Has your UM insurance company denied your claim on the basis that it is supposedly ‘unable to determine if the value of your insurance claim exceeds the liability coverage’ of the other person who injured you? Has your UM insurer refused to pay your UM claim because it is “unable to determine if any UM payment is owed at this time,” while it either intervenes in your ongoing lawsuit, or stands by and does nothing to investigate your claim, or even works against your on-going claim? You may have claims for bad faith and fraud, and may even have a basis for moving for summary judgment on a breach of contract claim based based on the policy language.

UM insurers owe a duty to their insureds protect them by swift payment of the UM claims. Pentz v. Davis, infra, at 542. Insurers cannot withhold payment of UM claims until the liability benefits have been exhausted. Burch v. Allstate Ins. Co., infra, at 1061. So if insurers attempt to deny UM claims on the ground that the limits of the tortfeasor’s liability insurance has not been exhausted, such conduct may be contrary to Oklahoma law and a breach of the insurance agreement. While insurance company purports that it continues to “handle” a UM claim, it may merely attempt to wait for the claim against the tortfeasor to play out. The UM insurer may attempt to asserts that the insurer must first litigate their claims against the tortfeasor, expend excessive amounts of attorney fees and costs against tortfeasors who refuse to cooperate in discovery, and obtain a judgment in excess of the tortfeasor’s liability coverage. The UM insurer may attempt to assert that the liability coverage must be exhausted before it will pay “any” UM benefits.

Such behavior should be viewed as a denial of UM claims in a gross violation of Oklahoma law and a breach of the subject insurance agreement. Under such circumstances, where the insurer has already filed legal claims againts their UM carrier (whether in response to a motion to intervene or upon initial suit against the tortfeasor), the insured is arguably entitled to partial summary judgment on their breach of contract claim against the insurer on the grounds that it wrongfully denied Plaintiffs’ UM claims on the basis that the liability coverage of the tortfeasor has not been exhausted.

“A party may move for … summary disposition of any issue on the merits on the ground that the evidentiary material filed with the motion or subsequently filed with leave of court show that there is no substantial controversy as to any material fact.” Dist. Ct. R. 13(a).

A party may make a motion for summary judgment on “part” of a claim, often referred to as a motion for “partial summary judgment.” 12 O.S. § 2056(A); see Mann v. State Farm Mut. Auto Ins. Co., 1985 OK 27, fn. 2, 698 P.2d 925, 927 (partial summary judgment also referred to as interlocutory summary judgment or determination).

Section 3636 of Title 36 of the Oklahoma Statutes regulates uninsured motorist coverage in Oklahoma. “For the purposes of this coverage the term ‘uninsured motor vehicle’ shall also include an insured motor vehicle, the liability limits of which are less than the amount of the claim of the person or persons making such claim, regardless of the amount of coverage of either of the parties in relation to each other. 36 O.S. § 3636(C).

“No specific requirements of the exhaustion of liability limits appears in the statute, nor is there any mention of exhaustion of limits as a condition precedent to recovery.” Buzzard v. Farmers Ins. Co., Inc., 1991 OK 127, 824 P.2d 1105, 1111. “[E]xhaustion of limits is not required as a condition precedent to recovery. Our statute is clear; underinsurance is available when ‘the liability limits … are less than the amount of the claim….’” Id. at 1112 (emphasis added), citing Section 3636(C). “[L]liability attaches to an uninsured motorist carrier without the insured first having to seek recovery against the tortfeasor.” Burch v. Allstate Ins. Co., 1998 OK 129, 997 P.2d 1057, 1064, citing Roberts v. Mid-Continent Casualty Co., 1989 OK CIV APP 92, 790 P.2d 1121.

Under the provisions of 36 O.S.1991 § 3636, uninsured motorist coverage is primary, meaning that an uninsured motorist carrier is liable for the entire amount of its insured’s loss from the first dollar up to the UM policy limits without regard to the presence of any other insurance.” Burch, supra, at 1057 (emphasis added). “The court [in Buzzard, supra] held that a UM carrier cannot withhold payment on the UM policy until liability benefits have been exhausted.” Burch, at 1061-1062, citing Buzzard (observing that Buzzard decided an issue of when UM benefits must be paid).

In Pentz v. Davis, 1996 OK 89,927 P.2d 538, 542, the Oklahoma Supreme Court held, “[We] can only conclude that § 3636 imposes upon the UM insurer the responsibility to protect its injured insured by good faith and fair dealing, including swift payment, from and after the time of injury.” The Court further held that Section 3636 “creates subrogation rights to guard against one insurer shifting the burden of loss to another or escaping the burden of loss through token settlements.”

