 1 is more than 50% at fault, making him jointly and severally liable to UM insured for $48,600, which exceeds his policy limits). Several liability. Tortfeasor 1 with $25,000 limits, 40% at fault; Tortfeasor 2 with $50,000 limits, 40% at fault; UM insured 20% at fault and damages assessed at $60,000. UM COVERAGE NOT TRIGGERED (neither tortfeasor legally liable to UM insured in excess of policy limits; each torfeasor liable to UM insured for 40% of damages, or $24,000). Pierce Couch Hendrickson Page 8

9 Several liability. Tortfeasor 1 with $25,000 limits, 40% at fault; Tortfeasor 2 with $50,000 limits, 40% at fault; UM insured 20% at fault and damages assessed at $100,000/ UM COVERAGE TRIGGERED (Tortfeasor 1 legally liable to UM insured for $40,000, which exceeds the limits). Several liability. Tortfeasor 1 with $25,000 liability limits, 20% at fault; Torfeasor 2 with $50,000 liability limits, 20% at fault; UM insured 60% at fault and damages assessed at $300,000. UM COVERAGE NOT TRIGGERED (neither tortfeasor legally liable to UM insured whose recovery is barred due to negligence exceeding 50% of the combined negligence of all parties. Is UM coverage primary? Yes, subject to the limits. Once UM coverage is triggered and becomes applicable, the coverage is primary meaning that an uninsured motorist carrier is liable for the entire amount of the insured s loss from the first dollar up to the UM policy limits without regard to the presence of any other insurance. Burch v. Allstate Insurance Co, 1998 OK 129, 977 P.2d Priority Among Insurers There is no priority of payment where multiple UM insurers are involved, regardless of any UM policy provision stating that UM coverage under that policy shall be in excess of other UM coverage. A UM insurer should settle with the UM insured, then work out among the other UM insurers (through a subrogation lawsuit if necessary) questions concerning priority of coverage, overpayments, etc. All UM coverage is triggered immediately after a claim is made, regardless of whether one UM policy is in excess of or secondary to the underlying primary policy. Mustain v. USF&G, 1996 OK 98, 925 P.2d 533. The Mustain case involved a situation where a UM carrier had an other insurance clause making its UM coverage excess when its insured was occupying a non-owned vehicle. Mustain held this Pierce Couch Hendrickson Page 9

10 provision invalid vis-à-vis the insured, to whom the UM coverage is considered primary. The goal being that payments not be withheld from the insured while UM carriers sort out coverage priorities; and that post-payment, the UM insurers may seek determinations of priorities between themselves in ancillary proceedings. Stacking Issues An injured person may become entitled to multiple UM coverages in different ways. For instance, if the injured person was riding in someone else s car, that person will be entitled to the coverage of the car he is occupying (typically called a permissive insured or Class II insured) and would also be entitled to UM coverage under his own policy. A resident household member may also qualify as a UM insured under policies issued to family members, a subject to the definition of a resident relative household member in the insured status section. Stacking can also occur when the injured or resident household member (Class I insureds) may stack UM coverage on the household vehicles where an insurance company charges a separate UM premium for each vehicle insured. There is no requirement to sell stackable UM in a single policy covering multiple vehicles where (a) only one UM premium is charged; and (b) the insurance company informs the insured of all UM coverage options (accomplished by use of mandated statuory form). The insurance company is not required to offer stackable UM coverage. Withrow v. Pickard, 1995 OK 120, 905 P.2d 800. Further, the insurance company must clearly advise the insured of the effect of this limitation of stacking. Scott v. Cimarron Ins. Co., 1989 OK 26, 774 P.2d 456. With respect to commercial fleet policies, stacking will apply if the injured claimant is a Class I insured. It will not apply if the injured is a permissive occupant, Class II insured. Aetna v. Craig, 1989 OK 43, 771 P.2d 212. Pierce Couch Hendrickson Page 10

