Current Issues in Underinsured and Uninsured Insurance Coverage in Missouri

Lynch v. Shelter Mutual Insurance Company


Lynch v. Shelter Mutual Insurance Company provides an example of an anti-stacking underinsurance clause that the Southern District found to be unambiguous. 325 S.W.3d 531 (Mo. App. S.D. 2010). In Lynch, the insured sued Shelter seeking UIM benefits under four policies she had purchased from Shelter. Id. at 533. Lynch sought to stack her four underinsurance policies. Id.
On appeal, Lynch argued the language of her UIM Endorsement was ambiguous when reading the “Limits of Our Liability” provision together with the “Other Insurance” provision. Id. at 540. Lynch maintained that the “Limits of Our Liability” provision was ambiguous because the first sentence of the “Other Insurance” provision of her policies limited stacking only when the insured was “occupying the described auto.” The “Limits of Our Liability” provision did not specify that Lynch had to be “occupying the described auto.” Id. The relevant policy language read:


The limit of liability for this Coverage will be the limit of liability stated for this particular endorsement number in the Declarations, subject to the following limitations:

(5) Regardless of the number of:

(a) vehicles involved in the accident,

(b) persons insured,

(c) claims made, or

(d) premiums paid,

the limits for this Coverage may not be added to, combined with, or stacked onto the limits of other underinsured motorists coverage to determine the total limit of underinsured motorists coverage available to any insured for any one accident.


If an insured’s claim under this Coverage arises out of bodily injury sustained while occupying the described auto, no other policy of underinsured motorist insurance, issued by us will apply to such a claim. However, the insurance provided by this Coverage will apply as excess insurance over any other company’s underinsured motorists insurance available to the insured as a result of the same accident. The insurance under this policy will then apply only if the total of the limits of all such other insurance is less than the limit of liability of this Coverage. In that instance, we will be liable, under this Coverage, for only that amount by which its limit of liability exceeds the total limits of all such other insurance. Id. at 539-40.

Lynch believed this inconsistency created an ambiguity in her policies permitting stacking. Id. at 540.

The Southern District disagreed with Lynch’s position and found that the anti-stacking language contained in Paragraph (5) under the “Limits of Our Liability” provision was unambiguous. Id. at 540-41. The Southern District went on to explain that the “Other Insurance” provision provided excess UIM coverage in a situation where the insured was “occupying the described auto” and there is UIM coverage by “any other company.” Id. at 541. As there was no ambiguity, the court did not allow Lynch to stack the UIM coverage. Id. These principals have been applied on numerous occasions.

Looking at set-offs in Lynch, the Southern District found the set-off provisions were plain and unambiguous and consequently allowed the insurer to set-off from the coverage limits. Lynch v. Shelter Mut. Ins. Co., 325 S.W.3d 531, 539(Mo. App. S.D. 2010). Lynch had a $50,000 coverage limit in her Shelter UIM coverage and she had previously received $100,000 payment from the tortfeasor’s insurer. Id. She suffered over $300,000 in damages from the accident. Id. at 533. With a set-off, she would not be entitled to any payment from Shelter. Id. at 539.

Lynch argued the definition of “uncompensated damages” dictated that she would be compensated for damages exceeding the total amount paid by the tortfeasor. Id. at 535. The term was defined as “Uncompensated damages means the portion of the damages which exceeds the total amount paid or payable to an insured by, or on behalf of all personslegally obligated to pay those damages.” Id. at 533. (quoting Lynch’s Shelter policy) (bold emphasis in original). The Southern District found this reasoning faulty as the definition contained no promise of compensating her for these damages. Id. at 535.

The court found a promise of compensation in the “Insuring Agreement for Coverage E-1” which read:

If an insured sustains bodily injury as a result of anaccident involving the use of a motor vehicle, and is entitled to damages from any person as a result of that bodily injury, we will pay the uncompensated damages subject to the limit of our liability stated in this endorsement. Lynch, 325 S.W.3d at 533 (quoting Lynch’s Shelter policy) (bold emphasis in original).

The “subject to” clause immediately following the phrase “uncompensated damages” indicated the coverage was “not absolute.” Id. at 536. The “Limit of Our Liability” section specified, “The limit of liability stated in the Declarations will be reduced by all amounts paid or payable to the insured making the claim by, or on behalf of, all persons legally obligated to pay any portion of the damages to that insured.” Id. at 536. With the clear “subject to clause” and the subsequently expressed limitations, the court found “an ordinary person of average understanding” would understand these provisions reduced coverage amounts based on recovery from other liable parties. Id. As Shelter, “never state[d] or even implie[d] that [it] promise[d] to pay the full amount of its coverage limit” the policy was clear. Id. at 537. With no ambiguity or misleading text, the Southern District found the set-off provision was properly applied by Shelter. Id. at 539. Lynch was not entitled to any payment under her UIM coverage. Id.

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