Ohio’s Uninsured/Underinsured Motorists Insurance Law

Many Ohioans, especially business owners, began experiencing availability/affordability problems upon renewal of their auto insurance policies in 2001. A number of insurers, faced with the potential of soaring claims costs associated with Uninsured/Underinsured Motorists (UM/UIM) insurance claims, took action to circumvent a string of Ohio Supreme Court decisions that expanded coverage beyond its intent. These actions included suspending the writing of any new commercial auto and umbrella policies in Ohio, raising UM/UIM premiums between 50–100% and excluding this coverage at renewal.

Ohio Supreme Court decisions

Insurers were forced to evaluate UM/UIM coverage based on a series of Ohio Supreme Court decisions that affected their ability to adequately assess risk and exposure to losses and subsequently, lawsuits. Two prominent rulings affecting Ohio’s auto insurance market were Scott-Pontzer v. Liberty Mutual Fire Insurance Co. (June 1999) and Linko v. Indemnity Insurance Co. of North America (December 2000).

The Scott-Pontzer decision resulted in higher auto liability insurance premiums for businesses. The case expanded employer UIM coverage to apply in a crash even though the deceased (Pontzer) was not driving a company-owned vehicle nor was he engaged in company business at the time of the fatal crash.

The Linko ruling adversely affected most (if not all) auto insurers in Ohio. The case dealt with what constituted an express and knowing rejection of UM/UIM coverage.

Up to this point, policyholders opting to reject UM/UIM coverage or choosing lower limits were required to sign a waiver form. This sign-off process was a source of several adverse Supreme Court rulings and was the only auto insurance coverage that required such a step. In its ruling the court changed the requirement of what constitutes a valid offer of coverage, invalidating most of the ways UM/UIM coverage rejections were being handled by companies. So even if a policyholder (i.e. business owner or consumer) signed a UM/UIM waiver form rejecting coverage, claims exposure still existed.

SB 97—the response

A bill, backed by a broad spectrum of auto insurance consumers affected by increased cost and limited availability of UM/UIM coverage, was passed by the Ohio General Assembly, becoming law on October 31, 2001.

SB 97 (sponsored by Senator Scott Nein, R-Middletown) restored stability to the UM/UIM marketplace by removing the mandatory offering requirement in previous UM/UIM law. This law brought UM/UIM coverage into uniformity with all other coverages offered by insurers under personal and commercial auto insurance policies.

UM/UIM coverage is offered in the same manner as all other auto insurance coverages. Waiver or sign-off forms are no longer required. As with other optional insurance coverages, consumers can decide if UM/UIM coverage meets their driving needs. Based on the fact that about one in eight drivers in Ohio are uninsured, it’s advisable to consider this coverage as part of your auto insurance package.

Other provisions of SB 97

SB 97 included the following provisions:

• Permits exclusions in UM/UIM coverage under an employer’s commercial auto insurance policy when the employee is not acting within the scope of employment
• Limits policyholder UM/UIM claims to a three-year period
• Entitles the Ohio Department of Insurance to monitor Ohio’s UM/UIM market and report on its status to the General Assembly. ODI released findings in November, 2003, reporting that the UM/UIM market in Ohio was stabilizing. The report showed that insurers were readily offering UM/UIM coverage—though not required to do so—and the rates were decreasing.

For more information on Ohio’s UM/UIM law, go to www.ohioinsurance.org/newsroom/um-uim.asp.

Recent activity

On November 5, 2003, the Supreme Court of Ohio issued a ruling in Westfield Insurance Company v. Galatis which effectively limits Scott-Pontzer claims to only those cases where an employee is in the course and scope of his/her employment. Decision in the Galatis case will bring even further stability to the UM/UIM insurance marketplace. On December 25, 2003, the Supreme Court of Ohio denied a motion to reconsider Westfield Insurance Company v. Galatis. For more information, click here.