Knudson v. Grange Mut. Companies

• Decision Date: 21 March 1986
• Docket Number: No. L-85-298,L-85-298
• Citation: 507 N.E.2d 1155,31 OBR 34,31 Ohio App.3d 20
• Parties: , 31 O.B.R. 34 KNUDSON et al., Appellants, v. GRANGE MUTUAL COMPANIES, Appellee. *
• Court: Ohio Court of Appeals

Page 20

31 Ohio App.3d 20

507 N.E.2d 1155, 31 O.B.R. 34

KNUDSON et al., Appellants, v. GRANGE MUTUAL COMPANIES, Appellee. ^*

No. L-85-298.

Court of Appeals of Ohio, Sixth District, Lucas County.

March 21, 1986.

Syllabus by the Court

An insurance company is obligated to offer underinsured motorist coverage that is applicable when the projected amount available for payment under the tortfeasor's insurance policy is less than the victim's underinsured motorist coverage limits.

Allan L. Mollenkamp and Robert M. Scott, Toledo, for appellants.

Cormac B. DeLaney, Toledo, for appellee.

RESNICK, Judge.

This cause is before the court on appeal from a judgment of the Lucas County Court of Common Pleas, wherein that court granted a declaratory judgment in favor of appellee.

It is from that judgment that appellants filed a timely notice of appeal asserting the following sole assignment of error:

"The decision of the Trial Court is in error and must be reversed as Plaintiffs are entitled to recover under the underinsured motorist coverage of their own insurance policy pursuant to Section 3937.18 of the Ohio Revised Code since the limits of coverage of the tortfeasor's policy, available for payment to Plaintiffs-Appellants, are less than the limits of Plaintiffs-Appellants' own underinsured motorist coverage."

The relevant facts are as follows. Scott Kemley, age thirteen, and Anthony Slone, age fourteen, were riding their bicycles on State Route 51 in Wood County, Ohio, when they were struck by a motor vehicle allegedly driven by one Daniel Holzemer. As a result of the accident, both boys sustained serious bodily injuries and Scott Kemley later died as a result of those injuries. At the time of the accident, Daniel Holzemer had in effect a motor vehicle liability policy of insurance with liability limits in the amount of $50,000 per person/$100,000 per occurrence. Appellant Gordon Kemley, the father of the deceased, had in effect at the time of the accident, a policy of motor vehicle insurance issued by appellee providing for underinsured motorist bodily injury coverage with limits of $50,000 per person/$100,000 per occurrence.

Five separate and distinct claims were filed against Holzemer, the alleged tortfeasor, on account of the injuries suffered by the two boys. ¹ On December 27, 1984, appellants filed a complaint for declaratory judgment in the Lucas County Court of Common Pleas, asking the court to determine whether appellants were covered under the underinsured motorist provision contained in the Kemley policy with appellee. On August 8, 1985, the trial court ruled that appellants were not entitled to recover under the underinsured motorist coverage of the Kemley policy.

The issue presented by the instant appeal is whether underinsured motorist coverage is applicable where the tortfeasor's liability limits under his policy are the same as the insureds', but the amounts actually available for payment to the insured victim from the tortfeasor's insurance are reduced below the tortfeasor's insurance liability limits because of multiple claimants.

The Kemley policy had underinsured motor vehicle liability coverage with limits of $50,000 per person/$100,000 per occurrence. The policy defined an "underinsured motor vehicle" as follows:

"An 'underinsured motor vehicle' * * * is a motor vehicle for which the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of liability under this insurance; * * * "

Therefore, under the strict language of the Kemley policy, the underinsured motorist coverage is only available where the express limits of liability from the tortfeasor's policy are less than the applicable limits of the underinsured motorist coverage. Under the terms of the policy, underinsured motorist coverage was not available to appellants. However, this is not the end of our inquiry because the duties and obligations of an insurance company in offering uninsured and underinsured motorist coverages are controlled by R.C. 3937.18. Any contractual restriction on the coverage mandated by R.C. 3937.18 must comply with the purpose of the statute. See Ady v. West American Ins. Co. (1982), 69 Ohio St.2d 593, 23 O.O.3d 495, 433 N.E.2d 547, syllabus.

R.C. 3937.18 provides, in pertinent part, the following:

"(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 are provided:

" * * *

"(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 an insured against loss for bodily injury, sickness, or disease, including death, 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 at the time of the accident. The limits of liability for an insurer providing underinsured motorist coverage shall be the limits of such coverage, less those amounts actually recovered under all applicable bodily injury liability bonds and insurance policies covering persons liable to the insured." (Emphasis added.)

It is not explicitly clear under the above-quoted language what type of underinsured motorist coverage is mandated by the statute. Appellee contends that where the stated limits of the tortfeasor's coverage are less than the victim's coverage, then, and only then, is the underinsured motorist coverage applicable. It is appellants' contention...