494 P.3d 345
Okla.2021Background
- In 2017 plaintiffs (passengers) were seriously injured in a single-car rollover driven by a minor insured under a Progressive policy issued to the driver’s parents.
- Progressive's policy provided $100,000 per person/$300,000 per accident liability (Part I) and $100,000/$300,000 uninsured/underinsured motorist (UM) coverage (Part III); premiums for both coverages were paid.
- Plaintiffs recovered the $100,000 per-person liability limits but their damages exceeded that amount; they then sought UM benefits from Progressive.
- Progressive denied UM claims based on a policy exclusion (the “UM Exclusion”) that bars UM coverage when liability coverage in an amount equal to or greater than Oklahoma’s statutory minimum is available.
- The federal district court sided with Progressive; the Tenth Circuit certified the controlling question to the Oklahoma Supreme Court: whether that UM Exclusion contravenes 36 O.S. § 3636.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a policy exclusion that denies UM whenever liability in at least the statutory minimum is available violates 36 O.S. § 3636 | UM Exclusion is void as against public policy; it negates bargained-for UM coverage | Statute does not expressly forbid such exclusions; exclusion satisfies statutory minimums and is permitted | Yes. The exclusion contravenes § 3636 and is void; UM coverage must be separately available up to contracted limits |
| Whether liability coverage can operate as a substitute that eliminates UM recovery when damages exceed liability limits | Policyholders paid for distinct UM coverage and must be able to obtain it when damages exceed liability limits | The legislative scheme contemplates that either liability or UM can supply minimum protection; exclusions are permissible | Liability is not a substitute. UM must apply based on claim value above available liability; exclusion that effectively erases UM is impermissible |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. Wendt, 708 P.2d 581 (Okla. 1985) (exclusions that dilute legislatively mandated UM coverage are void)
- Burch v. Allstate Ins. Co., 977 P.2d 1057 (Okla. 1998) (insurer must assure contracted UM coverage for which premium paid)
- Ball v. Wilshire Ins. Co., 221 P.3d 717 (Okla. 2009) (policyholder’s choice re UM must be protected; exclusions impermissible when they nullify that choice)
- State Farm Auto Ins. Co. v. Greer, 777 P.2d 941 (Okla. 1989) (purpose of UM coverage is to protect insured from effects of uninsured/underinsured motorists)
- Russell v. Am. States Ins. Co., 813 F.2d 306 (10th Cir. 1987) (criticized Catch-22 exclusions that impermissibly limit § 3636)
- Bohannan v. Allstate Ins. Co., 820 P.2d 787 (Okla. 1991) (courts protect strength of UM statute and insureds’ purchased rights)
- Hartline v. Hartline, 39 P.3d 765 (Okla. 2001) (liability and UM are components of an integrated system; insurers must provide statutory minimum to Class 1 insureds)