For years, Wrongful Death claims have been the "problem child" of automobile insurance law. Consider the insurance problems posed by the following typical wrongful death scenario:

Soona Gonner is killed in an automobile collision caused by a negligent driver who is insured by a liability policy with limits of $25,000 per person/$50,000 per accident. Soona is survived by her husband, a minor daughter who still lives at home, and her adult son, Trevor, who lives in his own apartment. Soona is the named insured on a policy of automobile insurance issued by Catastrophic Insurance Company. The Catastrophic policy provides uninsured and underinsured motorist coverage in the amount of $100,000 per person/$300,000 per accident. Trevor has an automobile insurance policy issued by Goliath Insurance Company. The Goliath policy provides for uninsured and underinsured motorist coverage in the amount of $100,000 per person/$300,000 per accident.

With the consent of Catastrophic and Goliath, the Administrator of Soona's estate accepts $25,000 to settle the wrongful death claims against the tortfeasor and gives the tortfeasor a complete release. After attorney fees, expenses, and payment of the funeral bill, the remaining $12,000 is distributed to the next-of-kin as follows:

Husband: Minor Daughter: Trevor: Total

$5500 $5500 $1000 $12,000

I. Is Trevor entitled to underinsured motorist benefits under Soona's Goliath policy?

Some uninsured motorist policies broadly define "insured" to include Trevor even though he was not an named insured and did not live in Soona's household. For example, many policies define "insured" to include

1. the named insured,

2. the spouse of the named insured,

3. occupants of the insured vehicle,

4. relatives living in the named insured's household, and

5. any person who is legally entitled to recover damages because of bodily injury sustained by persons described as an insured by sections 1 - 4 above.

If Soona's policy contains this broad definition of "insured", then Trevor is clearly entitled to recover underinsured motorist benefits under the Goliath policy because he is an insured under section 5 of the definition.

However, many policies define "insured" more restrictively by leaving out section 5 from the definition. Trevor would not meet the definition of an insured under this sort of restrictive definition, and until recently, Ohio Appellate Courts were split on the issue of whether Trevor could make an underinsured motorist claim under Soona's policy despite the restriction. Some Court's held that all of the decedent's next-of-kin were entitled to make a claim under the decedent's policy regardless of whether the next-of-kin qualified as an"insured" under the policy definition. Lehmkuhl v. Owners Ins. Co. (Feb 1, 1993), Clermont App. No. CA92-06-072 (12^th Dist.), unreported; Dion v. State Farm Mut. Automobile Ins. Co. (March 24, 1992), Defiance App. No. 9-91-14 (3^rd Dist.), unreported. Other Court's held that next-of-kin could not make a claim under the decedent's policy unless they qualified as "insured persons". Berleman v. State Farm Mut. Auto. Ins. Co. (1992), 76 Ohio App. 3d 81, 600 N.E.2d 1145, (12^th Dist).

This conflict was recently resolved by the Ohio Supreme Court in Holt v. Grange Mut. Cas. Co. (1997), 79 Ohio St. 3d 410, 683 N.E.2d 1080. In Holt, Holt was killed in a collision caused by an underinsured motorist. Holt was survived by his wife with whom he resided in the same household. Holt was also survived by two adult sons with whom he did not live in the same household. Holt and his wife were named insureds on a Grange policy with $250,000 per person/$500,000 per accident underinsured motorist coverage. Grange refused to pay benefits to the two adult sons because they did not fit the policy definition of "insured". The Ohio Supreme Court held that, in a wrongful death case, the decedent's uninsured/underinsured motorist policy must provide coverage to all of the decedent's next-of-kin regardless of whether the next-of-kin are "insureds" under the policy.

II. Is Trevor entitled to underinsured motorist benefits under his own Catastrophic policy?

As recently as two years ago, many policies did not require that an insured sustain bodily injury as a prerequisite to coverage. For example, the following policy language was common:

We promise to pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury, caused by accident and arising out of the ownership, maintenance or use of such uninsured motor vehicle.

Under the above policy language, Trevor is entitled to underinsured motorist benefits under his own policy because he is "legally entitled to recover damages" even though no insured sustained a bodily injury. However, almost all insurance carriers have amended their policies to restrict coverage as follows:

We promise to pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by an insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured motor vehicle.

Under this more restrictive language, Trevor will likely be denied coverage because bodily injury was not "sustained by an insured".

Can Trevor make a claim under his Catastrophic policy despite the requirement that an insured sustain bodily injury? The Ohio Supreme Court first considered this issue in Sexton v. State Farm Mut. Auto. Ins. (1982), 69 Ohio St.2d 431, 433 N.E.2d 555. In Sexton, Sexton's daughter, who lived with Sexton's former wife, was killed by an uninsured motorist. As a result of a divorce decree, Sexton was obligated to pay for his daughter's hospital and funeral expenses. Accordingly, Sexton made a claim against his own uninsured motorist carrier, State Farm, to recover these expenses. However, State Farm denied the claim because Sexton's daughter was not an insured person under the State Farm policy. In particular, State Farm relied upon the following policy language which requires that bodily injury be sustained by an insured person as a prerequisite to coverage:

To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured motor vehicle * * *. Sexton supra, at 431, emphasis added.

