Opinion ID: 1472722
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Heading: part cuninsured motorists coverage

Text: ... C. Uninsured motor vehicle means a land motor vehicle or trailer of any type: 1. To which no bodily injury liability bond or policy applies at the time of the accident. 2. To which a bodily injury liability bond or policy applies at the time of the accident. In this case its limit for bodily injury liability must be less than the minimum limit for bodily injury liability specified by the financial responsibility law of the state in which your covered auto is principally garaged. ... However, uninsured motor vehicle does not include any vehicle or equipment: 1. Owned by or furnished or available for the regular use of you or any family member. ... Upon close scrutiny the terms uninsured motor vehicle and underinsured motor vehicle may be used interchangeably throughout Part CUninsured Motor Coverage, except in relation to Part C, subsection c. Subsection c attempts to define the term uninsured motor vehicle; thus, we think it perspicuous that underinsured motor vehicle cannot therein be used interchangeably. Because the owned vehicle exclusion is set forth in subsection c, we are of the opinion that the exclusion can be applied only to an uninsured motor vehicle. Thus we believe no owned vehicle exclusion exists regarding UIM coverage. Finally, upon the following perlustration of the Glasses' policies, we believe Jeffrey was protected by $150,000.00 of UIM coverage. The policy language states in relevant part as follows: Underinsured motor vehicle means a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage. (Emphasis added.) We view this definitionunderinsured motor vehicleas ambiguous. The phrase motor vehicle ... to which a bodily injury liability ... policy applies at the time of the accident ... may be susceptible to inconsistent interpretations. One interpretation is that only the bodily injury policy covering the motor vehicle at the time of the accident is applicable; the other interpretation is that the bodily injury policy covering the vehicle and, likewise, any such policy covering the driver are applicable. We recognize that such interpretations are inconsistent only when the owner of the vehicle and the driver of the vehicle are not the same, as in the case at hand. Because the definition of an underinsured motor vehicle is subject to inconsistent interpretations, we are bound to resolve the ambiguity in favor of the insured, Jeffrey. See Transport Ins. Co. v. Ford, Ky.App., 886 S.W.2d 901 (1994), and Davis v. American States Ins. Co., Ky.App., 562 S.W.2d 653 (1977). There is little doubt that the most favorable interpretation to the insured/Jeffrey is that only the motor vehicle's bodily injury policy needs consideration and not any additional policy on the tortfeasor/driver. As a result, only Policy D's bodily injury liability on Jeffrey's truck at the time of the accident must be weighed when determining whether the vehicle was, in fact, underinsured. The Glasses' policies clearly and unambiguously state that a vehicle is underinsured when its limit for bodily injury liability is less than the limit of liability for this coverage. The bodily injury liability limit on Jeffrey's vehicle was $50,000.00, and we believe that the limit of liability for this coverage (underinsured) should be $150,000.00. We arrive at this figure by stacking the UIM coverage applicable to each of the Glasses' three insured vehicles at the time of the accident. Each vehicle had $50,000.00 UIM coverage. We do not believe the fourth caradded to Policy D after the accident should be considered. We think it appropriate to stack UIM coverage when initially determining whether Jeffrey was underinsured. [3] Hence, we believe Jeffrey's vehicle was, indeed, an underinsured motor vehicle, as defined by the Glasses' policies. More succinctly, we view the applicable sum of bodily injury liability as $50,000.00 under Policy D and the applicable sum of UIM coverage of Policies A and D as $150,000.00. Because the limit for bodily injury liability ($50,000.00) is less than the limit of liability for UIM coverage ($150,000.00), we believe that Jeffrey's vehicle was underinsured, as defined by Glasses' policies. Having so concluded, we now examine the Glasses' policies to determine the exact amount of UIM coverage to which Jeffrey is entitled. The Glasses' policies state in relevant part as follows: We will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements. We believe this sentence susceptible to inconsistent interpretations and therefore ambiguous. One possible interpretation is that Motorists would pay UIM benefits (1) only after exhaustion of applicable bodily injury policy/policies and (2) only in the amount remaining uncompensated after such policies have been exhausted. Consequently, the UIM payment would be reduced by applicable bodily injury payments. Another possible interpretation is that Motorists would pay UIM benefits (1) only after exhaustion of applicable bodily injury policy/policies, but (2) in the full amount of damages incurred irrespective of any applicable bodily injury payments. Consequently, the UIM payment would not be reduced by any applicable bodily injury payments. We are compelled to adopt the latter interpretation, it being more favorable to the insured/Jeffrey. See Transport Ins. Co., supra , and Davis, supra. Because the UIM payment ($150,000.00) should not be reduced by any applicable bodily injury payments, we are of the opinion Jeffrey is entitled to the full $150,000.00 of UIM coverage. A controversy exists over the effect of KRS 304.39-320 (UIM coverage) as it applies to this case. On July 15, 1988, the statute was amended to remove certain offset language. [4] Prior to that time the UIM benefits were diminished by the amount paid by the liability insurer for the tortfeasor. See Coots v. Allstate Ins. Co., Ky., 853 S.W.2d 895 (1993). Because the accident giving rise to this litigation occurred on May 13, 1988, before the amendment, Motorists Mutual argues that any UIM benefit recovery should be subject to offset. While we do not necessarily agree that the date of the accident is the triggering event, we are not bound to decide the question. We are of the opinion that the amendment of the statute is a non-issue. As we read Motorists' policies, they do not state with specificity that an offset should be effected, as was the situation in LaFrange, supra . To read into the policies the right of an offset requires a ratiocination that we are not inclined to afford. Without a setoff provision, as authorized by statute before amendment, we interpret the Glasses' policies as providing more coverage than required by the pre-amended version of KRS 304.39-320. At a minimum an insurance