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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. The result of these court rulings
was that an employer’s
insurance coverage was being extended to employees while they were
operating their personal vehicles on personal time – even
when the employer had signed and rejected the 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 and business groups 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.
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A May 2006 National Highway Traffic Safety Administration report shows that young men in pickup trucks in rural areas are the drivers that are most unlikely to use seat belts. Although seat-belt use is reaching record levels, approximately 48 million motorists in the US do not regularly buckle up.
(The Wall Street Journal, 5/15/06) |
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