11 Offer/Rejection Issues A named insured or applicant shall have the right to reject UM coverage in writing. 36 O.S. 3636(G). After selection of limits, rejection, or exercise of the option not to purchase uninsured motorist coverage by a named insured or applicant for insurance, the insurer shall not be required to notify any insured in any renewal, reinstatement, substitute, amended or replacement policy as to the availability of such uninsured motorist coverage or such optional limits. Statute provides that selection, rejection or exercise of option not to purchase UM by a named insured or applicant shall be valid for all insureds under the policy and any renewal, reinstatement or replacement policy. When an insurance carrier violates the statute by failing to obtain a written rejection of UM coverage, UM coverage is imputed to the extent of the minimum financial responsibility limits (25/50 effective April 1, 2005).May v. National Union Fire Ins. Co., 1996 OK 52, 918 P.2d 43. Any changes to an existing policy, regardless of whether these changes create new coverage, do not create a new policy and do not require the completion of a new form. 63 O.S. 3636(G). No UM offer is required on an umbrella policy. Moser v. Liberty Mutual,1986 OK 78, 731 P.2d 406. Umbrella policies are not the type of policy the UM statute requires to be accompanied by a UM offer. A self-insured car rental company is not required to offer UM coverage to a renter; accordingly, no UM coverage is imputed by operation of law. The rational being that self-insurers are not transformed into insurance companies as contemplated by the insurance code. McSorley v. Hertz, 1994 OK 120, 885 P.2d Increased Limits Statute requires that increased limits shall be offered and purchased, if desired. The increased limits shall not exceed the limits provided in the body injury liability policy of the insured. 36 O.S. 3636(B). Pierce Couch Hendrickson Page 11

12 Legally Entitled to Recover Oklahoma cases indicate they will adopt a liberal interpretation of the legally entitled to recover statutory language. Barfield v. Barfield et. al., 1987 OK 72, 742 P.2d 1107, held that an employee, injured through the negligence of a co-employee could recover from his UM carrier, even though the workers compensation exclusive remedy doctrine prohibited a suit against his co-worker. Also see, Torres v. Kansas City Fire & Marine Ins. Co., 1993 OK 32, 849 P.2d 407. Ply v. Nat l Union Fire Ins. Co., 2003 OK 97, 81 P.3d 643, indicated that an employer may be at fault within the meaning of legally entitled to recover from the owner or operator (of an uninsured/underinsured motor vehicle) where the employer provides negligent instructions relating to the use of an employer-owned vehicle and/or provides inadequate vehicle maintenance and the employee is injured caused by following the instructions and/or due to maintenance issues. Although the employee could not sue the employer in district court (due to the exclusive work comp remedy) the employee was found legally entitled to recover from the employer for purposes of making a claim against his UM carrier. There is a case finding that the UM insured was not legally entitled to recover. Specifically, a 3-yearold daughter of the injured knocked a car into gear causing it to roll into and hurt her mother/injured insured. The court reasoned that a child under the age of 7 is incapable of negligence by law. As such, the injured insured/mother was not legally entitled to recover from her 3-year-old daughter, precluding UM coverage. The court distinguished this case from one committing a wrong, but immunized by statute, indicating that in such situation, the injured insured would be deemed legally entitled to recover from the wrongdoer immunized by statute. Martin v. Hartford, 1996 OK 55, 918 P.2d 49. Pierce Couch Hendrickson Page 12

13 Efforts to exclude/limit/ offset Generally, the Oklahoma Supreme Court has been quite protective of an insured's UM benefits by invalidating policy exclusions, limitations or set-offs, on the basis they violate Oklahoma's public policy. Examples of policy provisions which have been invalidated are as follows: Cothren v. EMCASCO, 1976 OK 137, 555 P.2d 1037 invalidated as contrary to public policy a clause excluding coverage where the insured was occupying a vehicle owned by the insured but not insured by the company. Keel v. MFA, 1976 OK 86, 553 P.2d 153, invalidated the "other insurance" clause, thereby permitting "stacking" of UM policies. Biggs v. State Farm, 1977 OK 135, 659 P.2d 430, invalidated the "actual physical contact" requirement for there to be "hit-and-run" UM coverage. Chambers v. Walker, 1982 OK 128, 653 P.2d 231, prohibited a policy provision providing for an off-set or credit against the insured's own UM policy for workers' compensation benefits received. Uptegraft v. Home Insurance, 1983 OK 41, 662 P.2d 681, invalidated a policy provision barring recovery where the insured let the statute of limitations run as against the tort feasor on the rationale that the UM statute did not permit such an exclusion. Three cases invalidated a policy provision excluding from the definition of "uninsured motor vehicle" the insured vehicle itself. Heavner v. Farmers, 1983 OK 51, 663 P.2d 730; State Farm v. Wendt, 1985 OK 75, 708 P.2d 581; and Russell v. American States, 813 F.2d 306 (10 th Cir. 1987). Pierce Couch Hendrickson Page 13

