UM Coverage Can be Provided by Contract (in the Insurance Policy) or By Law (La.R.S. 22:1295)

Insurance.jpgAshanti Green v. Michael Johnson, 2014-0292 (La.10/15/14), with Justice Hughes writing for the Louisiana Supreme Court, held that since the Allstate auto policy at issue contractually included UM coverage, the express provisions of the policy (or contract) governed whether UM coverage existed for the accident, and statutory UM coverage under La. R.S. 22:1295 was not at issue.

Plaintiff co-owned a motorcycle with a friend. When plaintiff was killed by an underinsured motorist, his beneficiaries filed a claim for UM benefits against the co-owner’s Allstate auto policy. The express terms of the Allstate auto policy did not provide for bodily injury liability coverage, but did provide for UM coverage.

In granting summary judgment in favor of Allstate, the lower courts relied on jurisprudential language holding that, “it is well-settled that a person who does not qualify as a liability insured under a policy of insurance is not entitled to UM coverage under the policy” as a basis for finding that there was no UM coverage for the accident at issue under the co-owner’s Allstate policy. The Louisiana Supreme Court reversed, holding that this jurisprudential language is limited to the provision of “statutory” UM as required by La.R.S. 22:1295, and does not apply to UM that is actually provided for in the insurance policy (or contract). Thus, the Louisiana Supreme Court concluded that even when an insurer is not required by law to provide UM coverage because the policy does not provide liability coverage, the insurer is nevertheless free to contract to provide UM coverage.

After analyzing the Louisiana Supreme Court jurisprudence, the Supreme Court articulated that when the existence of UM coverage under a policy of automobile insurance is at issue, Magnon v. Collins, Succession of Fannaly v. Lafayette Insurance Company, Filipski v. Imperial Fire & Casualty Insurance Company, and Cadwallader v. Allstate Insurance Company demonstrate a two-step analysis:

(1) the automobile insurance policy is first examined to determine whether UM coverage is contractually provided under the express provisions of the policy; and

(2) if no UM coverage is found under the policy provisions, then the UM statute (La.R.S. 22:1295) is applied to determine whether statutory UM coverage is mandated.

See also Bernard v. Ellis, 11-2377 (La. 7/2/12), 111 So.3d 995, 1000 (recognizing that an automobile insurance policy must first be examined for contractual UM coverage, and if contractual coverage is absent, “if a plaintiff is insured under the auto liability coverage, he is entitled to UM coverage” (citing Magnon v. Collins and Filipski v. Imperial Fire & Casualty Insurance Company)). If there is express contractual UM coverage in the policy, it is unnecessary to apply the UM statute to determine whether UM coverage is statutorily mandated.

In this case, the Allstate auto policy provided UM coverage to the plaintiff because he met the definition of an “insured person” since he was a “person while in, on, getting into or out of an `insured auto’ with [the policyholder’s] express or implied permission.” The co-owned motorcycle qualified as an “insured auto” for purposes of UM coverage since it was an after-acquired “land motor vehicle” as set forth in the policy.

The motorcycle did not qualify as an “insured auto” for purposes of liability coverage since it was not an after-acquired “four wheel” auto as set forth in the policy.

Thus, the distinction between the UM provisions and the liability provisions vis-à-vis coverage was that the UM provisions included within the definition of “insured auto,” for coverage as an after-acquired vehicle, a “land motor vehicle,” which would encompass a motorcycle, while the liability provisions included within the definition of “insured auto,” for coverage as an after-acquired vehicle, only a “four wheel” auto, which would exclude liability coverage for a motorcycle.

The Louisiana Supreme Court found no ambiguity in this Allstate policy; the parties clearly intended to extend greater UM coverage to after-acquired vehicles, by defining an “insured auto” to encompass any “land motor vehicle” (with only three listed exceptions), than for liability coverage, which was limited to “four wheel” autos. The inclusion in the policy of differing definitions for “insured auto” in differing coverage sections produced no absurd consequences, and the policy was applied as written.

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