No Insurance Coverage Available – Rental Car
Safe Auto Ins. Co. v. Koroma, (2006) 169 Ohio App.3d 747
Safe Auto Insurance filed a declaratory judgment action against its insured who had rented a motor vehicle from Budget Rental in order to drive his children to Texas. He did not secure insurance from Budget Rental and Safe Auto’s position was that no insurance coverage inured to his benefit (from his personal policy) when an accident occurred while he was driving the Budget Rental Car.
The Safe Auto Insurance policy included the following language appearing in paragraph 13:
“Under Part I of the policy, entitled Liability Coverage, the policy states:
We will provide liability coverage for an auto you rent from a car rental agency or garage, ONLY while your covered auto is being serviced or repaired, or if it has been stolen or destroyed. PLEASE NOTE THAT NO COVERAGE IS AFFORDED TO VEHICLES RENTED FOR REASONS OTHER THAN THOSE STATED ABOVE.”
It was stipulated that the automobile owned and insured with Safe Auto was not being serviced, repaired, stolen or destroyed at the time of the accident. Accordingly, the exclusionary language set forth above was cited as the predicate for the declaratory judgment action seeking an adjudication that Safe Auto had no obligation to defend and/or indemnify its insured while operating the rental car.
The insured attempted to challenge the exclusion at issue by arguing that upholding the exclusion violated O.R.C. Section 4509.101 which prohibits an individual from operating a motor vehicle unless proof of financial responsibility is maintained. Alternatively phrased, part of the challenge was that the exclusionary language at issue was violative of the statutory mandate set forth and, at the minimum, the policy required a clear warning on the face of the policy that it did not provide proof of financial responsibility pursuant to O.R.C. Section 4509.104.
The Ohio Supreme Court rejected the statutory challenge made to the exclusion at issue and concluded that no insurance coverage was applicable and so indicated in its holding in paragraph 14 of its opinion wherein it stated as follows:
“Safe Auto’s policy insured the automobiles defendant owned to the minimum requirements of R.C. 4509.01(K). As a result, Safe Auto was not required to include a clear and conspicuous warning pursuant to R.C. 4509.104 on the face of the policy stating that the policy does not constitute proof of financial responsibility under R.C. 4509.101. If defendant desired a policy that covered him in the operation of any vehicle, he could have obtained such a policy.”
In paragraph 20 of its opinion, the Court clearly indicated that the singular obligation rested with the insured to maintain proof of financial responsibility when driving a rental vehicle and so indicated wherein it stated as follows:
“As a result, defendant was required to maintain proof of financial responsibility through some other means with respect to his operation of the rental vehicle, including a separate policy of insurance to cover such situations or insurance purchased from the rental company at the time he rented the vehicle.” (Emphasis added)
The holding’s direct impact is apparent and likely will be incorporated by many in their vacation plans.
Postsettlement Interest
Bellman v. Am. Internatl. Group (2007) 113 Ohio St.3d 323
The Ohio Supreme Court dealt with a purported class action against 21 insurance carriers wherein the plaintiff alleged that insurance companies delayed payment of settlement monies in order to gain financial benefit through the use of “float” on settlement funds. The claims failed at the trial court and appellate levels and the Ohio Supreme Court reviewed two issues. The first dealt with the application of parol-evidence rule and contract integration in conjunction with the proper party for purposes of postsettlement interest.
It was argued at the trial court level that a liability insurance carrier was the proper party. The Ohio Supreme Court specifically rejected this argument and stated in paragraph 20 of its opinion the following:
“Thus, based upon our review of R.C. 1343.03(A) and other relevant authority, a claim for postsettlement interest is properly brought as a postdecree motion against the tortfeasor and properly filed in the underlying action.”
The Court dealt with the more complicated issue that had been raised, specifically, the question of when postsettlement interest would accrue and the Court elected to create a bright line rule and articulated said rule in paragraph 14 of its opinion wherein it stated the following:
“The date of a written settlement agreement becomes the date from which postsettlement interest accrues, unless the parties to such a settlement agreement negotiate a different due and payable date and incorporate that into the written settlement agreement. When an agreement fails to incorporate a separate due and payable date, the parol-evidence rule assumes that the formal written agreement embodies all of the terms of the agreement between the parties and therefore precludes extrinsic evidence to vary or contradict its terms. Thus, unless otherwise specified, a claimant is entitled to postsettlement interest from the date of settlement agreement until the date of payment. Those who delay in forwarding settlement drafts incur postsettlement interest from the date of the agreement unless a different due and payable date is specified in the settlement agreement.”
Curtin & Associates, LLP would recommend that any letter or release forwarded to opposing counsel include a window of at least 30 days as the “payable date” so as to avoid the accrual of postsettlement interest.
