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UPDATE OF UM COVERAGEPROVIDED BY OPERATION OF LAW

APRIL 19, 2002Robert W. Kerpsack, Esq.,

ROBERT W. KERPSACK CO., L.P.A.21 East State Street, Suite 300

Columbus, OH 43215Telephone: (614) 242-1000Facsimile: (614) 242-3948E-mail: bob@rwklaw.com

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UM COVERAGE BY OP. OF LAW:RECENT APPELLATE CASE LAW

• Shropshire v. Hamilton Mut. Ins. Co. (October 5, 2001), Montgomery App. No. 18803 and 18814, unreported

• German v. Therm-O-Disc, Inc. (March 28, 2002), Richland App. No. 01CA51-2, unreported

• Davis v. State Farm Fire and Cas. (December 18, 2001), Franklin App. No. 00AP-1458, unreported

• Lemm v. The Hartford (October 4, 2001), Franklin App. No. 01AP-251, unreported, appeal to OH SC allowed at 93 Ohio St.3d 1474

• Zurcher v. National Surety Corp. (February 25, 2002), Stark App. No. 2001CA00197, unreported

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DEFUSING UM DEFENSES (UM coverage provided by operation of law)

• Scott-Pontzer, at 666: • Any policy restrictions intended to apply

solely to the liability coverage do not apply to UM/UIM coverage provided by operation of law.

–Citing Demetry v. Kim (1991), 72 Ohio App.3d 692, 698, 595 N.E.2d 997, 1001

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LATE NOTICE OF UIM CLAIM/FAILURE TO PROTECT SUBRO

• FATAL PER SOME APPELLATE COURTS:– See Luckenbill v. Midwestern Indem. Co. (June 1,

2001), Darke App. No. 1536, unreported [homeowners policy—notice and subrogation provisions are coverage “conditions,” not coverage “restrictions.” • But. . ., discretionary appeal allowed by Ohio

Supreme Court and determination that a conflict exists at 93 Ohio State 3d 1487 [oral argument scheduled June 4, 2002].

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LATE NOTICE OF UIM CLAIM/FAILURE TO PROTECT SUBRO

• BUT SEE. . . German v. Therm-O-Disc, Inc. (March 28, 2002), Richland App. No. 01CA51-2, unreported. – UM coverage provided by operation of law is not

subject to any of the notice or subrogation requirements attributable to the liability coverage or contained within the general policy conditions• Motion to certify conflict with Luckenbill filed 4/8/02

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SELF-INSURED RETENTIONS/ DEDUCTIBLE AMOUNTS

• QUERY: Are “fronting” policies (equal coverage and deductible amounts) subject to R.C. 3937.18?– Yes, according to Eby v. Zurich Am. Ins. Co. (November

30, 2001), Cuyahoga C.P. No. 408279, unreported; and Gilchrist v. Gonsor (February 6, 2002), Cuyahoga C.P. No. 420200, unreported [unless certificate of self-insurance filed with State].

– See also German v. Therm-O-Disc, Inc. (March 28, 2002), Richland App. No. 2001CA51-2, unreported [UIM coverage provided by operation of law is not subject to deductible amounts attributable to liability coverage].

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EMPLOYERS’ POLICIES• Query: Do commercial policies insuring sole

proprietorships provide UM coverage for employees?– No Pontzer “you” ambiguity; therefore, no employee UM

coverage by operation of law. See Geren v. Westfield Ins. Co. (March 8, 2002), Lucas App. No. L-01-1398, unreported. See also Reinbolt v. Gloor (September 1, 2001), Henry App. No. 7-01-05, unreported.

– But see Shropshire v. Hamilton Mut. Ins. Co. (October 5, 2001), Montgomery App. Nos. 18803 and 18814, unreported (an employee of a partnership is an insured under a CGL policy providing UM coverage by operation of law).

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EMPLOYERS’ POLICIES:WHO IS INSURED?

• QUERY: Are resident relatives of employee’s household covered under un/underinsured motorist coverage that is provided by employer’s policy by operation of law?– Yes, according to Ezawa v. Yasuda Fire &

Marine (1999), 86 Ohio St. 3d. 557; and Still v. Indiana Ins. Co. (February 25, 2002), Stark App. No. 2001 CA 00300), unreported.

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HOMEOWNERS-TYPE POLICIES• Lemm v. The Hartford (October 4, 2001), Franklin App.

No. 01AP-251, unreported [pre-H.B. 261 policy]; conflict certified by Ohio Supreme Court at 93 Ohio St.3d 1474 on the following issue:

• “When a homeowner’s insurance policy provides express liability for damages arising from a motor vehicle accident when the injured party is the homeowner’s residence employee and the injury occurred in the course of that employment, is the policy deemed an automobile liability or motor vehicle policy subject to the requirement of former R.C. 3937.18 to offer uninsured and underinsured coverage?”

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HOMEOWNERS-TYPE POLICIES• QUERY: Are homeowners policies providing motor

vehicle coverage for residence employees and issued after the effective date of H.B. 261 (9/3/97) “motor vehicle liability insurance policies” that are subject to R.C. 3937.18?

• Yes, according to Davis v. State Farm Fire and Cas. (December 18, 2001), Franklin App. No. 00AP-1458, unreported.

• No, according to Jones v. Nationwide Ins. Co. (July 23, 2001), Stark App. No. 2000CA0329, unreported, appeal to OH Sup. Ct. allowed at 93 Ohio St.3d 1496 (stayed pending Lemm, a pre-HB 261 policy).

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R.C. 3937.31(A) TWO-YEAR UM/UIM COVERAGE GUARANTEE

• Wolfe v. Wolfe (2000), 88 Ohio St.3d 246:

– R.C. 3937.31(A) provides a two year guarantee period during which a policy cannot be altered. The guarantee period is not limited to the first two years after inception of the policy.

– A new 2-year guarantee period commences every two years

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WOLFE v. WOLFE

• Query:– Does Wolfe apply equally to commercial

policies and personal/consumer policies? • Yes, according to Shropshire v. Hamilton Mut. Ins.

Co. (October 5, 2001), Montgomery App. Nos. 18803 and 18814, unreported; and Carper v. Valley Forge Ins. Co. (March 20, 2002), U.S. Dist. Court (S. D. OH) No. C-1-01-281, unreported.

• No, according to Zurcher v. National Surety Corp. (February 25, 2002), Stark App. No. 2001CA00197, unreported.