Summary
The Supreme Court of Oklahoma answered a certified question from the United States Court of Appeals for the Tenth Circuit concerning Progressive's uninsured-motorist coverage exclusion. The court held that the exclusion violated 36 O.S. § 3636 and was void as against Oklahoma public policy because it effectively eliminated underinsured-motorist coverage for which premiums had been paid. The certified question was answered in the affirmative.
Topics
Practice areas
Questions Presented
- Whether Progressive's uninsured-motorist exclusion, which denies uninsured-motorist coverage when the insured recovers at least Oklahoma's statutory minimum liability coverage, violates 36 O.S. § 3636.
- Whether the exclusion is void as against Oklahoma public policy because it effectively eliminates uninsured/underinsured-motorist coverage for which the policyholder paid a premium.
Holdings
- Progressive's UM Exclusion violates 36 O.S. § 3636 because it effectively eliminates uninsured/underinsured-motorist coverage whenever the insured receives liability coverage equal to or greater than Oklahoma's statutory minimum.
- The UM Exclusion is void and unenforceable as against Oklahoma public policy.
Key quotations
“Progressive's UM Exclusion violates public policy because an insurer in Oklahoma cannot deprive its policyholder of uninsured-motorist coverage for which a premium has been paid through an exclusion that effectively erases its policyholder's choice to purchase that coverage in the first place.” (¶ 2)
“Liability coverage is not a substitute for uninsured-motorist coverage.” (¶ 20)
“Uninsured-motorist coverage must be conditioned upon the claim's value above available liability coverage, not upon the availability of minimum liability coverage.” (¶ 20)
Factual background
Lane and Stone were injured as passengers in a single-car rollover accident involving a vehicle insured by Progressive. The policy provided $100,000 per person in liability coverage and the same limits in uninsured-motorist coverage; both plaintiffs recovered the liability limits, but their damages exceeded those amounts. Progressive denied their additional uninsured-motorist claims under an exclusion applicable when liability coverage equal to or greater than Oklahoma's statutory minimum was available.
Procedural history
Lane and Stone sued Progressive in the United States District Court for the Western District of Oklahoma for breach of contract and bad faith after Progressive denied their uninsured/underinsured-motorist claims. The district court granted Progressive judgment on the pleadings, concluding that Oklahoma law permitted the policy exclusion. On appeal, the Tenth Circuit certified whether the exclusion violated 36 O.S. § 3636. The Oklahoma Supreme Court answered the certified question yes.
Remand instructions
No remand instructions were issued; the certified question was answered.