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May
18, 2001
Uninsured/Underinsured Motorists Availability Act of 2001
What It Does: Sen. Scott Nein (R-Middletown) introduced SB 97 which
would eliminate the current statutorily mandated offering of uninsured/underinsured
(UM/UIM) insurance coverage in Ohio. It also maintains provisions of
the statute previously enacted by the Ohio General Assembly that defines
what the coverage is, and what it is not. It provides an allowable exclusion
from coverage under an employer’s insurance policy when the employee
is not acting within the scope of employment. Finally, it would provide
a two-year time period within which employees may make claims under
their employer’s UM/UIM insurance coverage. Currently, personal
injury attorneys are mining claims that have been closed for up to 15
years. Although legislation cannot remedy this costly situation, it
can address future claims. The bill is expected to be voted out of the
Senate Insurance, Commerce & Labor Committee the week of May 22
and then sent to the full Senate.
History: Scott-Pontzer V. Liberty Mutual Fire Insurance Co.
(June 1999) Christopher Pontzer was killed in an auto accident while
driving his wife’s car on a personal errand, and NOT in the scope
of employment. His widow, Kathryn Scott-Pontzer, claimed uninsured motorists
benefits under a commercial auto policy of her husband’s employer,
Superior Dairy. Liberty Mutual, Superior’s insurer, denied the
claim because the corporation was the “name insured” not Pontzer,
and he was not acting in the scope of his employment. The Ohio Supreme
court, in a 4-3 decision handed down in June 1999, allowed the claim,
however, saying Pontzer qualified as a named insured because corporations
can only act through its employees, and because the policy did not specifically
state that employees had to be working to be covered. The effect of
this opinion is to extend comprehensive automobile insurance coverage
to any employee working for an employer prudent enough to insure itself,
regardless of whether the employee is within the scope of employment,
or for example, driving to Florida for vacation.
Linko v. Indemnity Insurance Co. of North America (December 2000)
G. Michael Linko was killed in an auto accident in Chautauqua County,
New York in November 1996. The executor of Linko’s estate, Patricia
S. Linko, then brought suit claiming she was entitled underinsured motorists
coverage under the business automobile policy Linko’s employer,
Saint-Gobain Industrial Ceramics, Inc. had with Indemnity. Linko had
been driving a company car when he was killed but Saint-Gobain’s
corporate parent had rejected underinsured coverage. The form used to
reject the coverage, however, simply lists the parent company’s
name. Linko claimed in her suit that wasn’t a proper rejection
of the coverage, the Ohio Supreme Court agreed by a 4-3 vote in December
2000. In its opinion, the Court established criteria for a valid rejection
that was never contemplated by lawmakers. The court also said that all
the related companies must be on the form so they can be “specifically
offered the insurance” before expressly rejecting the coverage,
changing the relationship between a parent company and its subsidiaries.
Writing for the dissenters, Justice Deborah Cook said there simply isn’t
any support in Ohio law for the court’s earlier requirement that
policyholders “expressly reject” coverage or for Linko’s
requirement that corporations go into such detail on rejection forms.
Ohio Chamber’s Position: The Ohio Chamber of Commerce applauds
Sen. Scott Nein’s introduction of SB 97 and is in support of this
bill. This important measure would create a common sense remedy for
the above Ohio Supreme Court decisions that have drastically impacted
Ohio’s business and insurance markets through costly, never-before
contemplated expansions of the state’s uninsured and underinsured
laws.
Taking into account that personal injury trial lawyers get at least
one-third of a settlement, these two rulings have created at least a
half-billion dollar windfall for members of the Ohio Academy of Trial
Lawyers who oppose SB 97.
Ohio’s reputation for having a healthy, available and affordable
insurance marketplace has been greatly undermined by these Court decisions.
Recent studies show that between 1994 and 1998 Ohio’s liability
insurance premiums rose 10.1% compared to the national average of 1.4%.
And the worst indication of the havoc these decisions will wreak on
the insurance marketplace is yet to come.
Cincinnati Financial Corp., the largest issuer of commercial auto policies
in Ohio already has paid over $40 million to cover claims allowed by
these Court rulings. The company recently estimated the rulings will
cost up to $100 million in unexpected claims. In total these decisions
could result in insurance companies paying out more than $1.5 billion,
driving premium increases through the roof. Many companies have already
received renewal notices with 50 to 100 percent increases in the cost
of uninsured/underinsured motorist coverage.
These Supreme Court rulings and their devastating effect on the Ohio
insurance marketplace, are adding to Ohio’s unenviable reputation
as a state with an unpredictable business climate caused by a Supreme
Court majority that consistently exceeds its constitutional authority.
When introducing SB 97, Sen. Nein pointed out that if this series of
rulings by Justices Resnick, Douglas, Pfeifer and Sweeney were a natural
disaster in terms of insured losses, they would constitute the costliest
catastrophe in the world during the year 2000.
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