Opinion ID: 1864717
Heading Depth: 3
Heading Rank: 1

Heading: Self-insurers are required to provide UIM coverage.

Text: The trial court found as a matter of law that self-insurers are required to provide UIM. U.S. West is a self-insurer under SDCL ch. 32-35. SDCL XX-XX-XXX provides in relevant part: Every driver or owner of a motor vehicle shall at all times maintain in force one of the forms of financial responsibility on the motor vehicle by one of the following methods:       (4) Having a certificate of self-insurance, as provided in §§ 32-35-90 and 32-35-91, supplemented by an agreement by the self-insurer that, with respect to accidents occurring while the certificate is in force, he will pay the same amounts that an insurer would have been obligated to pay under an owner's motor vehicle liability policy if it had issued such a policy to said self-insurer[.] (Emphasis added.) All insurance policies issued in South Dakota must include uninsured motorist coverage. SDCL 58-11-9 provides in relevant part: No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle may be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto in limits for bodily injury or death equal to the coverage provided by such policy for bodily injury and death, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. However, the coverage required by this section may not exceed the limits of one hundred thousand dollars ... unless additional coverage is requested by the insured. The question of whether a self-insured entity under SDCL ch. 32-35 is required to provide uninsured coverage is a question of first impression in this jurisdiction. There is a decided split of authority in other jurisdictions as to whether self-insured entities are required to provide UIM absent specific statutory mandates. While courts in a slight majority of states have determined statutes requiring uninsured motorist coverage are not applicable to self-insurers, [2] we find that under the liberal construction given South Dakota's uninsured motorist statutes, self-insurers must provide uninsured protection. Clark, 270 N.W.2d at 29. SDCL XX-XX-XXX mandates that a self-insurer pay the same amounts it would have paid had it purchased a motor vehicle liability policy. It is clear that if U.S. West had chosen to obtain commercial liability insurance, SDCL 58-11-9 would mandate UIM coverage. Because UIM is statutorily mandated under an owner's motor vehicle liability policy and SDCL XX-XX-XXX requires self-insurers to pay as if an owner's motor vehicle liability policy were in force, UIM must be provided by a self-insured entity. The obligation to pay the same amount it would be obligated to pay under a motor vehicle liability policy is exactly what U.S. West agreed to in its application for self-insurance. On December 30, 1986, it sent a signed and notarized application for self-insurance to the South Dakota Department of Commerce and Regulation and stated: The undersigned agrees to pay the same amounts with respect to accidents occurring while the certificate is in force that an insurer would be obligated to pay under an owners motor vehicle liability policy if issued to the self-insurer. Accord McClain v. Begley, 465 N.W.2d 680, 681-82 (Minn.1991) (where application for self-insurance stated entity retained excess coverage, it would be held liable up to limits it represented in application). Furthermore, the legislature did not exempt self-insured entities who establish proof of financial security from providing UIM. It did specifically exempt policies on government-owned vehicles from the requirement of UIM. SDCL 58-11-9; Simpson v. Tobin, 367 N.W.2d 757, 763-64 (S.D.1985) (declaring where legislature provided only one statutory exception, it intended only one). In addition, this reasoning is consistent with courts in other jurisdictions which have concluded self-insurers should be put in the same position as those who purchase liability policies. The sole purpose of self-insurance is to relieve self-insurers of the burden of expending their assets on insurance premiums; self-insurance is not a means by which self-insurers may avoid the claims of those individuals for whose protection the insurance laws have been enacted. Modesta v. Southeastern Pa. Transp. Auth., 503 Pa. 437, 469 A.2d 1019, 1022 (1983). [3] Thus, we agree with the trial court and hold that unless specifically exempted by statute, self-insurers in South Dakota must provide UIM as well as coverage for motor vehicle liability.