contract must include rights and obligations as required by statute; however, it is axiomatic that an insurance contract may provide broader coverage than that required by statute. LaFrange at 413. We interpret the Glasses' policies as providing more UIM coverage, and thus the rights and liabilities so afforded are controlling. In concluding this issue, there being only three insured vehicles in the Glass household at the time of the accident, Jeffrey was entitled to $150,000.00 UIM benefits, not the $200,000.00 awarded. Upon remand the court shall adjust the judgment accordingly. We next turn to issues faced by Motorists regarding the application of various provisions of the Kentucky Unfair Claims Settlement Practices Act (UCSPA). KRS 304.12-230. Motorists claims entitlement to a directed verdict because of insufficient evidence regarding the claims of bad faith, violation of the UCSPA, and punitive damages. Before addressing these issues we consider the question of whether a third party may pursue a bad faith claim under the UCSPA. Motorists contends that the UCSPA does not apply to third party claimants such as Jeffrey. We believe State Farm Mut. Auto. Ins. Co. v. Reeder, Ky., 763 S.W.2d 116 (1988), negates Motorists' argument and is controlling. We would be remiss, however, if we did not observe that the statute is not specifically designed to accommodate third party claims. This, of course, makes trial nearly impossible and appellate review most difficult. As to sufficiency of evidence, a directed verdict is precluded unless there is a complete absence of proof on a material issue in the action or if no disputed issue of fact exists upon which reasonable minds could differ. Taylor v. Kennedy, Ky.App., 700 S.W.2d 415, 416 (1985). Motorists Mutual denies any bad faith in its adjustment of Jeffrey's claim. Based upon the requirements for a bad faith claim under the UCSPA ( see Wittmer v. Jones, Ky., 864 S.W.2d 885 (1993)), we conclude there was sufficient evidence supporting the issue's submissibility. Approximately a month and a half after the accident, Motorists' adjuster was authorized to pay the $50,000.00 policy liability limit; yet, Motorists did not tender same until years later and initially failed to advise Jeffrey of his potential UIM coverage. During the interim, astronomical medical bills emanating from the insured tort were mounting. Because reasonable minds could differ on the issue of Motorists' bad faith and because there was sufficient evidence to support the claim, we believe the circuit court properly submitted the matter to the jury. Motorists also contends there was insufficient evidence supporting the jury's findings of a UCSPA violation and of Jeffrey's right to punitive damages. [5] For reasons similar to those given on the issue of bad faith, we conclude that the court did not err in submitting these issues to the jury. Concerning the issue of attorney fees, Motorists argues four specific points. First, it submits that KRS 304.12-235 does not apply to third party claimants. We disagree. Having already held that the UCSPA (KRS 304.12-230) applies to third party claimants, we perceive no logical basis for granting to such insured claimants the right to pursue a bad faith cause of action under KRS 304.12-230, but not under KRS 304.12-235. KRS 304.12-230 sets forth prohibited settlement practices of an insurer. KRS 304.12-235 stipulates the time allotted for payment of claims and the effect of failure to promulgate a settlement. Both statutes were enacted to protect the rights of an insured against unfair settlement practices. KRS 304.12-010. As such, they must be applied consistently to effectuate the purposes of both statutes. To do otherwise seems contrary to legislative intent. Dispute also arises as to which version of KRS 304.12-235 is applicable. The controverted portion of the statute was amended July 13, 1990, and reads as follows: All claims arising under the terms of any contract of insurance shall be paid to the named insured person or health care provider not more than thirty (30) days from the date upon which notice and proof of claim, in the substance and form required by the terms of the policy, are furnished the insurer. Although this version was applied by the circuit court, Motorists observes that at the time of the accident, the pre-amended statuteallowing for sixty days of payment on the claimwas in effect. In both versions the time period applies to subsections (2) and (3) regarding the time for settlement before interest or attorney fees can be awarded for failure to settle. We believe that Motorists' protracted delay in payment renders the dispute inconsequential as to the stipulation of thirty or sixty days. Thus, if any error existed in application of the statute, we perceive no resulting prejudice. CR 61.01 Motorists also objects to the jury instruction given to create liability under KRS 304.12-235(3). Specifically, Motorists contends the instruction excluded an element of the subsection and should have incorporated language that a delay in payment must be without reasonable foundation. KRS 304.12-235(3). Motorists also maintains error on the basis that no evidence was presented on the reasonableness of the claimed fee. The circuit court rendered the following interrogatory to the jury: Do you believe from the evidence that the Defendant, Motorist Mutual Insurance Company, failed to make a good faith attempt to settle the Plaintiff's, Jeffrey A. Glass, claim within 30 days from the date on which notice or proof of loss in the substance and form required by the terms of the policy was furnished the Defendant, Motorist Mutual Insurance Company? [6] The jury responded in the affirmative to this question, and Glass made a post-trial motion for one-third of attorney fees against Motorists and Farm Bureau. The motion was granted only against Motorists. The court then fixed the amount of attorney fees in an amount equal to one-third of the total recovery against Motorists. We believe both the instruction and the amount fixed by the court to be appropriate. Finally, Motorists argues that the court erred in calculating interest on the award from the date of verdict rather than from date of judgment. We believe this indeed erroneous. KRS 360.040 provides for interest upon a judgment. We know of no authority for commencing interest from the date of verdict. There may be special circumstances that would justify same, but they are not here present. Motorists argues that the cumulative effect of various other errors deprived it of a fair trial. We have examined these alleged errors and find no merit. In conclusion, we reverse and remand the judgment against Motorists as to the amount of UIM coverage and the award of interest prior to judgment; in all other respects, the judgment is affirmed.