A “set-off” is a reduction in coverage based on previous recovery. See id. at *7. Within underinsured motorist coverage, set-off clauses that deduct from coverage limits rather than from total damages are permissible when plain and unambiguous language is used. Shelter Mutual Insurance Company v. Straw, 334 S.W.3d 592, 598 (Mo. App. S.D. 2011) (citing Ritchie v. Allied Property & Cas. Inc. Co., 307 S.W.3d 132, 141 n.10 (Mo. banc. 2009)). In 2009, the Missouri Supreme Court looked at two separate set-off provisions and found that both provisions were ambiguous. See Jones v. Mid-Century Ins. Co., 287 S.W.3d 687 (Mo. banc 2009); Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132 (Mo. banc 2009). In Ritchie, the Supreme Court looked at whether Allied Property and Casualty Insurance Company was entitled to a set-off against its total liability under UIM coverage based on the amount paid to its insured by the tortfeasor’s liability insurer. Ritchie, 307 S.W.3d at 139. The relevant portions of the Allied policy read:
Limit of Liability
A. The limit of liability shown in the Declarations for each person for Underinsured Motorist coverage is our maximum limit of liability for all damages for case, loss of services, or death arising out of “bodily injury” sustained by any one person in any one accident.
B. The limit of liability shall be reduced by all sums: . . . [p]aid because of ‘bodily injury’ or by or on behalf of persons organizations who may be legally responsible. Id. at 137.
Allied contended that the language in subsection B entitled it to a $60,000 “set-off” since that was the amount paid by the tortfeasor. Id. at 139. The Supreme Court disagreed. Id. at 139-41. Citing its earlier decision in Jones, the Supreme Court ruled against Allied because its policy promised coverage at one point and then tried to take it away in another. Id. at 140 (“But, Jones noted, if a contract ‘promises something at one point and takes it away at another, there is an ambiguity . . . [and if] policy language is ambiguous, it must be construed against the insurer.'”). Using the same analysis it used in Jones, the Supreme Court explained:
Both the declarations page for the policy and the limit of liability provision state that coverage is provided up to $100,000 per person, $300,000 per accident, for each of the three vehicles the Ritches owned and, in multiple places, states that “this is the most we will pay” and that this limit of liability is the maximum it will pay. Yet, as Allied’s corporate representative conceded below, Allied in fact never will pay out its full amount under its interpretation of “limit of liability” subsection B. It always will be reduced by the amounts already paid, ever where, as here, the plaintiffs still had $1.74 million in damages unpaid. Ritchie, 307 S.W.3d at 140.
The Supreme Court, still following Jones, reasoned that the set-off language would be applicable in situations where the insured had not suffered damages to the full extent of coverage. Id. at 141. For instance, if the insured suffers $140,000 in damages and recovers $60,000 from the tortfeasor, then the insurer would only be liable for $80,000. Id. In cases where the insured’s damages far exceed the total amount of coverage provided by the insurer, then the set-off provision does not apply unless it plainly states that the amount payable in UIM coverage is the difference between the policy limits and the amount recovered from the tortfeasor. Id. at 141.
Lynch v. Shelter
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