Indiana Court of Appeals Finds Uninsured Motorist Coverage Inapplicable

The Indiana Court of Appeals recently resolved an insurance dispute in an automobile accident case concerning uninsured motorist coverage. In Progressive Se. Ins. Co. v. Smith, a passenger, Smith, was injured in his own vehicle that was involved in a single-vehicle collision.

Smith had given the driver, Clayton, permission to drive the vehicle when the two had left a company event. Smith’s liability insurance covered his vehicle damage and he received medical payments under the medical payment portion of his policy. Smith then brought suit against Clayton which resulted in Clayton’s insurer, Allstate, tendering its policy limits to Smith to settle.

Smith then asserted an uninsured motorist (UM) claim with Progressive. Progressive, in turn, filed a complaint for a declaratory judgment against Smith, requesting a determination under the terms of the policy that Smith was not covered under the UM coverage portion of the policy. Smith then filed a motion for summary judgment seeking coverage and damages under the policy. The trial court granted Smith’s motion and Progressive appealed.

Under Ind. Code Sec. 27-7-5-4(a) an “uninsured motor vehicle” is defined as a “motor vehicle without liability insurance.” In order to recover on an uninsured motorist claim, then, the insured must prove there is no insurance policy applicable to the vehicle driven the at-fault party.

Smith’s progressive policy unambiguously stated that an “uninsured motor vehicle” does not include a vehicle “owned by you” that is a “covered auto.” Thus, according to the Court, “the unambiguous language of the policy does not extend UM coverage to Smith’s bodily injuries sustained in an accident caused by his own truck because Smith’s truck is a covered auto as defined by the policy” and therefore not included in the definition of an “uninsured motor vehicle” which would trigger coverage.

Smith also argued that an ambiguous coverage exclusion created coverage, to which the Court noted that coverage exclusion clauses do not grant or enlarge coverage, but are limits on the clause providing insurance only.  Since no clause provided insurance, no exclusion could create it.

Finally, Smith pointed to correspondence from Progressive to suggest Progressive had denied coverage at first.  However, the Court found this unavailing for the reason that Clayton was insured and offered policy limits to settle and Progressive had paid Smith $5000 in medical payments and covered the repair of his truck. Citing two prior cases finding that payment of underlying minimum insurance limits to settle by the tortfeaser satisfied the minimum requirements of Indiana’s Financial Responsibility Act, the Court concluded “coverage was available and Smith cannot claim under the UM provisions of his policy.”