Opinion ID: 1107944
Heading Depth: 1
Heading Rank: 2

Heading: the nature of self-insurance and the purpose of the exclusion

Text: Even if R.S. 22:1406(D) could be construed to allow the exclusion of self-insured vehicles from the definition of uninsured motor vehicles, such an exclusion would be against the public policy as stated in the statute. The Louisiana Motor Vehicle Safety Responsibility law (LMVSR), R.S. 32:851-1043, has as its purpose the elimination of the reckless and irresponsible driver from the highways by requiring that owners and drivers of motor vehicles provide proof of financial responsibility. 1952 La.Acts, No. 52. Under the terms of R.S. 32:861, owners and operators of motor vehicles can provide proof of financial responsibility by (1) purchasing a liability policy whose limits conform to the requirements of R.S. 32:900(B)(2) or a binder for the same; (2) posting a motor vehicle liability bond to satisfy the requirements of R.S. 32:861(B); (3) depositing with the state treasurer sufficient cash and securities under the provisions of R.S. 32:861(C); or (4) becoming self-insured under the terms of R.S. 32:1042. For a self-insurer, this proof of ability to respond in damages, R.S. 32:851(10), is a certificate indicating the state's satisfaction that the self-insurer has and will continue to have the ability to pay judgments. R.S. 32:1042(B)(1). Any person who is the registered owner of more than twenty-five motor vehicles or who is the registered owner of property valued in excess of $100,000 over any encumbrances may qualify as a self-insurer. R.S. 32:1042(A). Self-insurance then is a misnomer. It is not insurance, but instead is one of four methods by which a person can satisfy the LMVSR. The self-insurance certificate indicates only that the self-insurer possessed sufficient assets when the certificate was issued to meet the state's definition of the ability to respond in damages if found legally liable. Consequently, the certificate of self-insurance cannot be considered a policy for the purposes of uninsured motorist coverage requirements under R.S. 22:1406(D), because the LMVSR does not require a person to offer the same items of coverage as offered in an insurance policy in order to satisfy its requirements. See Jordan v. Honea, 407 So.2d 503 (La.App. 1st Cir. 1981), writ denied, 409 So.2d 654 (La.1982). Therefore, self-insured vehicles are uninsured vehicles. Even though a self-insured vehicle is uninsured, the assumption underlying the exclusion is that the self-insured can and will pay damage claims and judgments. If this be true, the argument is that automobiles owned or operated by self-insurers ought not to be considered uninsured because their owners or operators, having met the requirements of R.S. 32:1042, are not fiscally irresponsible. Regardless of whether this assumption is true, it does not follow that insurers can utilize the relief granted to self-insurers to avoid the claims of those for whose protection the uninsured motorist law was enacted. The alternative methods provided in R.S. 32:861 for satisfying the motor vehicle responsibility law simply relieve those who qualify from the burden of spending their assets on insurance premiums. Those methods do not provide liability insurance. [4] Ramsey Jones and Clarence Jones contracted with Hartford for UM coverage. R.S. 22:1406(D)(1)(a)(iii) requires that uninsured motorist coverage accompany any liability insurance covering any accident occurring in this state and involving a resident of the state. Section 1406(D)(1)(a)(i) mandates that [n]o automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state ... unless coverage is provided therein ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners of uninsured or underinsured motor vehicles.... (Emphasis added). By excluding self-insured vehicles from UM coverage, Hartford has placed on the shoulders of its insureds the burden of ascertaining whether the resources are available from a self-insurer ... and the burden (including the costs) of securing a recovery. 1 A. Widiss, Uninsured and Underinsured Motorist Insurance § 8.7, at 251 (2d ed. 1987). The record in this case is not yet developed with regard to either U-Haul's liability or its ability to respond in damages. Should U-Haul be liable yet unable to respond to the relators' claims, this exclusion would preclude indemnification from Hartford. The statute does not evince any intent to allow an insurer to condition its UM obligation on the tortfeasor's wealth or poverty or the status of the vehicle. See Bryant v. Gulf States Utilities Co., 460 So.2d 709 (La.App. 3rd Cir.1984).