Is It the General Assembly's Intent to Limit the Amount of UIM Benefits to That Which Is Available Under An Insured's Policy ?
In Kovatch v. Aetna Cas. & Sur. Co. (Sept. 24, 1999), Lake App. No. 98-L-095, 1999 Ohio App, the plaintiff-appellant, Kathleen Kovatch, was traveling as a passenger in a vehicle owned and operated by her daughter, Michelle, when Michelle's vehicle collided with a second vehicle operated by Melanie Measel. Measel's negligence caused the accident. As a result of the accident, Kathleen received $ 25,000 in liability coverage under Measel's (the torteasor's) insurance policy with State Farm Insurance Company, and another $ 25,000 in UIM coverage under Michelle's insurance policy with Aetna Casualty & Surety Company.
At the time of the accident, Kathleen had an insurance policy with Progressive Insurance Company that contained a UIM provision with coverage limits of $ 50,000 per person and $ 100,000 per accident.
Kathleen sought UIM benefits from Progressive despite the fact she had already received $ 50,000 in total payments as a result of the accident.
The trial court found that Kathleen was not entitled to receive UIM benefits under her policy with Progressive. Kathleen appealed.
The Kovatch court upheld the trial court, stating in pertinent part:
"Kathleen contends that the phrase 'persons liable to the insured' in former R.C. 3937.18(A)(2), which is now contained in R.C. 3937.18(C) refers only to the tortfeasor. from Kathleen's perspective, therefore, only the $ 25,000 from Measel's policy with State Farm should be offset against the limits of her UIM coverage with Progressive.
In other words, the $ 25,000 paid by Aetna should not be offset because Michelle Kovatch was not a person who was 'liable' to Kathleen.
The Court disagree with Kathleen's interpretation of R.C. 3937.18(A)(2) now R.C. 3937.18(C). the statute manifests a clear intent on the part of the General Assembly to limit the amount of UIM benefits to that which is available under the insured's policy.
In this case, Kathleen's policy with Progressive contained an express limitation of $ 50,000 per person in UIM benefits. It is uncontroverted that Kathleen received this amount, to wit: $ 25,000 from State Farm and $ 25,000 from Aetna.
"The phrase 'persons liable to the insured' as used in R.C. 3937.18(A)(2) now R.C. 3937.18(C) is broad enough to encompass all persons who are liable to the insured.
It does not distinguish between tort and contractual liability. As a result, the category of liable persons can include both those who may be liable in contract, as well as those who may be liable in tort.
In other words, the statute mandates that the policy limits of UIM coverage must be reduced by those amounts available for payment under all applicable bodily injury insurance policies, not just the amount of money that was recovered under the torteasor's policy.
"In this case, Aetna decided to settle with Kathleen for $ 25,000 after she filed the complaint seeking UIM benefits. As the insurer of the vehicle in which Kathleen was injured, Aetna must have recognized its potential contractual liability to Kathleen as an insured passenger in the covered automobile.
As a result of such liability, Aetna settled the claim for $ 25,000. This figure represented the difference between the UIM limit set forth in Kovatch's policy and the amount already paid by State Farm pursuant to Measel's policy.
"Under R.C. 3937.18, the trial court correctly ruled that the policy limits of Kathleen's UIM coverage had to be offset by those amounts paid under all applicable bodily injury insurance policies, not just the sum of money recovered by Kathleen under the tortfeasor's policy." Kovatch, Lake App. No. 98-L-095, 1999 Ohio App.