Insured Vehicle Exclusions Are Enforceable - For Now

Updated: Nov 18

By Jamison McCune

In Roberts v. State Farm Mutual Automobile Insurance Company, 311 Or App 235 (May 2, 2021), the Court of Appeals held that an injured party could not recover liability and UIM payments from the same insurance policy for the same accident. Roberts is an apparent win for insurers and prevents claimants from “double dipping” from their insured’s policies. The decision confirms insured vehicle exclusions are enforceable under Oregon law but suggests that further challenges to these exclusions may be coming.

I. The Coverage Dispute

Roberts arose from a single car accident. The plaintiff was a passenger in the car, and according to his complaint, suffered a fractured sternum. He was uninsured at the time of the accident, and his medicals bills exceeded $40,000.

State Farm insured the driver of the car and paid the plaintiff its liability limits of $25,000. After receiving the liability limits, the plaintiff then sought underinsured motorist coverage (UIM) from State Farm under the same policy. State Farm denied the claim based on an insured vehicle exclusion, which eliminated UIM coverage for cars that were also covered by the liability section of the same policy.

The plaintiff filed suit alleging that State Farm breached the policy by failing to pay him UIM benefits. State Farm moved for summary judgment based on the insured vehicle exclusion and the trial court granted State Farm’s motion. The plaintiff appealed, arguing that the insured vehicle exclusion violated ORS 742.502 because it failed to provide the minimum UIM coverage required by the statute. The plaintiff argued ORS 742.502 required State Farm’s policy to provide UIM coverage because the driver’s liability limits did not fully cover his injuries.

II. The Court’s Ruling

The Court of Appeals rejected these arguments and affirmed summary judgment in State Farm’s favor. Relying on its precedent in a nearly identical State Farm case, Wright v. State Farm Mutual Auto Insurance, 152 Or App 101 (1998), the court held that insured vehicle exclusions did not violate ORS 742.502 and were enforceable. State Farm was therefore not required to provide both liability and UIM coverage to the plaintiff as a passenger in the driver’s car.

The Roberts decision was short and to the point. The Court of Appeals described its decision in Wright as “the final word” on insured vehicle exclusions and refused to revisit its prior decision. The court concluded, however, by saying that to the extent the plaintiff sought to overturn Wright, he should petition the Oregon Supreme Court. The Roberts plaintiff, or a plaintiff in another case, may very well accept this invitation.

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