14 State Farm v. Wendt, also invalidated a policy exclusion for vehicles (regularly furnished for the insured's use). The Oklahoma Supreme Court was clear that once a person is named as an insured in an uninsured motorist policy, subsequent policy exclusions to limit benefits are invalid. The Court did not limit its decision to this specific exclusionary language of the State Farm policy, but broadly stated that "any attempt to tie uninsured motorist coverage to automobiles alone, rather than to people, must fail". Wendt at page 585. State Farm v. Greer, 1989 OK 110,777 P.2d 941, invalidated a policy definition of uninsured motor vehicles which excluded governmentowned vehicles. The provision was deemed to be contrary to the UM statute and void. Legisla tive mandate of UM co ve ra ge impermissibly restricted by policy provision that a household resident was insured while in a car or a pedestrian; hence, UM coverage also applies when household resident operating a motorcycle. Ameen v. Prudential Property and Gas. Ins. Co., 2005 OK CIV APP 23, 110 P.3d 86. Statute of Limitations Subrogation The statute of limitations for written contracts (as an insurance policy) is 5 years. 12 O.S. 95(1). The 5-year statute of limitations begins to run not from the date of loss, but from the breach of the uninsured motorist coverage contract. Wile v. GEICO, 2000 OK 10, 2 P.3d 888. When an insurer pays a claim to a person under UM policy, the insurer has a right of subrogation and may recover sums which claimant may recover from the tortfeasor. The Oklahoma Supreme Court has indicated that if the insured intentionally or affirmatively destroys the insurer's subrogation rights, the UM carrier may not be liable to the insured for the entire loss to be indemnified. Passive destruction of the insurer's subrogation rights by the UM insured will not forfeit UM coverage. Burch v. Allstate, 1998 OK 129, 977 P.2d Pierce Couch Hendrickson Page 14

15 "Intentionally" has not been defined, but would likely be the insured violating a notice provision, ignoring a demand that the insured not let the statute of limitations toll. The UM carrier can make a substitute pay of the policy limits, and preserve subrogation rights. If the UM carrier does not make a substitute pay, it will lose its subrogation rights. The named insured then would settle with the torfeasor for policy limits (providing a release) and then pursue his/her UM claim. These substitute pay monies are not considered UM monies, so they do not reduce the UM limits to the extent of any such payment. The following comprise various scenarios typically confronted by carriers: Tortfeasor s carrier with high limits (example $500,000) makes policy limits offer. UM coverage is in a low amount (example $10,000). Experience dictates that very few UM carriers are willing to make a substitute pay of $500,000 when the UM limits are low. Typically, they will waive subrogation, let the injured insured settle with the tortfeasor and then continue to deal with the injured insured on the UM claim. Tortfeasor has low limits (example $10,000). Oftentimes, carriers will make substitute pay to preserve subrogation rights in these instances. Occasionally, situations arise where an injured insured has settled with a tortfeasor and, in conjunction therewith, executed a release in full of all claims in favor of the tortfeasor. Under this situation, the insured has destroyed the UM carrier s subrogation rights and, therefore, is prohibited from making a UM claim. This is considered an affirmative act which destroys the UM carrier s subrogation rights. Porter v. MFA Mutual Insurance Co.,1982 OK 23, 643 P.2d 302; Strong v. Hanover Insurance Co., 2005 OK CIV APP 9, 106 P.3d 604. Pierce Couch Hendrickson Page 15