Multiple Uninsured/Underinsured Motorists Policies –
Status Of Volunteer Turns On Knowledge
Westfield Natl. Ins. Co. v. Farmers Ins. Exchange (2006) 169 Ohio App.3d 785
The Third District Court of Appeals dealt with a situation wherein Westfield Insurance Company settled an underinsured motorist claim for $225,000 and received an assignment as it pertains to the right to recover against any other potential underinsured motorist carrier. The other underinsured motorist carrier’s identification really had never been disclosed and the opinion is silent as to when the disclosure of the other underinsured motorist carrier was made known to Westfield, but it appears from the opinion that Westfield knew of the other underinsured motorist carrier’s potential prior to the settlement although the degree of that knowledge was unclear. Regardless, the Court of Appeals made clear that both policies applied and, hence, pursuant to the “other insurance” clause, both policies were pro rata and the issue of whether or not Westfield acted as a volunteer turned on the issue of knowledge. The Court stated in paragraphs 19 – 24 of its opinion, the following:
“The Supreme Court of Ohio has held that ‘[o]ne who, with knowledge of the facts and without legal liability, makes a payment of money, thereby becomes a volunteer’ and that ‘[e]quity will not aid a volunteer.’ ...
The real question here is how much knowledge is ‘knowledge.’ Westfield had been told for a period of years that there may have been another insurance policy that could have potentially offered additional coverage. This court holds this situation to be quite different from the facts considered by the Ohio Supreme Court in Farm Bur. and the Eleventh District in Buckeye Union. In each of those cases, the evidence appears to be uncontroverted that the ‘volunteers’ had full knowledge that another insurance company had specific coverage and liability on the incident for which they had executed a settlement.
In the case sub judice, Westfield had only a suggestion that another insurance company could have offered additional coverage. ...
We conclude that the potential existence of another insurance policy that may or may not provide additional insurance coverage does not constitute ‘knowledge’ sufficient to waive an insurance company’s right to contribution against another insurance company whose coverage and liability are not fully demonstrated until after a settlement has been executed.”
Curtin & Associates will continue to electronically transmit cases of interest to the insurance industry. Please visit our website at http://www.curtinlawfirm.com/. For your convenience, we will post these cases on our website in the “Newsletter” link.
The information contained in this Newsletter is not a legal opinion and is for informational purposes only. Specific questions should be directed to an attorney for a legal opinion.
No Insurance Coverage Available – Rental Car
Safe Auto Ins. Co. v. Koroma, (2006) 169 Ohio App.3d 747
Safe Auto Insurance filed a declaratory judgment action against its insured who had rented a motor vehicle from Budget Rental in order to drive his children to Texas. He did not secure insurance from Budget Rental and Safe Auto’s position was that no insurance coverage inured to his benefit (from his personal policy) when an accident occurred while he was driving the Budget Rental Car.
The Safe Auto Insurance policy included the following language appearing in paragraph 13:
“Under Part I of the policy, entitled Liability Coverage, the policy states:
We will provide liability coverage for an auto you rent from a car rental agency or garage, ONLY while your covered auto is being serviced or repaired, or if it has been stolen or destroyed. PLEASE NOTE THAT NO COVERAGE IS AFFORDED TO VEHICLES RENTED FOR REASONS OTHER THAN THOSE STATED ABOVE.”
It was stipulated that the automobile owned and insured with Safe Auto was not being serviced, repaired, stolen or destroyed at the time of the accident. Accordingly, the exclusionary language set forth above was cited as the predicate for the declaratory judgment action seeking an adjudication that Safe Auto had no obligation to defend and/or indemnify its insured while operating the rental car.
The insured attempted to challenge the exclusion at issue by arguing that upholding the exclusion violated O.R.C. Section 4509.101 which prohibits an individual from operating a motor vehicle unless proof of financial responsibility is maintained. Alternatively phrased, part of the challenge was that the exclusionary language at issue was violative of the statutory mandate set forth and, at the minimum, the policy required a clear warning on the face of the policy that it did not provide proof of financial responsibility pursuant to O.R.C. Section 4509.104.
The Ohio Supreme Court rejected the statutory challenge made to the exclusion at issue and concluded that no insurance coverage was applicable and so indicated in its holding in paragraph 14 of its opinion wherein it stated as follows:
“Safe Auto’s policy insured the automobiles defendant owned to the minimum requirements of R.C. 4509.01(K). As a result, Safe Auto was not required to include a clear and conspicuous warning pursuant to R.C. 4509.104 on the face of the policy stating that the policy does not constitute proof of financial responsibility under R.C. 4509.101. If defendant desired a policy that covered him in the operation of any vehicle, he could have obtained such a policy.”
