Opinion ID: 172959
Heading Depth: 2
Heading Rank: 1

Heading: The Kansas UM Statute

Text: Kansas law requires car insurance to protect against accidents caused by uninsured motorists: No automobile liability insurance policy... shall be delivered or issued [in Kansas]... unless the policy contains ... a provision ... in such automobile liability insurance policy sold to the named insured for payment of part or all sums which the insured or the insured's legal representative shall be legally entitled to recover as damages from the uninsured owner or operator of a motor vehicle .... Kan. Stat. Ann. § 40-284(a) (emphasis added). According to the Kansas Supreme Court, [t]he purpose of K.S.A. 40-284 is to provide the individual who is covered by the standard automobile liability policy with a right against his or her own insurer equal to that the insured would have against the uninsured ... tortfeasor. O'Donoghue v. Farm Bureau Mut. Ins. Co., 275 Kan. 430, 66 P.3d 822, 828 (2003) (quoting Rich v. Farm Bureau Mut. Ins. Co., 250 Kan. 209, 824 P.2d 955, 959 (1992)). Long argues the statute must be liberally construed in favor of coverage and should be read to require St. Paul to cover her children's injuries. Some Kansas cases appear to support this contention since the uninsured and underinsured motorist statutes should be liberally construed to provide broad protection to the insured. Jones v. Auto. Club Inter-Ins. Exch., 26 Kan.App.2d 206, 981 P.2d 767, 769 (1999); see also Rich, 824 P.2d at 959 (The purpose of the legislation ... is to fill the gap inherent in motor vehicle financial responsibility and compulsory insurance legislation. This coverage is intended to provide recompense to innocent persons....). But this is a general statement of policy, and must yield to specific statutory requirements. As an initial matter, § 40-284(a) does not require that a tortfeasor's insurance policy protect an innocent accident victim  it only requires that the injured person's policy provide UM coverage. Indeed, the language of § 40-284(a) mandates UM coverage only in such automobile insurance policy sold to the named insured.  (emphasis added). We therefore look not to the St. Paul policy covering the pickup truck, but to the American Standard policy that insured Long and her children from injuries caused by uninsured motorists. The district court concluded that unlike the St. Paul Policy  which, under the facts of this case, clearly excluded coverage for non-permissive users  the American Standard policy did not unambiguously deny coverage for Long's children. See Long, 483 F.Supp.2d at 1102-03. Of course, whether the Kansas UM statute or the relevant policy language mandated coverage under the American Standard policy is a legal question not before us  that issue has been settled by the parties. But at the very least, Long's children recovered benefits from their own insurer to bridge the gap in coverage left by the St. Paul permissive user exclusion. The purpose of § 40-284(a) therefore appears to have been satisfied in this case. Moreover, Kansas courts have not construed the statute to mandate that a vehicle owner's insurance policy provide UM coverage for nonpermissive users of the owner's insured vehicles or passengers of nonpermissive users. [3] The Kansas Supreme Court faced an insurance dispute similar to this one in Farmers Insurance Co. v. Schiller, 226 Kan. 155, 597 P.2d 238 (1979). In that case, the owner of a pickup truck, who was arranging to sell the truck, lent the vehicle to a potential buyer for the evening, instructing that only the buyer was allowed to drive. That night, the buyer  without the owner's permission  turned the keys over to Schiller and a friend. It is unclear who drove the truck that night  Schiller or the friend  but someone wrecked it, and Schiller sustained personal injuries. The owner's insurer, Farmers, filed an action for declaratory judgment to determine whether it was required to cover Schiller, though neither he nor his friend had permission to drive the truck. Schiller argued that because Farmers denied him personal injury benefits, § 40-284(a) mandated that he receive UM coverage. The Kansas Supreme Court disagreed. It held, [t]he uninsured motorist statute was not enacted to provide coverage for everyone.... [A] guest passenger of [an] unauthorized user, which passenger does not fall within the definition of `insured' contained in the [vehicle owner's] policy, is not within the coverage mandated by the uninsured motorist statute.... Schiller, 597 P.2d at 243. In a later case, Hilyard v. Clearwater, 240 Kan. 362, 729 P.2d 1195 (1986), the Kansas Supreme Court reaffirmed that the mere denial of general insurance coverage does not trigger the UM statute. There, an insurance company denied liability benefits for the family members of several insured parties pursuant to a policy's household exclusion. The plaintiffs argued this denial of coverage triggered statutorily-required UM benefits. But the Kansas Supreme Court held that § 40-284(a) did not mandate UM coverage under those facts: The statute does not contemplate a situation where the `uninsured owner or operator' is the owner of an automobile liability insurance policy. Hilyard, 729 P.2d at 1200. Long argues Hilyard has little precedential value because the Kansas Court of Appeals purported to limit Hilyard to its particular facts. See Cummings, 778 P.2d at 375. Long's argument is incorrect for several reasons. First, as a federal court sitting in diversity, we apply the law as set forth by the relevant state's highest court. The decisions of lower state courts, while persuasive, are not dispositive. See Wade, 483 F.3d at 665-66. Second, although Cummings revisited the holding of Hilyard, it ultimately arrived at a similar conclusion: [A]n offending vehicle is not to be considered as `uninsured' when the driver [or owner] of that vehicle is covered by the requisite minimum liability coverage. Cummings, 778 P.2d at 376; see also id. at 374 (if either the owner or driver of an automobile has purchased minimum coverage, the vehicle... is not `uninsured'). And Cummings never suggested Hilyard was incorrectly decided. Unlike Cummings, Hilyard concerned the operation of a valid insurance policy exclusion; the Kansas Supreme Court denied UM coverage in Hilyard because to do otherwise would have emasculate[d] the ... exclusion clause in the policy. Cummings, 778 P.2d at 375. In contrast, no policy exclusions were implicated in Cummings  the only question was the definition of an uninsured vehicle. For precisely this reason, the court in Cummings found Hilyard did not apply to the facts of that case. [4] Schiller and Hilyard thus establish that the Kansas statute does not mandate UM coverage for Long's children under the St. Paul policy. The teen driver here, like the driver in Schiller, was not permitted to drive the truck at the time of the accident, and Long does not argue otherwise. Consequently, as guest passenger[s] of the unauthorized user, Long's children are not entitled to UM benefits from St. Paul under § 40-284(a). Schiller, 597 P.2d at 243. Moreover, as in Hilyard, the mere fact that St. Paul denied liability coverage to the driver does not mean it is simultaneously required to provide UM coverage for passengers. The teen driver  but for the nonpermissive user provision in the St. Paul policy  was insured under that same policy. As the Kansas Supreme Court stated, the UM statute does not contemplate the situation at hand  where the driver is insured but, because of a legitimate policy exclusion, the claimant characterizes him as uninsured to gain access to statutory UM benefits. Hilyard, 729 P.2d at 1200. The Kansas legislature has not modified the UM statute to abrogate the Schiller and Hilyard decisions, and we must presume it agrees with their holdings. Halsey, 61 P.3d at 697 (quoting In re Adoption of B.M.W., 268 Kan. 871, 2 P.3d 159, 166 (2000)). We therefore conclude that § 40-284(a) does not mandate St. Paul to provide UM benefits to C.J. and Jennifer