December 21, 2009

TO ALL INTERESTED COMPANIES

On December 8, 2009, the Missouri Supreme Court issued its opinion in Derousse v. State Farm Mutual Automobile Insurance Company, and the opinion may be of interest to you.

Derousse was simply driving down the highway when an accident occurred that involved an uninsured motor vehicle. An occupant of that uninsured vehicle was ejected during that crash and landed on the windshield of Ms. Derousse’s vehicle, rolled off the hood, and went under her car. At the time that all happened, Ms. Derousse was an insured person under a policy of motor vehicle insurance issued by State Farm.

Ms. Derousse admitted that she suffered no physical injury. Her vehicle was not involved in the accident, other than the person that was ejected from the uninsured motor vehicle happened to land on Ms. Derousse’s vehicle. Ms. Derousse claimed only emotional distress and upset. State Farm denied the claim for uninsured motorist benefits because there was no “bodily injury” suffered by Ms. Derousse.

The Supreme Court found that Ms. Derousse was entitled to pursue an uninsured motorist claim, even though she suffered no “bodily injury”. The Court ruled that the Missouri statute making uninsured motorist coverage mandatory required coverage for “bodily injury, sickness or disease” and the Court held that even though pure emotional upset may not be “bodily injury”, it is “sickness or disease” and therefore coverage was required under the UM provisions of the contract of insurance.

On the same date, the Missouri Supreme Court issued its opinion in Rice v. Shelter Mutual Insurance Company, and that case may also be of interest to you.

Mr. Rice was injured on the job while a passenger in a vehicle. The accident occurred as a result of the fault of an uninsured motorist. At the time of the accident, Rice was an insured person on three (3) automobile insurance policies issued by Shelter. One of the policies had limits of $100,000/$300,000. The other two policies had limits of $250,000/$500,000. Rice received worker’s compensation benefits. The Shelter policies provided that the uninsured motorist coverage did not apply:

“To damages sustained by any insured…if benefits are payable to, or on behalf of, such insured under any compensation law as a result of the same accident, or…required by any compensation law to be provided to, or on behalf of such insured as a result of the same accident.”

The policy also limited the exclusion such that minimum coverage would still be available. The policy provided:

“This exclusion does not apply to the amounts of coverage mandated by any uninsured motorist insurance law or financial responsibility law applicable to the accident, but does apply to any amount exceeding that mandate, and to coverages which are not mandated by such laws.”

As a result of the policy provisions, Shelter paid $25,000 per policy, the minimum limits required by Missouri law.

The Supreme Court held that Shelter’s policies were ambiguous because the policies showed that the insured purchased limits of uninsured motorist coverage in excess of the statutory minimum ($25,000/$50,000). The policy then provided that if the insured recovered further compensation, such as worker’s compensation benefits, the limits were reduced to the statutory minimum. However, the policy also contained the following:

“If an applicable uninsured motorist insurance law or financial responsibility law renders any provision of this Part of the policy unenforceable, we will provide only the minimum limits mandated by such law. However, if other insurance covers an insured’s claim and provides those required minimum limits, the provisions of this policy are fully enforceable.

All provisions of this Part of the policy which exceed the requirements of any applicable uninsured motorist insurance law or financial responsibility law, or are not governed by it, are fully enforceable.”

The Court held that the effect of the policy was to first grant higher limits of uninsured motorist coverage in the declarations. The exclusion then restricted the coverage, but the policy then provided that all provisions of the policy that exceed the requirements of the mandatory insurance law were fully enforceable. The Court held the policies were therefore ambiguous and held that Rice was entitled to recover the limits of all three (3) policies.

            As has been our practice in the past, I have not enclosed a copy of the opinion with this letter.  If you would like to have a copy of the opinion, you can access it here and here.

                                                                       
SCHMITT MANZ SWANSON & MULHERN, P.C.
Paul Hasty, Jr.
7101 College Blvd., Suite 350
Overland Park, KS  66210
Telephone: (913) 317-8068
phasty@msmlawkc.com