The Ohio Supreme Court held that the uninsured motorist statute requires only that an insured be "legally entitled to recover damages" and that an insured need not sustain actual physical injury in order to qualify for coverage. Accordingly, the Ohio Supreme Court held that the State Farm requirement that an insured sustain bodily injury was void as contrary to public policy.

The Ohio Supreme Court seemed to reaffirm Sexton in Peace v. The Prudential Prop. and Cas. Ins. Co. (1993), 68 Ohio St. 3d 106. Peace brought an underinsured motorist claim against his own insurance company for the death of his adult daughter, Donna Pavia, who was killed by an underinsured driver. Prudential denied the claim because Pavia was not an insured under the Prudential policy. The appellate court granted summary judgment in favor of Prudential, finding that Peace could not recover because the decedent was not insured under the policy. In reversing the court of appeals' decision, the Ohio Supreme Court simply cited Savoie v. Grange Mut. Ins. Co. (1993), 67 Ohio St. 3d 500, 620 N.E.2d 809, holding that each wrongful death beneficiary who is insured under a policy of uninsured/underinsured motorist coverage has a separate claim.

Prior to the Ohio Supreme Court's decision in Peace, the appellate court's were admittedly at odds about whether an insured could recover uninsured motorist benefits for the death of a non-insured relative. However, after Peace, the vast majority of appellate courts recognized the validity of such claims. United Services Auto. Assn. v. Mack (May 17, 1995), Clark App. No. 94-CA-32 (2nd Dist.), unreported; National Mut. Ins. v. Schroeder (Aug. 5, 1994), Mercer App. No. 10-93-24 (3rd Dist.), unreported; Spriggs v. Lightning Rod Mut. Ins. Co. (Oct. 28, 1994), Scioto App. No. 93 CA 2203 (4th Dist.), unreported; Komaromy v. Lightning Rod Mut. Ins. Co. (March 25, 1994), Muskingum App. No. 93-40, unreported, (5th Dist); Cincinnati Ins. Co. v. Jarvis (1994, 6th Dist.), 98 Ohio App. 3d 155; Lynch v. State Farm Mut. Automobile Ins. Co. (March 21, 1994), Butler App. No. CA93-06-099 (12th Dist), unreported.

However, the validity of these claims is again in doubt as the result of the passage of S.B. 20 which became effective on October 20, 1994. Insurance carriers are taking the position that S.B. 20 now requires that bodily injury be sustained by an insured as a prerequisite to coverage. The Uninsured Motorist Statute, as amended by S.B. 20, now reads as follows:

(A) No automobile liability or motor vehicle liability policy of insurance insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless both of the following coverages are offered to persons insured under the policy for loss due to bodily injury or death suffered by such insureds:

(1) Uninsured motorist coverage, which shall be in an amount of coverage equivalent to the automobile liability or motor vehicle liability coverage and shall provide protection for bodily injury, sickness, or disease, including death under provisions approved by the superintendent of insurance, for the protection of insureds thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, suffered by any person insured under the policy.

* * *

(2) Underinsured motorist coverage, which shall be in an amount of coverage equivalent to the automobile liability or motor vehicle liability coverage and shall provide protection for insureds thereunder against loss for bodily injury, sickness, or disease, including death, suffered by any person insured under the policy, where the limits of coverage available for payment to the insured under all bodily injury liability bonds and insurance policies covering persons liable to the insured are less than the limits for the insured's uninsured motorist coverage. * * *

[The relevant new language is emphasized.]

In light of S.B. 20, most insurance carriers argue that Sexton no longer applies because, unlike the older version of the statute under consideration in Sexton, the amended statute authorizes the limitation of coverage to accidents in insureds have suffered bodily injury.

However, there is another, more logical way to read S.B. 20, and Plaintiffs should argue that Sexton is still applicable. As a preliminary matter, it is worth noting that the S.B. 20 staff notes say nothing about overruling Sexton. In passing S.B. 20, the legislature was not bashful about naming Supreme Court cases which it intended to "supercede"; indeed, the staff notes repeatedly express the legislature's intention to overrule Savoie. The legislature's failure to mention Sexton is an indication that S.B. 20 was not intended to overrule it.

