Opinion ID: 1472722
Heading Depth: 1
Heading Rank: 6

Heading: the underinsured motorist claims.

Text: The trial judge concluded that Jeffrey could stack the UIM coverages for the four vehicles described in the two Motorists Mutual policies. See Allstate Insurance Co. v. Dicke, Ky., 862 S.W.2d 327 (1993). However, since one of those vehicles was added to the policy after the date of this accident, the maximum available UIM coverage under both Motorists Mutual policies was $150,000.00. In fact, none of that available coverage was applicable to this accident. On the date of this accident, KRS 304.39-320 contained the following offset provision: [T]he insurance company agrees to pay its own insured for such uncompensated damages as he may recover on account of injury due to a motor vehicle accident because the judgment recovered against the owner of the other vehicle exceeds the policy limits thereon, to the extent of the policy limits on the vehicle of the party recovering less the amount paid by the liability insurer of the party recovered against. In LaFrange v. United Services Automobile Association, supra , we held that this statutory provision meant exactly what it said, i.e., an insurance company is required to pay under its UIM coverage only to the extent that the UIM coverage exceeds the liability policy limits of the tortfeasor's insurance policy. In that case, the limits of the injured insured's UIM coverage were $25,000.00 and the limits of the tortfeasor's liability coverage were also $25,000.00. When we offset $25,000 against $25,000, the remainder is zero. Id. at 413. The offset provision was deleted by a statutory amendment effective July 15, 1988. Ky. Acts 1988, Ch. 180, § 1. Since the amendment was not expressly declared to be retroactive, it does not affect claims arising out of injuries which occurred prior to its effective date. KRS 446.080(3); cf. Koching v. International Armament Corp., Ky., 772 S.W.2d 634 (1989). As also pointed out in LaFrange, supra , the insurance contract could provide broader coverage than required by the statute. However, as noted earlier, the policy defines an underinsured motor vehicle as a land motor vehicle ... to which a bodily injury liability ... 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. [17] The UIM portion of the policy further provides: Any amounts otherwise payable for damages under this coverage shall be reduced by all sums: 1. Paid because of the bodily injury by or on behalf of persons or organizations who may be legally responsible. This includes all sums paid under part A. [18] Part A is the liability coverage under which Shelburne was covered as an additional insured. Thus, the policy mirrors the statutory offset provision in effect at the time of this accident. Even if the offset provision did not apply in this case, Jeffrey still could not recover under the UIM coverage of these policies. The language of the post-July 15, 1988 version of KRS 304.39-320 includes the following: Every insurer shall make available upon request to its insureds underinsured motorist coverage, whereby subject to the terms and conditions of such coverage not inconsistent with this section the insurance company agrees to pay its own insured for such uncompensated damages as he may recover on account of injury due to a motor vehicle accident because the judgment recovered against the owner of the other vehicle exceeds the liability policy limits thereon, to the extent of the underinsurance policy limits on the vehicle of the party recovering. (Emphasis added.) The statute contemplates that the underinsured tortfeasor will be operating a different vehicle than the vehicle providing UIM coverage for the injured claimant. Conceptually, the purpose of the statute is to give the insured the right to purchase additional liability coverage for the vehicle of a prospective underinsured tortfeasor. LaFrange, supra, at 414. The statute does not authorize recovery against both the liability and UIM coverages of the same policy. Pridham v. State Farm Mutual Insurance Co., Ky.App., 903 S.W.2d 909 (1995); Windham v. Cunningham, Ky.App., 902 S.W.2d 838 (1995). The issue then becomes whether the policy, itself, permits such recovery; and/or whether Jeffrey can recover under the UIM coverage of his parents' Motorists Mutual policy, under which he is not a liability claimant but is an additional insured for UIM purposes. Both policies exclude from the definition of an underinsured vehicle any vehicle [o]wned by or furnished or available for the regular use of you or any family member, [19] which clearly applies to the 1980 pickup truck involved in this accident. The validity of this exclusion was discussed at length by the Court of Appeals in Windham v. Cunningham, supra, at 841. We agree with the Court of Appeals' analysis and with its conclusion that the exclusion is not against public policy. The purpose of UIM coverage is not to compensate the insured or his additional insureds from his own failure to purchase sufficient liability insurance. Id. The Glasses argue that they paid a premium for UIM coverage, thus the exclusion is void because of the doctrine of reasonable expectations. That principle or doctrine, first enunciated by this Court in Ohio Casualty Insurance Co. v. Stanfield, Ky., 581 S.W.2d 555, 559 (1979), does not pertain to whether a premium was paid for coverage which is excluded, but rather to the clarity of the exclusionary language. As we explained in Simon v. Continental Insurance Co., Ky., 724 S.W.2d 210, 212-13 (1986): The gist of the doctrine is that the insured is entitled to all the coverage he may reasonably expect to be provided under the policy. Only an unequivocally conspicuous, plain and clear manifestation of the company's intent to exclude coverage will defeat that expectation. ... The doctrine of reasonable expectations is used in conjunction with the principle that ambiguities should be resolved against the drafter in order to circumvent the technical, legalistic and complex contract terms which limit benefits to the insured. (Quoting R.H. Long, The Law of Liability Insurance, § 5.10B.) There is nothing ambiguous about this exclusion. A vehicle owned by or furnished or available for the regular use of the named insured or a family member is not an underinsured vehicle. The obvious reason for the exclusion is that the named insured can avoid the fact of underinsurance by simply purchasing additional liability insurance coverage for his vehicle. The Glasses' Consumer Protection Act claim was also premised upon their perception that Motorists Mutual sold them policies of insurance with UIM coverage that was illusory. The coverage was not illusory; it just did not apply to the facts of this case. If this had been a two-vehicle accident with Shelburne operating his own vehicle, and if Shelburne's liability insurance coverage had been only $25,000.00, then Jeffrey could have recovered $25,000.00 in UIM payments for each of the three vehicles to which the UIM coverage applied. If the accident had occurred after July 15, 1988, he could have recovered $50,000.00 for each of the three covered vehicles. If there had been a valid UIM claim in this case, it should have been presented to the jury in the same manner as the liability claim against Shelburne would have been presented had it not been settled, except that Motorists Mutual would have been the only named defendant. The trial should have been bifurcated with the negligence (UIM) claim tried first, followed by the bad faith claim. Wittmer v. Jones, supra, at 891. The jury should have been instructed to apportion liability according to comparative fault and to determine damages for the injuries sustained. See 2 Palmore, Kentucky Instructions to Juries (Civil), § 16.55 (4th ed. Anderson 1989). Only if the verdict equaled or exceeded the sum of the applicable liability and UIM coverages would Jeffrey have been entitled to the UIM policy limits. Thus, if there had been $200,000.00 UIM coverage available in this case, Jeffrey would have been entitled to the full amount only if the apportioned verdict of the jury equaled or exceeded $350,000.00. If the verdict did not exceed the $150,000.00 liability limits, he would have been entitled to none of the UIM coverage. Clearly, it was improper to merely tell the jurors how much coverage was available and ask them how much of that coverage they wanted Jeffrey to receive.