Imagine the insured makes a liability claim against the insurer of the tortfeasor, the amount of which is in excess of the insurance. The insured may at the same time demand that their UM insurer fully pay their UM benefits. Your UM insurer may respond with something like, ‘We are unable to determine if the value of your claim exceeds the liability coverage of the tortfeasor, and thus, are unable to determine if any UM payment is owed at this time.’

The problem for the insurer is that such a response is contrary to Oklahoma law because the insurer is effectively denying the claim on the grounds that liability coverage of the tortfeasor had not been exhausted. The insurer’s refusal to swiftly pay the claim, and instead require you to fully litigate your claims against the tortfeasor (while at times even intervening in the case while working with the tortfeasors), is contrary to the protections of Section 3636(C).

Such a denial of a UM claim is particularly egregious where the UM insurer aligns itself with the at fault tortfeasor, while demanding that you incur excessive attorney fees and costs against the tortfeasors who may meanwhile refuse to cooperate in discovery. Arguably, the insurer is not actually evaluating your claims for payment. It is denying your claims on a wrongful basis and is instead delaying payment in hopes that you will not prevail on their claims against the tortfeasor. The insurer’s wrongful opposition to you may even further be demonstrated, in part, by its insistence that you must show “strict proof” to support their claims, a standard that does not appear anywhere in the terms of your insurance policy. The insurer’s denial of your UM claims is wrongful and in breach of the insurance agreement. Burch v. Allstate Ins. Co., 1998 OK 129, 997 P.2d 1057 (“[L]liability attaches to an uninsured motorist carrier without the insured first having to seek recovery against the tortfeasor.”)

Further, there is arguably no reasonable dispute that insured breached the insurance agreement because when it denies the UM claim on the ground that your vehicle was not even an “uninsured motor vehicle” under the terms of the agreement. The insurer effectively admits this if it argues that your “UM claim is not triggered by the amount of the claim and by arguing that you have made no compensable UM claim. Look at your policy; its plain language may provide that an “uninsured motor vehicle” means one “To which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily liability is less than the amount of the claim of the person or persons making the claim, regardless of the amount of coverage of either of the parties in relation to each other.” By law, such language must be interpreted in a light most favorable to you.

“[I]t is fundamental that when there is doubt about the meaning or interpretation of an insurance policy provision it will be construed in a light most favorable to the insured.” Harrell v. Old American Ins. Co., 1991 OK CIV APP 91, 829 P.2d 75, 78; and McDonald v. Schreiner, 2001 OK 58, 28 P.3d 574, 577, fn. 11 (“The language of an insurance policy must be accepted in its plain, ordinary, and popular sense,” and “ambiguous insurance contract provisions must be “liberally construed in favor of the insured and those of exclusion will be strictly construed against the insurer”) (emphasis original); see Metzger v. American Fidelity Assurance Company, 2006 WL 2792435, *4 (W.D.Okla. 2006) (courts “will not make a better contract by altering a term for a party’s benefit,” citing Max True Plastering Co. v. U.S. Fidelity and Guar. Co., 1996 OK 28, 912 P.2d 861, 869.

The unambiguous terms of the aforementioned exemplar contract language indicate that the meaning of “uninsured motor vehicle” is determined by “the amount of the claim of the person or persons making the claim.” The phrase “value of the claim” probably  does not appear anywhere in the insurance policy. Plainly, the meaning of “the amount of the claim of the person” means the amount asserted by Plaintiffs’ (“the persons”) claim in the form of a demand. Nothing in the policy terms indicate that insurer is permitted to arbitrarily assert its own subjective “value” of the claim to determine whether Plaintiffs have even made a valid UM claim ‘triggering’ the insurer’s duties.

In the alternative, the phrase “the amount of the claim” is ambiguous, since the insurer and insured may assert two different meanings; and thus, as a matter of law, the phrase must be liberally construed in favor of you (the insured) and strictly construed against the insurer. Harrell, McDonald , Metzger, Max, supra. Similar to Metzger, the phrase “the amount of the claim of the person” is not defined by the subject agreement, and should be interpreted in favor of Plaintiffs.

