Opinion ID: 1858250
Heading Depth: 1
Heading Rank: 3

Heading: Whether Uninsured-Motorist Protection Extends to Claims Against Self-Insured Entities.

Text: Prior to determining the issues involving the application of the contractual period of limitations, we consider the district court's conclusion on Faeth's motion for summary judgment that under State Farm's policy uninsured-motorist coverage did not apply to claims against self-insured motor vehicles in any event. The provision on which the court relied for this conclusion was: An uninsured motor vehicle does not include a land motor vehicle: . . . . 2. owned or operated by a self-insurer under any motor vehicle financial responsibility law, a motor carrier or any similar law.... Faeth argues that this policy provision is only intended to make it clear that those motor vehicle operators who enjoy a legally sanctioned, self-insured status are not to be considered as uninsured. We agree with Faeth's interpretation of the policy provision involving self-insurers. However, as recognized by a New Jersey court in interpreting a similar provision, policy provisions removing legally sanctioned self-insurers from uninsured status for purposes of uninsured-motorist coverage only apply to solvent self-insured entities. Goodwin v. Rutgers Cas. Ins. Co., 223 N.J.Super. 195, 538 A.2d 425, 427 (1988). The court in Goodwin described the situation as follows: An effective self-insurer must be an entity which can pay claims in the usual course, not an empty or shallow pocket left to personal injury claimants who are reduced to general creditors' status awaiting payment from the debtor's estate after liquidation or reorganization proceedings are finally concluded. Id. The district court was wrong in concluding that the policy provision excepting a legally sanctioned, self-insured entity from the status of an uninsured motorist applies to self-insurers who have become insolvent. If the provision in State Farm's policy excluding self-insurers from being considered as uninsured motorists were to be applied to insolvent self-insurers, the policy would not provide the coverage mandated by Iowa Code section 516A.1. As recognized by the New Jersey court in Goodwin: The instruction of that provision is that an authorized and financially responsible self-insurer is not to be deemed uninsured. Such a self-insurer has provided an acceptable equivalent of liability insurance. An insolvent self-insurer is neither insured nor financially responsible. There is no reason to conclude that the statute permits a person injured by such an owner to be deprived of UM coverage. 538 A.2d at 427.