The language of S.B. 20 does not negate the Sexton holding. The amended language does not make clear what must be "suffered by any person insured under the policy" in order to trigger coverage. Insurance companies claim that"bodily injury, sickness, or disease, including death" must be suffered by the insured. However, a more plausible interpretation is that "loss for bodily injury" must be "suffered by any person insured under the policy". In our hypothetical wrongful death case, Trevor has not suffered "bodily injury"; however, he has suffered "loss" for the bodily injury of his mother. This argument is made persuasively by Academy member Jim Ransbottom in his Brief in Ferrell v. Personal Service Ins. Co., Muskingum C.P. No. CC97-0117, which is attached to these materials. As if the writing of this article, the effect of S.B. 20 upon the Sexton decision has not been squarely addressed by any court.

III. How much coverage is available under the uninsured motorist coverages.

Under Savoie, underinsured motorist coverage was "excess" coverage over the liability coverage available from the tortfeasor. Accordingly, in the Savoie era, Soona's underinsured motorist policy provided $100,000 in coverage; there was no set-off for the $25,000 paid by the tortfeasor's carrier. Of course, the legislature changed this by passing S.B. 20 which provides that underinsured motorist coverage applies only to the extent that the underinsured motorist coverage exceeds the liability coverage available from the tortfeasor. Under the S.B. 20 analysis, Catastrophic Insurance Company will probably claim that the coverage is limited to $75,000: $100,000 UM limits less $25,000 liability coverage. However, this simplistic approach to calculating underinsured motorist coverage erroneously limits the amount of benefits available to the insured.

The method for calculating underinsured motorist policy limits is set forth in R.C. 3937.18(A)(2) which provides, in pertinent part:

(2) Underinsured motorist coverage, which shall be in an amount of coverage equivalent to the automobile liability or motor vehicle liability coverage and shall provide protection for insureds thereunder against loss for bodily injury, sickness, or disease, including death, suffered by any person insured under the policy, where the limits of coverage available for payment to the insured under all bodily injury liability bonds and insurance policies covering persons liable to the insured are less than the limits for the insured's uninsured motorist coverage. . . .

Accordingly, in calculating underinsured motorist limits of coverage, it is not proper to simply subtract the tortfeasor's liability coverage limits from the uninsured motorist policy limits. Instead, the uninsured motorist limits should be reduced only by the "amount available for payment" to the insured.

The Ohio Supreme Court explained this analysis in the pre-Savoie case of Derr v. Westfield Cos. (1992), 63 Ohio St.3d 537, 589 N.E.2d 1278. In Derr, the decedent was survived by three next-of-kin. For purposes of analysis, the Court assumed that each surviving family member received $33,333 of the tortfeasor's $100,000 liability policy. The next-of-kin were each entitled to recover under an automobile policy issued by Westfield with uninsured motorist limits of $400,000. Westfield argued that it could set-off the $100,000 liability coverage and was therefore obligated to pay only $300,000 in underinsured motorist benefits. The Court rejected Westfield's argument holding that Westfield could be obligated to pay as much as $400,000. The Court reasoned that each next-of-kin had a separate claim and the amount "available for payment" to each next-of-kin was only $33,333. Therefore, the Court reasoned, each next-of-kin could make a claim under the Westfield policy up to $366,666 ($400,000 policy limit less $33,333 paid by the tortfeasor). Of course, the Court added, the claims were limited by the overall $400,000 per accident limit.

The Ohio Supreme Court reached a similar result in Motorists Mut. Ins. Co. v. Andrews (1992), 65 Ohio St.3d 362, 604 N.E.2d 142. A negligent truck driver caused serious injury to Richard Andrews and to one of Richard's grandsons, Shannon. Richard Andrews other grandson, Nathan, was killed in the crash. The trucking company paid $1 million to settle all of the claims. Of that amount, Richard Andrews received $997,000, his wife received $1000 for her consortium claim, Shannon received $1000 for his personal injury claim, and $1000 was paid for Nathan's wrongful death. Shannon and Nathan were covered under their parents automobile insurance policy issued by Motorists. Although the amount of uninsured motorist coverage available under the Motorists policy was in dispute, the parties agreed that the coverage was less than $750,000. Motorists argued that no underinsured motorist coverage was available under the policy because the tortfeasor's policy limits were greater than the UM coverage. The Ohio Supreme Court disagreed, holding that the amount "available for payment" to Shannon's personal injury claim and Nathan's wrongful death claim was only $1000 each. Hence, Motorists was entitled to a set-off from the policy limits only that amount which was actually available for payment to the insureds.

Ohio Courts of Appeal have also often held that more underinsured motorist coverage is available when the amount "available for payment" from the tortfeasor's liability insurer is depleted by multiple claimants. Knudson v. Grange Mut. Cos. (6^th Dist. App., 1986), 31 Ohio App. 3d 20, 507 N.E.2d 1155; Felber v. Grange Mut. Ins. Co. (Aug. 28, 1991), Summit App. No. 15003, unreported; Wilson v. Grange Mut. Cas. Co. (Aug 29, 1989), Franklin App. No. 87AP-1197, unreported.

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