This article, authored by Glen Pritchard, originally appeared in the Fall 2000 edition of the Ohio Association for Justice, Ohio Trial magazine.

The cost of lost earning and medical claims has steadily increased while the minimum insurance limit of liability has remained unchanged for more than a dozen years. As a result, plaintiff’s counsel often faces a desperate search for adequate uninsured/underinsured motorist coverage.  This article describes the state of the art in finding such coverage in unconventional places: the auto policy of the plaintiff’s employer and the plaintiff’s homeowner’s policy.

I. Employer’s Policies

Insurance carriers may provide more uninsured motorist coverage than they bargained for when they use the same policy language to cover both corporate and individual insureds.  Specifically, a corporate auto policy may provide coverage to all employees of the corporation if the policy language is drafted to cover individuals.

The Ohio Supreme Court first considered this issue in King v. Nationwide Ins. Co. (1988), 35 Ohio St.3d 208.  In King, Dale Gordon borrowed the vehicle of a co-worker to perform an errand for his employer, ASCAA. While running an errand for ASCAA, Gordon was killed by an uninsured motorist.  Gordon’s employer was the named insured on a Nationwide policy that provided $250,000 in uninsured motorist coverage.  However, Gordon was not a designated insured under the policy, and the car he was using was not listed as a covered auto.  However, the Nationwide policy covered “residents living in your household” and “anyone else” while occupying “any other motor vehicle while it is being operated by you or a relative living in your household.”

The Ohio Supreme Court held that this language, obviously designed to cover individual insureds, was ambiguous when the named insured was a corporate entity:

Because “you” and “your” refer to AASCAA as a legal entity, the ordinary meaning of the phrase “[r]elatives living in your household” used in the policy is “manifestly absurd.”  However, in the context of the policy as a whole, the phrase “[r]elatives living in your household” may be interpreted as referring to all employees of ASCAA, as referring to designated drivers only, or as a nullity.  Therefore, the phrase is ambiguous and must be construed in favor of the insured.

Accordingly, the Court held that Gordon’s estate was entitled to arbitrate the underinsured motorist claim with Nationwide.

Some appellate courts have held that the ambiguity identified in King results in coverage for an employee even when the employee is not within scope of employment and not occupying any vehicle.  In  Decker v. CNA Ins. Co. (1990), 66 Ohio App. 3d 576, Decker was struck and killed by an uninsured motorist while jogging.  Decker’s employer, Envirodyne, owned a policy issued by CNA in which Envirodyne was the named insured.  The CNA policy defined as “insured” to mean “you or any family member.”  The Court held that an employee of a corporate named insured qualified as a “family member” and that Decker was entitled to coverage despite the fact that he was not in the course of his employment and was not occupying any vehicle.  See also, Aetna Cas. & Surety Co. v. Borden, Inc. (Sept. 15, 1989), Lake App. No. 88-L-13-163, unreported; Simon v. Midwestern Indemn. Co. (Aug. 31, 1988), Lorain App. No. 4346, unreported.

Naturally, insurers changed their policy language in an effort to eliminate the ambiguity identified in King.  Many insurers changed the definition of insured to include 1) you, and 2) if you are an individual, relatives living in your household.  The idea is that clause insuring “relatives” will not apply unless “you”, the named insured, is an person rather than a corporation.  However, the Ohio Supreme Court recently held that this language could still be construed to extend coverage to the employees of a corporate named insured. Scott-Pontzer v. Liberty Mut. Fire Ins. Co. (1999), 85 Ohio St. 3d 660.  In Scott-Pontzer, the Court held:

[I]t would be reasonable to conclude that “you,” while referring to Superior Dairy, also includes Superior’s employees, since a corporation can act only by and through real live persons.  It would be nonsensical to limit protection solely to the corporate entity, since a corporation, itself, cannot occupy an automobile, suffer bodily injury or death, or operate a motor vehicle.  Here, naming the corporation as the insured is meaningless unless the coverage extends to some person or persons – including to the corporation’s employees.  Scott-Pontzer, supra, at 664.

Hence, when the named insured is a corporation or other business entity, “you” refers to both the named corporation and the corporate employees.  The Scott-Pontzer Court noted that the polices at issue did not limit coverage to employees working in the course and scope of employment.  Therefore, the Court held that insured employees were covered even though not working at the time of the injury.  It is an open question as to whether an insurer may permissibly restrict coverage to accidents which occur “on the clock”.

What about resident relatives of an employee? Remember, these policies provide to 1) “you” and 2) “if you are an individual, residents living in your household”.  Since employees are “you”, and employees are individuals, it is logical that an employees resident relatives would also be entitled to coverage under the employer’s policy.  In fact, the Ohio Supreme Court reached this result in Ezawa v. Yasuda Fire & Marine Ins. Co. of Am. (1999), 86 Ohio St.3d 557.  Although the one sentence majority opinion in Ezawa simply reverses the appellate court’s decision on the authority of Scott-Pontzer, Justice Stratton’s dissenting opinion makes it clear that the coverage afforded in that case was to the minor daughter of the employee.