16 On the other hand, there are situations where the injured insured passively destroys the UM carrier s subrogation rights. The most extreme example is where the injured insured fails to bring a suit against the torfeasor within 2 years. Having let the statute of limitations run on the tortfeasor, the injured insured then makes a UM claim. Under these circumstances, the UM claim is not destroyed. However, if it turns out the tortfeasor had adequate liability coverage vis-à-vis the injured insured s damages, the UM coverage is not triggered. However, if the injured insured s damages are greater than the tortfeasor s limits, then the UM carrier is obligated to pay the injured insured s damages (without offset) since UM coverage is considered primary. Gates v. Eller, 2001 OK 38, 22 P.2d An interesting case of note is Weatherly v. Flourney, 1996 OK CIV APP 109, 929 P.2d 296. Insured insured died as a result of a car accident. A wrongful death claim was made against the UM carrier, who paid $200,000 and waived subrogation rights against the tortfeasor. The wrongful death action was then pursued against the tortfeasor, resulting in a judgment of $203,000. The tortfeasor sought credit for the UM payments made; however, the court refused to credit the UM proceeds against the judgment due to the collateral source doctrine. The defendant did not purchase the collateral coverage, plaintiff did, so defendant could not take advantage of it. Even though the net effect was a double recovery for plaintiff, the court stated that the dealings between the tortfeasor s victim and his own insurance company was of no concern to the tortfeasor (the UM carrier may have wished it had preserved subrogation rights in this case). If the UM carrier wishes to preserve its subrogation rights, it needs to be mindful that it steps into the shoes of its insured vis-à-vis the tortfeasor. The subrogating UM carrier can acquire no rights greater than that of its insured. Accordingly, the subrogating UM carrier is subject to the two-year statute of limitations, from date of loss, against a Pierce Couch Hendrickson Page 16

17 tortfeasor. Farmers v. Stark, 1996 OK CIV APP 53, 924 P.2d 798. Can injured insured collect less than tortfeasor s limits and still pursue a UM claim? Are attorney s fees recoverable in a UM contract suit? UM Coverage for occupant Yes. This situation can arise where the UM carrier waives subrogation rights, then learns that the injured insured settled with the tortfeasor for less than policy limits. If it turns out that the injured insured s damages are more than the tortfeasor s liability limits, the UM carrier in this situation would owe the full extent of the injured insured s damages (subject to an offset for monies received by injured insured from tortfeasor). Generally, no. the American Rule provides each party is to pay their own attorney s fees unless provided for by contract or statute. No contract or statute provides that the injured insured plaintiff be entitled to attorney s fees when the prevailing party in a UM contract suit. However, there is an exception to the American Rule the oppressive litigation conduct exception; however, rarely will that exception be applicable. Barnes v. Oklahoma Farm Bureau, 2004 OK 25, 94 P.3d 25. Most policies provide UM coverage to permissive, Class II insureds while occupying the insured car. In Wicham v. Equity Fire & Casualty Co., 1984 OK CIV APP 148, 889 P.2d 1258, a good Samaritan stopped to help a stranded motorist; he was then struck by an uninsured motorist and killed. A wrongful death UM claim was made against the UM carrier on the car with a flat. The policy provided coverage to anyone occupying, with your permission, a car we insure. The court found the decedent to have been occupying the vehicle for UM coverage purposes. Specifically, the court found that the word occupying, as defined in the policy ( in, on, getting in or on, or getting off or out of ) was sufficiently broad to include a person such as the decedent who had looked through the trunk, performed repairs on the vehicle, and was next to the vehicle changing the tire at the time when he was struck by the uninsured motorist. Pierce Couch Hendrickson Page 17

18 Availability of UM coverage to exclude drivers while operating vehicles Uninsured/Underinsured status Excess/Liability Policies Liens An excluded driver, while operating the vehicle was injured due to the negligent actions of an uninsured motorist. The named driver exclusion was unambiguous (excluding any coverage benefits) and was held to not violate the public policy of Oklahoma s uninsured motorist laws. O Brien v. Dorrough, 1996 OK CIV APP 25, 928 P.2d 322. Where the tortfeasor is a government entity, which has waived sovereign immunity up to certain limits (by statute), such self-insurance was considered the functional equivalent of insurance for UM purposes. Accordingly, a UM claimant who let his claim against a state agency expire, was unable to collect UM benefits because the value of his claim was less than the statutory liability limits allowed. Carlos v. State Farm, 1996 OK CIV APP 158, 935 P.2d Excess liability policies are not included in determining the liability limits of an insured motor vehicle and its status as an underinsured motor vehicle, and UM coverage is primary to the excess liability coverage. GEICO General Insurance Co. v. Northwestern Pac. Indemnity Co., 2005 OK 40, 115 P.3d 856. UM proceeds are not subject to hospital liens, but are subject to physicians' or attorneys' liens. Broadway Clinic v. Liberty Mutual Insurance Co., 2006 OK 29, 139 P.3d 873. Pierce Couch Hendrickson Page 18