Opinion ID: 1386076
Heading Depth: 1
Heading Rank: 1

Heading: the conflicting uninsured/underinsured motorist statutes of california and oklahoma

Text: Our mobilized society and the divergent directions and purposes of the statutory and judicial developments in motor vehicle insurance law of the various states breed multistate conflict of laws issues in motor vehicle insurance or accident litigation. Comparison of the sharply opposed provisions of the California and Oklahoma UM statutes indicates the need for a choice of laws rule which will preserve the divergent public policies of the states in regulating the insurance industry. In this case, the California law allows reduction in the UM benefits for specified insurance benefits paid and prohibits stacking of UM benefits. Oklahoma law is the opposite. California's insurance code, Ins.Code § 11580.2, subd. (p)(4), provides that the maximum liability for underinsured motorist coverage for bodily injury caused by one or more insured, underinsured or uninsured motor vehicles ... shall not exceed the insured's underinsured motorist coverage limits, less the amount paid to the insured by or for any person or organization that may be legally liable for the injury. And, § 11580.2, subd. (q) prohibits stacking of UM benefits, Regardless of the number of vehicles involved ... in no event shall the limit of liability for two or more motor vehicles or two or more policies be added together, combined, or stacked to determine the limit of insurance coverage available to injured persons. The purpose of California's UM statute is to assure that each person shall have $30,000.00 of coverage for personal injury damages caused by a financially irresponsible, tortious motorist. Thus, California allows the $30,000.00 minimum UM benefits to be reduced by the liability insurance benefits received and prohibits stacking of UM insurance provisions or contracts. This purpose is explained in California Casualty Indemnity Exchange v. Pettis, 239 Cal. Rptr. 205, 211, 193 Cal. App.3d 1597, 1607 (Cal. App. 3 Dist. 1987) at footnote 6: 6. California's nonstacking rule is not simply a stingy refusal to permit insureds to obtain full recovery. It reflects a policy choice by our Legislature that, unless expressly rejected, all persons insured under a California policy should have a minimum level of uninsured motorist coverage. Insureds are not precluded from purchasing, and paying for, additional insurance should they choose to do so. If they do not purchase additional insurance then their premiums will represent the reduced risk attributable to California's nonstacking rule, as in this case with the multi-vehicle discounts the defendants received when they insured more than one car. In this manner our Legislature has acted to keep down the cost of compliance with our financial responsibility law while guaranteeing that all persons will be offered the minimum appropriate level of uninsured motorist protection. The realization of this legislative purpose would be thwarted if, based upon some minimal and fortuitous contact with another state, insureds are allowed to reap an unexpected and unpaid for windfall in that level of their insurance coverage. Pettis was a declaratory judgment action brought by the insurer to determine whether the California insurance contracts were governed by the laws of Hawaii or California. Pettis, his wife and another couple, all California residents, while vacationing in Hawaii, were involved in an automobile accident. No-fault insurance benefits were paid to the injured California residents, who then made claim for UM benefits under their California insurance contracts. Pettis contended that since the accident occurred in Hawaii he was entitled to full recovery of the personal injury damages under Hawaii law. That is, the UM coverage in his multi-vehicle policy should be stacked and the amount should not be reduced by the payments made under the Hawaii no-fault insurance. The trial court denied Pettis' stacking claim. The trial court also denied the insurer's claim to reduced Pettis' UM benefits by the amount received under the Hawaii no-fault insurance contract. The insurer did not appeal the denial of the set off. [1] Pettis, 239 Cal. Rptr. at 208. The stacking issue was presented to the California appellate court. Applying the most significant relationship choice of laws rule, the California court determined that California law controlled and stacking of the UM coverage was denied. [2] The Oklahoma counterpart to California's § 11580.2, 36 O.S. 1981, § 3636, provides that ... uninsured motor vehicle coverage shall include an insured motor vehicle, the liability limits of which are less than the amount of the claim of the persons making such claim, regardless of the amount of coverage of either of the parties in relation to each other ...  