Remember, employer policies will often contain standard UDM requirements with which the insured must comply.  For example, the policy will probably require the insured to protect the insurers subrogation rights against the tortfeasor, bring the UDM claim within a certain period of time after the accident, and obtain the consent of the insurer before entering into any settlement with the tortfeasor.  For these reasons, it may not be possible to bring claims against employer’s policies in cases where a settlement with the tortfeasor has already occurred.

II. Homeowner’s (and Other General Liability Policies)

At first, it might seem silly to look to the plaintiff’s homeowners insurance policy for uninsured motorist coverage because homeowner’s policies do not have uninsured motorist coverage. For now, perhaps you should take a second look.

The Ohio Uninsured Motorist Statute requires insurers to offer uninsured and underinsured motorist coverage with any “automobile liability or motor vehicle liability policy of insurance” R.C. 3937.18.  If an insurer fails to offer uninsured motorist coverage as required by statute, the coverage arises by operation of law in an amount equal to the liability insurance coverage. Abate v. Pioneer Mutual Cas. Co. (1970), 22 Ohio St.2d 161.

Prior to the enactment of the H.B. 261 amendment to the Uninsured Motorist Statute, effective September 3, 1997, R.C. 3937.18 did not define “automobile liability or motor vehicle liability policy of insurance”.  As such, it fell to the Courts to determine what policies triggered the insurer’s obligation to offer uninsured motorist coverage.

The Tenth District Court of Appeals was faced with this task in Goettenmoeller v. Meridian Mut. Ins. Co. (June 25, 1996), Franklin App. No. 95APE11-1553, unreported.  Janet Goettenmoeller was operating a vehicle owned by her mother when she was seriously injured by an underinsured driver.  Ms. Goettenmoeller was covered under an automobile policy with underinsured motorist coverage in the amount of $500,000.  Ms. Goettenmoeller was also insured under a farm owners policy, issued by Meridian, which provided liability insurance in the amount of $1 million.  The Meridian policy generally excluded liability coverage for automobile accidents and Meridian neither provided nor offered uninsured motorist coverage with the policy.  Nevertheless, the Court found that the Meridian policy was a motor vehicle policy of liability insurance due to fairly narrow exceptions from the motor vehicle exclusion.  In particular, the exclusion provided as follows:

This policy does not apply:

“1. Under Coverage F–Bodily Injury Liability

“a. to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of:

“(1) any aircraft;

“(2) any motor vehicle owned or operated by, or rented or loaned to any Insured; but this subdivision (2) does not apply to bodily injury or property damage occurring on the insured premises if the motor vehicle is not subject to motor vehicle registration because it is used on the insured premises or kept in dead storage on the insured premises; or

“(3) any recreational motor vehicle owned by any Insured, if the bodily injury or property damage occurs away from the insured premises; but this subdivision (3) does not apply to golf carts while used for golfing purposes[.]” (Emphasis added.)  Goettenmoeller, supra, at 4-5.

The Court found significant that the policy provided liability coverage for bodily injury arising out of the use of a recreational motor vehicle occurring on an insured location.  By statutory definition, “recreational vehicles” are “motor vehicle” R.C. 4501.01(B) Because the policy provided liability coverage for use of a “motor vehicle”, even under very limited circumstances, the Court held that the Meridian policy triggered the offer requirement of the Uninsured Motorist Statute.  Since no uninsured motorist coverage had been offered with the policy, the Court found that uninsured motorist coverage arose by operation of law in the same about as the liability insurance limits, $1 million.

Although Goettenmoeller involved a farm owner’s policy, which is relatively rare, almost all common homeowner’s policies provide coverage for some type of recreational motor vehicle.  Several unreported appellate cases have now adopted the Goettenmoeller rationale in finding that uninsured motorist coverage is provided, by operation of law, in ordinary homeowner’s policies. German v. Wray (Sept. 3, 1999), Richland App. No. 99CA 17, unreported; State Auto Mut. Ins. Co. v. Lopez (Sept. 23, 1999), Franklin App. No. 99AP-15, unreported; Stewart v. State Auto Mut. Ins. Co. (Oct. 7, 1999), Franklin App. No. 98AP-1601, unreported; Willis v. Lightning Rod. Mut. Ins. Co. (Sept. 27, 1999), Fairfield App. No. 99 CA 14, unreported; Chuff v. Holland (Sept. 30, 1999) Licking App. No. 99CA57, unreported; Wodrich v. Farmers Ins. (May 21, 1999), Greene App. No. 98 CA 103 unreported.

Finding coverage for recreational vehicles in a homeowner’s policy often requires careful scrutiny of the policy language.  For example, in German v. Wray, the State Farm policy excluded coverage for all damages arising out of the use of all “motor vehicles”.  The exclusion did not provide for any exception for recreational vehicles.  However, in a separate section of the policy, the term “motor vehicle” was defined to include:

1) a motorized land vehicle designated for travel on public roads or subject to motor vehicle registration; * * *

3) a motorized golf cart, snowmobile, or other motorized land vehicle owned by an insured and designed for recreational use off public roads, while off an insured location.

