Philadelphia Indemnity Insurance Company, Inc. v. Richard Tryon, 502 S.W.3d 585

Background

Richard Tryon was injured while riding his motorcycle; he had UIM coverage on that motorcycle (Nationwide) and owned two cars insured separately by Encompass and Philadelphia, each with UIM/UM provisions.
Encompass and Philadelphia denied Tryon UIM benefits under their automobile policies because the motorcycle was an owned-but-not-scheduled vehicle not insured under those policies.
Encompass’s policy expressly excluded UIM for vehicles owned by the insured that were not specifically identified on the policy; it also defined “covered person” to exclude persons in vehicles owned by the insured that were not insured under the policy.
Philadelphia’s policy had a similar owned-but-not-scheduled exclusion, but it expressly referenced only uninsured-motorist (UM) coverage and was silent as to underinsured-motorist (UIM) coverage.
Trial court granted summary judgment for Encompass and Philadelphia; Court of Appeals reversed relying on Chaffin (anti-stacking/ reasonable-expectations for UM). The Kentucky Supreme Court granted review to resolve whether owned-but-not-scheduled UIM exclusions are enforceable as public policy.

Issues

Issue	Plaintiff's Argument (Tryon)	Defendant's Argument (Insurers)	Held
Are owned-but-not-scheduled exclusions enforceable as a matter of Kentucky public policy to deny UIM benefits?	Such exclusions should be unenforceable by public policy and under Chaffin because insureds reasonably expect coverage they paid for.	UIM is optional and contractually negotiable under statutory scheme; exclusions are enforceable if clear and unambiguous.	Owned-but-not-scheduled UIM exclusions are enforceable so long as the policy plainly and unambiguously excludes the coverage.
Does Chaffin (anti-stacking/ reasonable expectations for UM) control UIM exclusions?	Chaffin’s reasoning (coverage personal to insured; reasonable expectation) requires denying such exclusions for UIM too.	Chaffin concerns mandatory UM, not optional UIM; statutory differences permit enforcing UIM exclusions.	Chaffin is limited to UM; statutory distinctions make it inapplicable to UIM and Dicke to the extent inconsistent is overruled.
Is Encompass’s policy ambiguous or sufficiently plain to deny Tryon UIM benefits?	Tryon argued ambiguity and that operative terms were not clearly defined; exclusion should be construed for insured.	Encompass argued the policy plainly and repeatedly excludes UIM for owned-but-not-scheduled vehicles.	Court: Encompass’s wording is clear and unambiguous; summary judgment for Encompass affirmed.
Is Philadelphia’s policy ambiguous as to UIM exclusion?	Tryon argued Philadelphia did not plainly exclude UIM (policy referenced UM only), so reasonable expectations require coverage.	Philadelphia argued the owned-vehicle exclusion applied generally.	Court: Philadelphia’s policy did not plainly exclude UIM; ambiguity resolved for insured and summary judgment for Philadelphia reversed.

Key Cases Cited

Chaffin v. Kentucky Farm Bureau Ins. Cos., 789 S.W.2d 754 (Ky. 1990) (held UM anti-stacking exclusions unenforceable; insureds have reasonable expectation of coverage)
Dicke v. Allstate Ins. Co., 862 S.W.2d 327 (Ky. 1993) (applied Chaffin reasoning to UIM; court here narrows/overrules to extent inconsistent)
Simon v. Continental Ins. Co., 724 S.W.2d 210 (Ky. 1986) (doctrine of reasonable expectations: exclusions must be unequivocally conspicuous to defeat coverage)
Motorists Mut. Ins. Co. v. Glass, 996 S.W.2d 437 (Ky. 1997) (upheld regular-use exclusion from UIM as enforceable)
State Farm Mut. Ins. Co. v. Hodgkiss-Warrick, 413 S.W.3d 875 (Ky. 2013) (recognized regular-use exclusion did not offend Kentucky public policy)
Bidwell v. Shelter Mut. Ins. Co., 367 S.W.3d 585 (Ky. 2012) (policy limitations must be clearly stated and operative terms defined to be enforceable)
Eyler v. Nationwide Mut. Fire Ins. Co., 824 S.W.2d 855 (Ky. 1992) (longstanding rule: exclusions construed narrowly against insurer)