In paragraph 20 of its opinion, the Court clearly indicated that the singular obligation rested with the insured to maintain proof of financial responsibility when driving a rental vehicle and so indicated wherein it stated as follows:
“As a result, defendant was required to maintain proof of financial responsibility through some other means with respect to his operation of the rental vehicle, including a separate policy of insurance to cover such situations or insurance purchased from the rental company at the time he rented the vehicle.” (Emphasis added)
The holding’s direct impact is apparent and likely will be incorporated by many in their vacation plans.
Postsettlement Interest
Bellman v. Am. Internatl. Group (2007) 113 Ohio St.3d 323
The Ohio Supreme Court dealt with a purported class action against 21 insurance carriers wherein the plaintiff alleged that insurance companies delayed payment of settlement monies in order to gain financial benefit through the use of “float” on settlement funds. The claims failed at the trial court and appellate levels and the Ohio Supreme Court reviewed two issues. The first dealt with the application of parol-evidence rule and contract integration in conjunction with the proper party for purposes of postsettlement interest.
It was argued at the trial court level that a liability insurance carrier was the proper party. The Ohio Supreme Court specifically rejected this argument and stated in paragraph 20 of its opinion the following:
“Thus, based upon our review of R.C. 1343.03(A) and other relevant authority, a claim for postsettlement interest is properly brought as a postdecree motion against the tortfeasor and properly filed in the underlying action.”
The Court dealt with the more complicated issue that had been raised, specifically, the question of when postsettlement interest would accrue and the Court elected to create a bright line rule and articulated said rule in paragraph 14 of its opinion wherein it stated the following:
“The date of a written settlement agreement becomes the date from which postsettlement interest accrues, unless the parties to such a settlement agreement negotiate a different due and payable date and incorporate that into the written settlement agreement. When an agreement fails to incorporate a separate due and payable date, the parol-evidence rule assumes that the formal written agreement embodies all of the terms of the agreement between the parties and therefore precludes extrinsic evidence to vary or contradict its terms. Thus, unless otherwise specified, a claimant is entitled to postsettlement interest from the date of settlement agreement until the date of payment. Those who delay in forwarding settlement drafts incur postsettlement interest from the date of the agreement unless a different due and payable date is specified in the settlement agreement.”
Curtin & Associates, LLP would recommend that any letter or release forwarded to opposing counsel include a window of at least 30 days as the “payable date” so as to avoid the accrual of postsettlement interest.
Multiple Uninsured/Underinsured Motorists Policies –
Status Of Volunteer Turns On Knowledge
Westfield Natl. Ins. Co. v. Farmers Ins. Exchange (2006) 169 Ohio App.3d 785
The Third District Court of Appeals dealt with a situation wherein Westfield Insurance Company settled an underinsured motorist claim for $225,000 and received an assignment as it pertains to the right to recover against any other potential underinsured motorist carrier. The other underinsured motorist carrier’s identification really had never been disclosed and the opinion is silent as to when the disclosure of the other underinsured motorist carrier was made known to Westfield, but it appears from the opinion that Westfield knew of the other underinsured motorist carrier’s potential prior to the settlement although the degree of that knowledge was unclear. Regardless, the Court of Appeals made clear that both policies applied and, hence, pursuant to the “other insurance” clause, both policies were pro rata and the issue of whether or not Westfield acted as a volunteer turned on the issue of knowledge. The Court stated in paragraphs 19 – 24 of its opinion, the following:
“The Supreme Court of Ohio has held that ‘[o]ne who, with knowledge of the facts and without legal liability, makes a payment of money, thereby becomes a volunteer’ and that ‘[e]quity will not aid a volunteer.’ ...
The real question here is how much knowledge is ‘knowledge.’ Westfield had been told for a period of years that there may have been another insurance policy that could have potentially offered additional coverage. This court holds this situation to be quite different from the facts considered by the Ohio Supreme Court in Farm Bur. and the Eleventh District in Buckeye Union. In each of those cases, the evidence appears to be uncontroverted that the ‘volunteers’ had full knowledge that another insurance company had specific coverage and liability on the incident for which they had executed a settlement.
In the case sub judice, Westfield had only a suggestion that another insurance company could have offered additional coverage. ...
We conclude that the potential existence of another insurance policy that may or may not provide additional insurance coverage does not constitute ‘knowledge’ sufficient to waive an insurance company’s right to contribution against another insurance company whose coverage and liability are not fully demonstrated until after a settlement has been executed.”
Curtin & Associates will continue to electronically transmit cases of interest to the insurance industry. Please visit our website at http://www.curtinlawfirm.com/. For your convenience, we will post these cases on our website in the “Newsletter” link.
The information contained in this Newsletter is not a legal opinion and is for informational purposes only. Specific questions should be directed to an attorney for a legal opinion.