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Underinsured coverage extended to insured's vehicle.

The Ohio Supreme Court has held that underinsured coverage must be extended to the insured vehicle involved in a one car accident. Alexander's policy provided the normal $50,0001/$100,000 coverage for bodily injury and the state-mandated uninsured and underinsured coverage. An exclusion in the underinsured portion of the policy, however, denied coverage to the insured's vehicle.

An unusual set of circumstances triggered the exclusion in the State Farm underinsured motorist coverage. While the policy was effective, Cosey drove the insured van with Alexander as a passenger. Cosey lost control of the van and was killed. Alexander was injured. Cosey carried auto insurance with Atlantic, and it paid Alexander the full amount available for liability coverage, $12,500. Because Cosey's liability coverage was less than Alexander's, Alexander sought additional compensation from State Farm on the underinsured clause. State Farm refused coverage based on the exclusion. The supreme court, however, ruled that the exclusion violated state law and was not enforceable.

The policy language, if effective, would exclude coverage for the insured's own vehicle involved in a one car accident. The state statute mandating coverage, on the other hand, extended coverage to persons entitled to recover damages from the owner or operator of a vehicle. Thus, the restriction sought to carve out an area of coverage despite the tort damages owed by Cosey to Alexander. The court concluded that the policy could not deny coverage since the basic requirement of tort liability was satisfied. As a result, the clause was not enforceable.

The court then used the restriction to conclude that Cosey was in fact underinsured. Under Alexander's policy, Cosey received liability protection. As a result, Cosey's total insurance appeared to amount to $62,500 (Cosey's policy for $12,500 and Alexander's for $50,000). The court, however, concluded that Cosey was underinsured for purposes of the Alexander policy because the policy did not extend liability coverage to Cosey as an insured. Thus, he could not sue directly, but could sue State Farm on the underinsured portion of the policy and recover.
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Title Annotation:Recent Court Decisions; State Farm Automobile Insurance Co. v. Alexander
Author:Darr, Frank P.
Publication:Journal of Risk and Insurance
Date:Jun 1, 1992
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