Oklahoma's Uninsured Motorist Coverage Statute - An Overview
By Dawn M. Goeres
This article discusses the current version of Oklahoma’s Uninsured Motorist Coverage Statute, 36 O.S. §3636 (the statute).1, 2 Many of the subsections of the statute discussed below could easily be the subject of independent articles, as the case law discussing uninsured/underinsured motorist (UM) coverage3 – as well as the statute itself – is constantly evolving. As such, this article provides only a cursory discussion of the statute and select cases discussing same.
Generally, subject to the terms and conditions of a specific insurance contract, UM coverage will indemnify an insured who is “legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom.”4 An uninsured motor vehicle is – again, generally – a vehicle which has no liability coverage or has liability coverage in an amount less than the damages an insured is legally entitled to recover from the tortfeasor.5
If counsel is involved in the presentation or defense of a UM claim, counsel should be certain to look closely at the language of the policy at issue, the relevant sections of the statute and applicable case law. Also keep in mind that the version of the statute which is in effect at the time of a policy’s issuance or last renewal will govern any issues relating to UM claims made under that policy.6
OKLAHOMA PUBLIC POLICY AND THE STATUTE
In 2009, the 10th Circuit Court of Appeals certified to the Oklahoma Supreme Court certain questions regarding an automobile insurance liability exclusion that was deemed to violate Oklahoma public policy, resulting in imputation of liability coverage onto the policy in the statutorily mandated minimum amount. One of the questions presented addressed a UM insurer’s duty to an individual who became an “insured” for purposes of liability coverage by operation of Oklahoma law.7 The insured argued if she became an insured for purposes of the policy’s liability coverage by operation of Oklahoma law, she also became an insured for purposes of the policy’s UM coverage.8 The Oklahoma Supreme Court performed an exhaustive review of Oklahoma’s UM public policy and determined Oklahoma law, at that time, did “not provide a conclusive answer” to the question of whether an insurer was required to provide UM coverage to an individual who became an “insured” under the policy for purposes of liability coverage because an exclusion violated Oklahoma public policy governing automobile liability insurance.9 The Ball court went on to state as follows:
In short, a review of our extant UM jurisprudence reveals (1) a public policy that is protective of UM coverage for Class One insureds and (2) a willingness to uphold UM exclusions which by their express terms are limited to individuals who own a vehicle and who have thus had an opportunity to purchase their own UM coverage. We have not yet addressed whether the public policy expressed in §3636 is offended by an exclusion that applies to Class Two insureds regardless of vehicle ownership.10, 11
This articulation of Oklahoma’s UM public policy is the most recent detailed analysis by the Oklahoma Supreme Court on the matter. Courts consider Oklahoma’s UM public policy when interpreting and applying UM coverage provisions,12 as well as when there are choice-of-law/conflict-of-law issues present in a UM claim.13
INSURANCE POLICIES GOVERNED BY THE STATUTE
The statute dictates no automobile liability insurance policy “shall be issued, delivered, renewed, or extended in this state with respect to a motor vehicle registered or principally garaged in this state unless the policy includes the coverage described in subsection B of this section.”14 The Oklahoma Supreme Court has acknowledged the statute does not apply to every policy of insurance that could be enforced in Oklahoma.15 Rather, the statute only applies to those policies “issued, delivered, renewed, or extended in [Oklahoma] with respect to a motor vehicle registered or principally garaged in [Oklahoma].”16, 17
In accordance with this rationale, it is important to identify whether the policy of insurance under which a UM claim arises was “issued, delivered, renewed, or extended” in Oklahoma. It is also important to ascertain whether the policy at issue insures a “motor vehicle” as that term is defined by 36 O.S. §3635, or if it has been issued to provide coverage to farm equipment or another type of vehicle designed for principally off-road use that is not subject to motor vehicle registration. Generally, this statutory language will determine whether the policy at issue is subject to the statute and Oklahoma’s UM public policy.