and that any payment made by the insured tortfeasor shall not reduce or be a credit against the total liability limits as provided in the insured's own uninsured motorist coverage. The purpose of 36 O.S. 1981, § 3636 [3] is to assure each person the full contracted coverage for personal injury damages caused by a financially irresponsible, tortious motorist for each premium paid. This purpose is explained in Keel v. MFA Insurance Company, 553 P.2d 153, 155-156 (Okla. 1976): The statute grants the victim prima facie recourse to any and all policies available, subject to the implicit condition that his claims in aggregate not exceed his damages. The legislature must have been cognizant that a person often becomes an insured, either named or otherwise included in more than one automobile liability policy... . The legislature could have limited protection to the minimum statutory limit had that been its intent, or could have restricted coverage to only one policy.... ... By imposition of both policies, the insured is not receiving a windfall. He has paid the insurer a premium for this protection, and is only attempting to recover the actual amount of his damages which are within the limits of both policies. On the other hand, the insurer has collected a premium for each policy... . This Court has consistently protected the strength of our UM statute and the rights of an insured granted thereunder and purchased. Biggs v. State Farm Mutual Automobile Insurance Company, 569 P.2d 430 (Okla. 1977); Porter v. MFA Mutual Insurance Company, 643 P.2d 302 (Okla. 1982); Lake v. Wright, 657 P.2d 643 (Okla. 1982); Chambers v. Walker, 653 P.2d 931 (Okla. 1982); Uptegraft v. Home Insurance Company, 662 P.2d 681 (Okla. 1983); Heavner v. Farmers Insurance Company, 663 P.2d 730 (Okla. 1983); State Farm Mutual Automobile Insurance Company v. Wendt, 708 P.2d 581 (Okla. 1985). This protection, however, does not reach all motor vehicle insurance contract coverage of all persons using the roadways of Oklahoma. Moser v. Liberty Mutual Insurance Co., 731 P.2d 406 (Okla. 1986). In this case, Ola McIntosh, an Oklahoma resident and driver of the automobile in which Plaintiff was a passenger at the time of the accident, contracted for UM coverage under Oklahoma law. Plaintiff, even though a resident of California, received first-party UM benefits as an insured under McIntosh's Oklahoma insurance contract. The premium for UM coverage paid by McIntosh was determined in accordance with the stacking laws of Oklahoma. Application of California's nonstacking or set off law to the provisions of the California contract to reduce the UM coverage by the Oklahoma UM coverage denies Plaintiff the realization of the benefits as an insured under McIntosh's Oklahoma UM insurance contract for which the premium was paid and it allows the California insurer an unexpected windfall. Such application would offend the legislative policy expressed in § 3636. Thus, any provision in the California UM contract which prohibits stacking of Oklahoma UM coverage with the California coverage or which allows Oklahoma UM benefits to be a credit or set off against the UM benefits under the California contract violates Oklahoma public policy and is unenforceable in an Oklahoma forum. On the other hand, James Grigsby contracted for liability coverage as mandated under Oklahoma's financial responsibility law, §§ 7-201, et seq., and compulsory liability insurance laws, §§ 7-600, et seq., of Title 47. The legislative purpose of these statutes is to protect the public by requiring Grigsby, or any other owner of a motor vehicle in this state, to maintain a minimum of $10,000.00 insurance coverage against loss from liability imposed by law for damages arising out of the use of his vehicle. These statutes do not prohibit a credit or set off against other coverage for the liability benefits paid. And, as stated earlier, the prohibition against a liability benefits credit or set off in § 3636 is a limitation on insurance contracts issued in this state. Oklahoma public policy would not be offended by an express bargain contracted in California that liability benefits will be a credit or set off against California UM coverage. The freedom-of-contract principles control as to the application and effect of any liability insurance payments credit or set off provisions in the California UM contract. Equity Mutual Insurance Company v. Spring Valley Wholesale Nursery, Inc., 747 P.2d 947 (Okla. 1987). Thus, any provision in the California UM contract which expressly requires a reduction in the coverage for benefits paid pursuant to a foreign liability insurance contract does not violate Oklahoma public policy and is enforceable in an Oklahoma forum.