The court in Bratcher v. Farmers Ins. Co., Inc., No. 4:21-CV-00790-DGK, (W.D. Mo. Jan. 9, 2023) upheld a clearly written step-down provision in the Farmer’s policy. Farmer’s insured, Heather Bratcher, was injured in an auto accident and the tortfeasor’s limits were not sufficient to compensate her for her injuries. Although she did not live with her parents, at the time of the accident she was driving her parents Chevy Blazer, with permission. Heather’s parents were the named insureds on the Farmer’s policy insuring the Blazer. Heather was a listed driver on the policy and qualified as an “insured person.”
The Farmers policy had UIM limits of $500,000.00. Farmers was only willing to pay $25,000.00 citing a step-down clause in the policy that provided:
We will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements. Further, we will provide insurance for an insured person, other than you or a family member, up to the limits of the Financial Responsibility Law only.
Heather was an “insured person” but she did not meet the definition of a “family member” because she did not reside in her parents’ household, and she did not qualify as a “you.” So, the question was what if anything could she potentially recover under the UIM coverage? The astute reader has probably already questioned the reference to the “Financial Responsibility Law.” As many know, The Missouri Financial Responsibility Law (MFRL) does not even mention UIM coverage.
Seizing on the absence of UIM coverage in the MFRL, the insured’s counsel argued that the step-down provision does not apply to UIM coverage since the MVFRL does not mandate UIM coverage or contain a minimum limit for UIM coverage. Stated differently, she argued a step-down provision “based on coverage limits for other types of insurance” cannot reduce the UIM coverage limits available to Plaintiff.
The court did not agree with Plaintiff finding that Missouri courts routinely uphold the application of step-down provisions in insurance contracts, even where a “policy defines the lower limit only by the financial responsibility law.” The Court did not believe it was material that the MFRL did not prescribe a specific limit for UIM coverage, since $25,000.00 was clearly the prescribed minimum limit for liability and UM coverage. No one should be confused as to the incorporation of the MFRL in the step-down provision was referencing.
Good result for Farmers and great job by Timothy Wolf of WWBH in securing this judgment for our client.