Last year, the Oklahoma Supreme Court held Oklahoma UM law governing “stacking” of the coverage limits (discussed more fully further in the article) would apply to a UM claim arising from a 2008 accident despite the fact the policy was issued in Kansas for a vehicle garaged in Kansas.18 While a cursory reading of the Leritz opinion would seem to call the language of 36 O.S. §3636(A) cited above and the Bernal case into question, it did not. Instead, it reinforced the need to know and understand the applicable policy language. The policy in Leritz stated 1) the insurer would “interpret [the] policy to provide any broader coverage required by” the compulsory laws of other states to which the insured became subject and 2) the issue of whether policy limits could be stacked would be “[s]ubject to the law of the state of occurrence.”19 The Oklahoma Supreme Court found there was no choice-of-law issue present nor was the statute implicated, as the policy’s language dictated the law of the state of the occurrence would govern the question of whether the UM policy limits could be “stacked.”20
DUTY TO OFFER/RIGHT TO REJECT UNINSURED MOTORIST COVERAGE
When an insurer issues an automobile liability policy, it is required to offer UM coverage.21 The amount of coverage cannot be less than the statutorily mandated minimum limits of liability coverage and an insured may purchase higher limits as long as those limits do not exceed the liability limits provided by the policy.22 The statute also states the insured may reject UM coverage or select limits of UM coverage which are lower than the liability limits.23 Since Nov. 1, 2009, a named insured’s written rejection of UM coverage is effective as to all insureds under the policy for the life of the policy and changes to the policy do not require an insurer to obtain a new UM selection/rejection form from the insured.24 Further, any statutory change in the mandatory minimum limits of liability coverage will not require an insurer to obtain new UM selection/rejection forms from its insureds.25
The statute states “the uninsured motorist coverage shall be upon a form approved by the Insurance Commissioner as otherwise provided in the Insurance Code” and includes template form language.26 The UM form used by the insurer is required to “read substantially” like the language set forth in the statute, and must be “filed with and approved by the Insurance Commissioner.”27 However, the statute also dictates the “Insurance Commissioner shall approve a deviation from the form described in subsection H of this section if the form includes substantially the same information.”28 The Oklahoma Court of Civil Appeals has held that an insurer’s use of an unapproved UM/UIM rejection/selection form did not render the insured’s written rejection of UM coverage (memorialized on that form) invalid.29 If an insurer cannot produce a written UM selection/rejection form, Oklahoma UM public policy requires UM coverage in an amount equal to the statutorily mandated minimum limits of liability coverage be imputed onto the policy.30
STATUTORY EXEMPTION FROM UM COVERAGE
On Nov. 1, 2004, the following section of the statute became effective:
For purposes of this section, there is no coverage for any insured while occupying a motor vehicle owned by, or furnished or available for the regular use of the named insured, a resident spouse of the named insured, or a resident relative of the named insured, if such motor vehicle is not insured by a motor vehicle insurance policy.31
The first published decision that expressly addressed this section of the statute was issued by the Oklahoma Court of Civil Appeals.32 In Conner, the plaintiff owned a motorcycle for which he had obtained liability insurance and rejected UM insurance.33 Because he resided with his parents, he sought to recover UM benefits from their policy.34 The insurer for the claimant’s parents denied UM coverage on the basis of an exclusion that barred UM coverage for an insured who was operating a vehicle he owned, but which was not insured for UM coverage.35 The plaintiff claimed the exclusion violated Oklahoma public policy, but the appellate court upheld the trial court’s entry of summary judgment in favor of the insurer.36
Not long after Conner was decided, the United States District Court for the Western District of Oklahoma certified questions to the Oklahoma Supreme Court seeking clarification of case law concerning a UM exclusion that seemed to align with the language of 36 O.S. §3636(E).37 The plaintiff, who resided with his mother, was involved in an accident while driving his commercial vehicle. He had purchased UM coverage for his personal automobiles, but rejected it on the commercial vehicle he was driving at the time of the underlying accident. The plaintiff’s own UM insurer paid him its UM limits.38 The plaintiff then sought benefits from his mother’s UM insurer, even though his commercial vehicle was not listed on his mother’s policy.39 In reliance on the undisputed fact the plaintiff had his own UM coverage, the Oklahoma Supreme Court found that application of the exclusion in that particular case violated Oklahoma public policy.40 The Oklahoma Supreme Court found Conner distinguishable, stating, “The Conner case holds that where a resident relative of a named insured insures his vehicle with liability insurance, but rejects uninsured motorist coverage, then an insurance company, with the proper exclusion, may preclude UM coverage from extending to such a vehicle.”41
UM LIMITS NOT SUBJECT TO ‘STACKING’
The current version of the statute became effective on Nov. 1, 2014, and it contained, for the first time, the following language: “Policies issued, renewed or reinstated after November 1, 2014, shall not be subject to stacking or aggregation of limits unless expressly provided for by an insurance carrier.” Prior to the enactment of the current version of the statute, in certain factual scenarios, Oklahoma UM insureds were permitted to “stack” UM limits. “Stacking” generally42 refers to a situation in which multiple vehicles are identified on a policy and the insured pays separate UM premiums for each, thereby permitting the insured to recover the UM limit for each listed vehicle rather than the single UM limit identified on the policy.43 With this recent addition to the statute, however, it appears the practice of “stacking” will not be permitted unless an insurer expressly provides for aggregation of UM limits in the language of the policy.
If counsel assists a client with a UM claim, it is important to 1) know the specific, unique facts which gave rise to the UM claim; 2) identify and read the relevant policy provisions; 3) confirm whether the statute applies to the policy that potentially provides UM coverage for the claim; 4) ascertain which provisions of the statute are relevant to the UM claim; and 5) review any jurisprudence that has interpreted and applied the statute to UM claims involving similar facts. While the statute is but one of many which may apply to any particular UM claim, it underpins the body of Oklahoma case law that articulates UM public policy. Accordingly, anyone practicing in this area should become very familiar with, and stay abreast of changes to, the statute.
