Recently, our firm successfully argued that Shelter Mutual Insurance’s policies permitted stacking based on conflicting provisions found in the policy and UIM endorsement in Long v. Shelter Mut. Ins. Co., (Mo. App. W.D. 2011). As the impact of this decision is still being tested in practice, we are pleased to see affirmation of the argument in Long that combining benefits of multiple policies (stacking) of insurance policies is allowed unless the insurer unequivocally states that it is prohibited. A new decision in the case of Manner v. Am Fam. Mut. Ins. Co., 2012 WL8560 (Mo. banc Jan. 8, 2013), in addition to Long, shows that Missouri courts do not favor provisions in UIM policies that attempt to restrict the coverage. The courts disfavor set-off provisions and allow stacking absent clear direct language to the contrary.
Manner v. American Family Mutual Insurance Company
In Manner v. Am Fam. Mut. Ins. Co., 2012 WL8560 (Mo. banc Jan. 8, 2013), Nathaniel Manner appealed the circuit court’s grant of summary judgment in favor for American Family. Id. at *2. The circuit court had granted summary judgment stating that Mr. Manner could not stack four insurance policies issued by American Family. Id.
The Supreme Court disagreed with the circuit court. American Family had tried to argue that an “owned-vehicle” exclusion prohibited coverage. Id. at *2-*3. American Family had issued Mr. Manner four policies each of which had an “owned-vehicle” exclusion that stated “This coverage does not apply for bodily injury to a person: . . . While occupying or when struck by, a motor vehicle that is not insured under this policy if it is owned by you or any resident of your household.” Id. at *2. American Family claimed Mr. Manner owned the vehicle he was driving at the time of the accident, and because he owned the vehicle, the “owned-vehicle” exclusion prohibited coverage. Id. at *2. American Family also argued the liability policy and UIM coverage had identical policy limits of $100,000.00. Id. at *2. Therefore, the tortfeasor did not meet the definition of an “underinsured motorist” found in the policy. Id.
The Supreme Court in Manner first ruled that American Family failed to meet its burden to show the “owned-vehicle” exclusion applied. Id. at *2-*3. The Court noted “the burden of showing that an exclusion to coverage applies is on the insurer.” Id. at *3. In a parenthetical, the Court reiterated that “Missouri also strictly construes exclusionary clauses against the drafter, who also bear the burden of showing the exclusion applies.” Id. (quoting Burns v. State, 303 S.W.3d 505, 510 (Mo. banc 2010) (emphasis in original)). Because American Family failed to define owner and factual questions existed as to whether Mr. Manner or his uncle owned the vehicle involved in the accident, the Supreme Court determined an ambiguity existed and American Family failed to meet its burden. Id. at *4 (“The insurers had the burden of showing that the term ‘owned’ in the endorsement unambiguously included Nathaniel’s situation. At best, the term is ambiguous as used in the policy, and any ambiguity will be interpreted in favor of the insured. The insurer failed to meet its burden of showing that the owned-vehicle exclusion applied.”) (internal citations omitted).
After dismissing the exclusion, the Supreme Court turned its attention to what the applicable limits of liability were. Id. at *4-*6. Mr. Manner pointed out under Missouri law, he could stack all four policies giving him limits of $400,000.00 making the tortfeasor, who had a liability policy of $100,000.00, underinsured. The Supreme Court agreed and stated:
In determining what coverage is provided for purposes of determining the applicability of underinsured motorist coverage, a court first must determine whether the policy permits coverage from multiple policies to be stacked. . . . This approach is consistent with the fact that one purpose of the underinsured motorist coverage is to provide the insured with the coverage the insured purchased when the excess amount is necessary to cover damages. Id. at *5.
The Manner court then discussed the Supreme Court’s decision in Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132 (Mo. banc 2009). Id. at *6. The Court first pointed to the “Other Insurance” provision found in Ritchie, which read:
If there is other applicable underinsured motorist coverage available under one or more policies or provisions of coverage:
(2) Any coverage we provide with respect to a vehicle you do not own shall be excess over any other collectible underinsured motorist coverage. Id. (citing Ritchie, 307 S.W.3d at 136-37).
The Court then explained Ritchie stood for the proposition that when a conflict exists between an “Other Insurance” clause and other provisions in a UIM policy, then the conflict will be decided against the insurer. Id. at *6. Relying on Ritchie, the Supreme Court in Manner held:
Similarly, here, the second sentence of the “other insurance” clause appears to an “ordinary person of average understanding” to permit stacking because it states that “any coverage we provide with respect to a vehicle you do not own shall be excess over any other collectible underinsured motorist coverage.” To the extent that this is inconsistent with other provisions of the policy such as the “Two or More Cars Insured” provision, the resulting ambiguity must be resolved in favor of the insured. Stacking is permitted under the four policies. Id.
In addition to addressing “stacking” UIM coverages, the Manner court made it clear that UIM carriers do not get a “set-off” or a credit for payments made by a tortfeasor. The Supreme Court reiterated its reasoning from Ritchie and held that “set-offs” would make the promised UIM coverage illusory since on a policy’s face it promises to pay the limits stated on the declarations page but if given a set-off, then the insurer would never have to pay the amount on the declarations page. Not only does the opinion reiterate the holding from Ritchie, but it also does not allude that it may be possible for an insurer to draft language allowing for set-off like the Ritchie court did. The strong language from Manner may finally have put the issue of “set-offs” to rest.
Despite the precedent disfavoring the restriction of UIM coverage in Manner, in addition to Long, insurance companies continue to aggressively deny their insured’s ability to stack coverages, and the companies continue to argue their policies grant them a set-off. Due to the aggressiveness of insurance companies in litigating UIM coverage, it is important for someone injured in a car accident to have experienced counsel review the relevant policy language to determine 1) is the negligent driver going to be an underinsured motorist, and 2) if so, what amount of UIM coverage is available.
At The Law Offices of Stephen R. Bough, we have the knowledge and experience to successful handle all aspects of a UIM case. If you or someone you know has been injured in a car accident and the negligent driver did not carry adequate coverage to compensate you for your injuries, then please contact The Law Offices of Stephen R. Bough so we can determine if you may have a UIM claim.
Also, if you are an attorney that needs assistance in handling a UIM claim after successfully litigating the claim against the negligent driver, then our firm would be more than happy to discuss an agreeable co-counsel arrangement.