Opinion ID: 1881223
Heading Depth: 2
Heading Rank: 4

Heading: government-owned vehicle.

Text: The Hatfields' policy also contains the following exclusion that precludes the result reached by the plurality in this case: DEFINITIONS ... 3. We will not consider as an... underinsured motor vehicle: ... b) any motor vehicle owned by a government unit or agency. (Emphasis added.) This exclusion was explicitly upheld as reasonable in the context of UM coverage in Commercial Union Insurance Co. v. Delaney, 550 S.W.2d at 500, and was recognized as the type of reasonable, narrowly drawn condition that fell within the authorization of the terms and conditions clause of the UM statute in Chaffin v. Kentucky Farm Bureau, 789 S.W.2d at 757. The exclusion is reasonable because there are other available avenues of recovery, e.g., the Board of Claims Act, KRS 44.070, et seq., and the Claims Against Local Governments Act, KRS 65.200, et seq. See 1 Paul A. Eisler, California Uninsured Motorist Law § 10.40, at 10-9 (1986) (government-owned vehicle exclusion does not violate the remedial purpose of the uninsured motorist law because government entities are normally able to respond in damages). The reason for the exclusion is that an insurance company cannot exercise its subrogation rights against an immune tortfeasor. Even if a subrogation claim could be paid under a particular partial waiver statute such as the Board of Claims Act, where, as here, the insured has already exhausted the maximum limit of the partial waiver, there would be no additional funds available against which to assert a subrogation claim. Although subrogation rights often have limited value when exercised against an uninsured or underinsured motorist, that is not always the case. See, e.g., Wine v. Globe American Casualty Co., Ky., 917 S.W.2d 558, 566 (1996), where the injured parties and their insurers litigated entitlement to approximately $700,000 recovered from an uninsured motorist. And that is definitely not the case with respect to a presumably solvent government tortfeasor. The plurality opinion also includes a string cite of cases declaring the government-owned vehicle exclusion invalid under the respective statutory schemes of various jurisdictions. Ante, at 42-43. Virtually all of those cases, including the Missouri cases, involved UM coverage, not UIM coverage, and every cited case, including the Missouri cases, was construing a statute that, like our UM statute, mandated that every policy of insurance contain the UM or UIM coverage. Ala.Code § 74(62a) (1965 version); Ariz.Rev.Stat. § 20-259.01(A) (1988 version); Ark.Code Ann. § 66-4003 (1947 version); Del.Code Ann., tit. 18, § 3902; Fla. Stat. § 627.727; Ga. Code Ann. § 56-407.1; Ill. Comp. Stat., ch. 73, § 755a (1967 version); Kan. Stat. Ann. § 40-284; La.Rev.Stat. § 22:1406; Me.Rev.Stat. Ann. § 2902(1); Minn.Stat. § 65B.49; Mo.Rev.Stat. § 379.203; Ohio Rev.Code Ann. § 3937.18(A); Okla. Stat. Ann. tit. 36, § 3636A; R.I. Gen. Laws § 27-7-2.1(a); Wash. Rev.Code § 48.22.030(2). In apparent response to the rendition of the three Ohio cases cited by the plurality opinion, the Ohio legislature amended its UM/UIM statute to delete the mandatory language and make both UM and UIM coverage optional. 2001 Ohio Laws § 97. Nor is Kyrkos v. State Farm Mutual Insurance Co., 121 Wash.2d 669, 852 P.2d 1078 (1993), the final word on this subject in the state of Washington. In Bohme v. PEMCO Mutual Insurance Co., 127 Wash.2d 409, 899 P.2d 787 (1995), the Supreme Court of Washington upheld a government-owned vehicle exclusion in a UIM endorsement that was conditioned upon the government being financially solvent, id. at 791-92, noting that the purpose of underinsured motorist coverage is to protect victims from financially irresponsible motorists by allowing them to recover the damages they would have received had the responsible party maintained liability insurance. Id. at 792. See also Cont'l W. Ins. Co. v. Conn, supra, at 502 (upholding statutory government-owned vehicle exclusion); Francis v. Int'l Serv. Ins., supra, at 61 (upholding government-owned vehicle exclusion in UM endorsement approved by Commissioner of Insurance). Unlike the statutes relied upon in the cases cited by the plurality opinion, KRS 304.39-320 does not mandate that every policy of insurance contain UIM coverage. We have twice held that the government-owned vehicle exclusion is a reasonable, narrowly-drawn exclusion that does not offend the public policy exemplified by our mandatory UM statute. Manifestly, it is equally, if not more, reasonable when viewed in the context of our optional UIM statute.