1. 36 O.S. §3636 has undergone two revisions since August of 2008, (the last time the Oklahoma Bar Journal published an issue addressing insurance law), one on Nov. 1, 2009, and one on Nov. 1, 2014.
2. As is the case with any insurance coverage, an insurer providing UM coverage has a duty of good faith and fair dealing when handling a UM/UIM claim. Christian v. American Home Assurance Co., 1977 OK 141, 577 P.2d 899. While certain cases involving an insurer’s alleged breach of this duty in the context of UM claims are cited, this article focuses on the interpretation and application of 36 O.S. §3636 to UM claims as opposed to an insurer’s duty of good faith and fair dealing.
3. Unlike some states, the statute classifies a single type of coverage: uninsured motorist coverage. The concept of “underinsured” motorist coverage is included within uninsured motorist coverage for purposes of the statute. See 36 O.S. §§3636(C) and (D).
4. 36 O.S. §3636(B).
5. See Endnote 3.
6. May v. Nat’l Union Fire Ins. Co. of Pittsburgh, 1996 OK 52, ¶7, 918 P.2d 43, 45.
7. Ball v. Wilshire, 2009 OK 38, 221 P.3d 717.
8. Ball at ¶24, 725.
9. Ball at ¶20, 724.
10. Ball at ¶36, 730.
11. “Class One” insureds are the named insureds and resident relatives of the named insureds, while “Class Two” insureds are individuals who are afforded coverage because they are an occupant or permissive user of a vehicle that has UM/UIM coverage. American Economy Ins. Co. v. Bogdahn, 2004 OK 9, ¶12, 89 P.3d 1051, 1054-55.
12. Ball at ¶¶23-36, 725-730.
13. Bernal v. Charter Co. Mut. Ins. Co., 2009 OK 28, 209 P.3d 309.
14. 36 O.S. §3636(A).
15. Bernal at ¶18, 317.
16. The term “motor vehicle” as used in 36 O.S. §3636 is defined in 36 O.S. §3635, and “means and includes a self-propelled land motor vehicle designed for use principally upon public roads or streets but does not mean or include crawler or farm-type tractors, farm implements and, if not subject to motor vehicle registration, any equipment which is designed for use principally off public roads and streets.”
17. Bernal v. Charter Co. Mut. Ins. Co., 2009 OK 28, 209 P.3d 309.
18. Leritz v. Farmers Ins. Co., 2016 OK 79, 385 P.3d 991.
19. Leritz at ¶3, 993.
20. Leritz at ¶4, 993.
21. 36 O.S. §§3636(A) and (B).
22. 36 O.S. §3636(B).
23. 36 O.S. §3636(G).
24. 36 O.S. §3636(G).
25. 36 O.S. §3636(J).
26. 36 O.S. §§3636(B) and (H).
27. 36 O.S. §3636(H).
28. 36 O.S. §3636(I).
29. Davis v. Progressive Northern Ins. Co., 2012 OK CIV APP 98, 288 P.3d 270.
30. May v. Nat’l Union Fire Ins. Co. of Pittsburgh, 1996 OK 52, 918 P.2d 43.
31. 36 O.S. §3636(E).
32. Conner v. American Ins. Co., 2009 OK CIV APP 61, 216 P.3d 850.
33. Conner at ¶8, 851.
34. Conner at ¶¶1-2, 850.
35. Conner at ¶5, 851.
36. Conner at ¶7, 851, stating “Even though Plaintiff did obtain liability insurance on his motorcycle through AIG, because UM coverage is mandatory unless waived, the presumption exists that he also had recourse to some UM benefits. Thus, the policy exclusion which does not allow UM coverage from extending to a vehicle which Defendant does not insure and which is not otherwise covered for UM by any other insurer is not inconsistent with the purpose of §3636(E).”
37. Morris v. America First Ins. Co., 2010 OK 35, 240 P.3d 661.
38. Morris at ¶¶2-6, 662.
39. Morris at ¶¶2-6, 662.
40. Morris at ¶13, 663.
41. Morris at ¶18, 664.
42. Keel v.MFA Ins. Co., 1976 OK 86, 553 P.2d 153.
43. Keel v. MFA Ins. Co., 1976 OK 86, 553 P.2d 153.
ABOUT THE AUTHOR
Dawn M. Goeres is a partner at Pignato, Cooper, Kolker & Roberson PC. Her career has focused on tort defense, insurance coverage and an insurer’s duty of good faith since 2000, when she earned her J.D. from the Southern Illinois School of Law. She is an experienced trial attorney who also holds the CPCU and RPLU designations and she is licensed in the state of Oklahoma, state of Illinois and all Oklahoma federal courts.
Originally published in the Oklahoma Bar Journal -- OBJ 88 pg. 1951 (Oct. 21, 2017)