NAVIGATING THE GAP: Clarifying Underinsured Motorist Coverage

by | January, 2023 | Legal News

Kirkendoll v. Auto-Owners Ins. Co. clearly sets forth the current state of the law and rejects past holdings which found Underinsured Motorist Coverage provisions ambiguous.

In Kirkendoll v. Auto-Owners Ins. Co., the plaintiff was a passenger in Jones’ car when it was rear ended by Rogers, who had a policy issued by Farm Bureau with liability limits of $50,000,00; Jones had a policy with Auto-Owners. The Owners policy clearly provided that Roger’s vehicle was not an underinsured vehicle because the Farm Bureau limits of liability were the same as the UIM coverage provided by the Owner’s policy.

Kirkendoll claimed that the Owner’s policy was ambiguous because the Declarations page’s “unequivocal promise of coverage fails to notify the insured that the amount of coverage Auto-Owners will actually provide is less than $50,000, because Auto-Owners only provides “gap coverage” supplying the difference between the negligent driver’s insurance coverage and the stated $50,000 limit.” The Court rejected this argument summarily holding that the declarations page of an insurance policy does not itself grant coverage. Rather, the declarations are introductory only and subject to refinement and definition in the body of the policy.

Looking to the content of the policy, the Court found that it clearly and unambiguously only provided gap coverage and the provisions of the policy clearly advised the insured of the scope of the coverage. Among other provisions, the Court highlighted the phrase in the Coverage Section which provided, in part, “Our Underinsured Motorist Coverage provides gap coverage …”  In the Limits of Liability Clause, the Court found important this language “Under no circumstances do we have a duty to pay you or any person entitled to Underinsured Motorist Coverage under this policy the entire Limits of Liability stated in the Declarations for this coverage.

Kirkendoll clearly sets forth the current state of the law and rejects past holdings which found UIM coverage provisions ambiguous.