SB 97 Uninsured/Underinsured
Motorists Availability Act

SB 97, the UM/UIM Motorist Availability Act, sponsored by Sen. Scott Nein (R-Middletown) eliminates the mandatory offering of UM/UIM insurance, provides more clarity as to when an employee is covered under the policy and establishes a three-year statute of limitations for filing an UM/UIM claim. These changes are necessary to provide businesses and insurers more certainty and predictability when estimating the amount of future liability or risk exposure each has assumed.

SB 97 became necessary due to several Supreme Court rulings that adversely affected Ohio’s commercial insurance industry. One such case is 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.

The second case was 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.

The Ohio Chamber of Commerce applauds Sen. Scott Nein’s work on this bill. This important measure creates 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 opposed 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%. Thanks to those who voted for this bill, the worst-case scenario was avoided.

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 would have cost up to $100 million in unexpected claims. In total, these Supreme Court decisions could have resulted 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 had a devastating effect on the Ohio insurance marketplace and added 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.

Thanks to support from Ohio’s business community, SB 97 passed in the Senate 25 to 7 and passed the House 91 to 4 and was signed into law by Governor Taft.

For more information on this issue, contact Ohio Chamber director of labor & human resources policy Tony Fiore at afiore@ohiochamber.com.