Pursuant to this definition, a recreational vehicle used off an insured location is a “motor vehicle” subject to the “motor vehicle” exclusion.  However, any recreational vehicle used on an insured location does not fit the policy’s definition of “motor vehicle”; therefore, the “motor vehicle” exclusion does not apply and coverage is extended for the use of recreational vehicles used on an insured location.  In German, the Fifth District Court of Appeals held that this narrow extension of liability coverage to recreational vehicles is sufficient to render the State Farm homeowner’s policy subject to the offer requirement of the Uninsured Motorist Statute.  Having failed to offer uninsured motorist coverage with the policy, uninsured motorist coverage arose by operation of law in the same amount as the liability coverage limits.

In reaching the conclusion that homeowner’s policies, which provide liability coverage for the use of recreational vehicles, must provide uninsured motorist coverage by operation of law, the appellate courts have found guidance in the Ohio Supreme Court’s recent decision in Selander v. Erie Ins. Group (1999), 85 Ohio St. 3d 541.  The policy considered in Selander was neither a farm owner’s policy nor a home owner’s policy, but a general business liability policy, issued by Erie to a partnership, Twin Electric.  The partnership was owned by Glenn and Eugene Selander who were both injured in a crash caused by an underinsured driver.  At the time of the crash, the Selander’s were both working in the scope and course of the partnership business.  The vehicle they were occupying was covered under a commercial auto policy issued by Erie.  The Selander family exhausted all of the tortfeasor’s available liability insurance as well and the underinsured motorist coverage available under the Erie commercial auto policy.

The Selander family then made an underinsured motorist claim under the Erie “Five Star” general commercial liability policy.  The Five Star policy, which provided liability coverage in the amount of $1 million per occurrence, generally excluded coverage for motor vehicle accidents, and did not list any covered autos or insured drivers.  Furthermore, Erie did not offer uninsured or underinsured motorist coverage when it sold the policy.  However, the Five Star policy did provide liability coverage for damages for which the partnership became liable arising out of the negligent use of a “non-owned or hired auto” by an employee.  In finding that the Five Star policy was a “motor vehicle liability policy of insurance” which triggered the offer requirement of the uninsured motorist statute,  the Ohio Supreme Court cited Goettenmoeller with approval for the proposition that “[w]here motor vehicle liability coverage is provided, even in limited form, uninsured/underinsured coverage must be provided”.  Selander, supra, at 544.  The Court was not persuaded by Erie’s arguments that the policy was not subject to the uninsured motorist statute because it did not insure any specific automobile or was not approved under Ohio’s financial responsibility law.

Bolstered by Selander, the Goettenmoeller analysis with respect to homeowner’s policies has been adopted in every appellate district that has considered the issue.  However, the window of opportunity for making these claims is short.  The H.B. 261 amendment to R.C. 3937.18, effective September 3, 1997, provides, for the first time, a statutory definition for “automobile liability or motor vehicle liability policy of insurance”:

(L) As used in this section, “automobile liability or motor vehicle liability policy of insurance” means either of the following:

(1) any policy of insurance that serves as proof of financial responsibility, as proof of financial responsibility is defined by division (k) of section 4509.01 , for owners or operators of the motor vehicles specifically identified in the policy of insurance;

(2) any umbrella liability policy of insurance.

Because homeowner’s policies and general commercial liability policies do not serve as proof of financial responsibility, they will no longer be deemed to be subject to the requirements of the Uninsured Motorist Statute.  See, for example, Selander, fn 1.

In considering whether the September 3, 1997, amendment applies to a particular case, be mindful that the date of the accident is irrelevant in making that determination.  The statutory law in effect on the date the applicable policy was issued or last renewed will control the rights of the parties.  Ross v. Farmers Ins. Group (1998), 82 Ohio St. 3d 281.  Therefore, even if the accident occurred after September 3, 1997, older version of the statute will prevail if the policy in effect at the time of the accident was last renewed before H.B. 261’s effective date.

It may even be possible to resurrect a Goettenmoeller type claim in cases that were long ago settled and “closed.”  Because Goettenmoeller UDM coverage arises by operation of law rather than from the written contract, there are no UDM exclusions, time limits for bringing claims, consent requirements, or subrogation clauses.  Restrictions found in other portions of the policy will not be applied to the UDM coverage which has been implied by law.  Demetry v. Kim (1991), 72 Ohio App. 3d 692, cited with approval by the Ohio Supreme Court in Selander.

III. CONCLUSION

The people who need to find uninsured motorist coverage in their homeowner’s policy or their employer’s auto policy are in dire straits.  The are the most grievously and permanently injured.  The have exhausted coverage available under traditional automobile policies.  They are running out of options.  They deserve representation by someone who will leave no stone unturned.