Courts should not adopt the insurer’s interpretation, which would effectively re-write the policy, inserting terms and meanings in the policy at insured’s detriment. The insurer’s discussion about a purported dispute of the “value” of Plaintiff’s damages is immaterial. Once the “amount of the claim” exceeds the amount of the liability policy, this arguably triggers the insurer’s duty to promptly investigate, evaluate and pay the UM claim. Buzzard v. Farmers Ins. Co., Inc., 1991 OK 127, 824 P.2d 1105, 1112. The insurer has effectively asserted, contrary to law and terms of the policy, that it has no duty yet. If the insurer interpretation were adopted, UM insurers would have no duty to conduct an investigation, evaluate the claim and pay unless the insurer first agreed that the “value” of the claim exceeded the liability limits according to its arbitrary standard, or unless insureds obtained a judgment in excess of the liability limits of the tortfeasor after lengthy litigation. The “amount of the claim” necessarily includes the amount of the insured’s claim in excess of the liability limits because the insured may proceed directly against their UM insurer without first adjudicating liability issues against the tortfeasor. Id. at 1112. As in Buzzard, the insureds have a reasonable expectation for payment of UM benefits, particularly under circumstances where the prima facie amount of their claim greatly exceeds the available coverage of the insured. Id. The insured’s UM benefits, and the insurer’s duties, are triggered. Under such circumstances, it should be undisputed that the amount of the UM claim exceeds the liability coverage of the tortfeasor, and that the insurer has breached the contract by denying that the insurer’s are even “uninsured” under the terms of the policy.

Under such circumstances, there should be no reasonable dispute that the insurer denied the insured’s UM claim on the ground that liability limits and other insurance had not been exhausted, which is a breach of contract. The liability coverage of the tortfeasor is arguably immaterial to its duty to evaluate and pay the claim because it is “liable for the entire amount of its insured’s loss from the first dollar up to the UM policy limits without regard to the presence of any other insurance.” Burch, 977 P.2d at 1058. In Pentz v. Davis, 927 P.2d 538, 540, the Oklahoma Supreme Court reversed demurrers to an insured’s evidence regarding UM carriers’ obligation to pay when the record did not even show whether the plaintiff had received any payment from the liability insurer.

Your insurance company may even argue that you must be able to “prevail” against the tortfeasor in excess of their liability coverage. On the contrary, you should not required to prevail against the tortfeasor (or even sue the tortfeasor) before seeking benefits of UM coverage. Buzzard, at 1112. Otherwise, the insurer is wrongfully denying the claims based on the same rejected “industry policy that liability insurance of the tortfeasor must first be exhausted.” Buzzard, at 1108. The insurer is arguably using its incorrect “value of the claim” interpretation to place an unreasonable burden on the insured and defeat their claims.

In a effort to avoid its duties, your insurer may make unreasonable demands and attempt to shift the financial burden of litigation to you. See McDonald, supra. The insurer may first “just monitor” based on its assertion that other insurance must be exhausted before it has any duty to pay. When it appears that you may prevail, the UM insurer may  then attempt to “intervene” in your claim when it realizes that the other coverage is limited, suggesting that it actually gauges its liability by the presence of other insurance, contrary to Burch. The insurer may then make other unreasonable demands, such as insisting on unlimited medical authorizations. In light of such pattern and practice of bad faith abuses, “good faith mistakes” excuses are not believable, as further shown by internal assertions that other insurers should pay first while it ‘just monitors.’

Insurers may cling to distinguishable cases which do not support their arguments. See, e.g., Gates v. Eller, 2001 OK 38, 22 p.3d 1215, fn. 3, in which the plaintiffs conceded that the amount of the claim did not exceed the tortfeasors’s liability insurance limits. Under many circumstances, the claims greatly exceed the amount of liability limits of their face, as did the claims in Buzzard, supra. The plaintiffs in Gates also did “not rest their arguments on any contract provision,” unlike the above example. Id., fn. 14. Gates’ narrow holding addressed whether a vehicle is uninsured because a statute of limitations expired, which is not applicable here. Id. at 1219. Boyer is similarly inapplicable. 902 P.2d at 87. The plaintiffs in Boyer never claimed that their damages exceeded the liability coverage. Id. at 85. Actually, the Court in Boyer looked to the amount claimed by the plaintiff regarding whether he was an uninsured motorist. Id. at 85, 87.

The circumstances of each claim and lawsuit are different. Sufficient to say, if your UM insurance company refuses to pay your claim, contact Reams Law (405) 285-6878 to know your rights.

Has Safeco denied your claim on the basis that it is supposedly ‘unable to determine if the value of your insurance claim exceeds the liability coverage’ of the other person who injured you?

Has State Farm denied your claim on the basis that it is supposedly ‘unable to determine if the value of your insurance claim exceeds the liability coverage’ of the other person who injured you?

Has Liberty Mutual denied your claim on the basis that it is supposedly ‘unable to determine if the value of your insurance claim exceeds the liability coverage’ of the other person who injured you?