Ohio’s Revised 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 recent 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 or was not 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 now 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 also 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
within two years of the law’s effective date. (Go to www.legislature.state.oh.us/bills.cfm?ID=124_SB_97
to view the bill in its entirety.)
For more information on Ohio’s UM/UIM law, go to www.ohioinsurance.org/news10-31-01QA.html.
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Based on figures from Ohio’s
top commercial auto insur-ance writers, the Scott-Pontzer
and Linko Ohio Supreme Court rulings are expected to
cost insurers at least $1.5 billion in additional claims for
which no premiums were assessed or collected. If these rulings
were a natural disaster in terms of insured losses, they would
constitute the costliest catastrophe in the world for 2000.
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