Motorists Mut. Ins. Co. v. Andrews - Ohio Supreme Court Opinion - Ohio Supreme Court Decision

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OPINIONS OF THE SUPREME COURT OF OHIO
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Motorists Mutual Insurance Company, Appellant, v. Andrews
et al., Appellees.
[Cite as Motorists Mut. Ins. Co. v. Andrews (1992),
Ohio St.3d .]
Insurance -- Underinsured motorist coverage available where
tortfeasor's policy limit is greater than the insured's
policy limits but claims of multiple claimants have
resulted in undercompensation of the insured's injuries.
When determining whether a motorist is underinsured within the
meaning of R.C. 3937.18(A)(2), the amount actually
available for payment under the tortfeasor's liability
insurance policy must be compared with the insured's
underinsured motorist coverage limits. If the amount
available for payment is less than the insured's
underinsured policy limits, then the insured is entitled
to underinsured motorist coverage.
(Nos. 91-2214 and 91-2351 -- Submitted September 23, 1992
-- Decided December 14, 1992.)
Appeal from and Certified by the Court of Appeals for
Sandusky County, No. S-91-4.
On August 27, 1987, Nathan Andrews and Shannon Andrews,
minor children of Dennis and Anita Andrews, were passengers in
a car driven by their grandfather, Richard Andrews. The car
was involved in an accident with a truck owned by Mac's
Transport, Inc. The operator of the truck, it seems, was at
fault in causing the accident. As a result of the accident,
Nathan was killed, Shannon was injured, and it appears Richard
was severely and permanently injured.
Primary liability insurance was provided by two policies
written by National Indemnity Insurance Company ("National").
The first policy, a single liability limit of $750,000, insured
Mac's Transport. The second policy insured Fairmont Homes,
Inc., owner of the mobile home hauled by Mac's Transport, and
the policy named Mac's Transport as an additional insured.
Pursuant to agreement of all the parties, National paid
Richard the full $750,000 under the Mac's Transport policy.
National denied coverage under the Fairmont Homes policy.
National filed a declaratory judgment action in federal court,

and eventually settled the claim for $100,000. From the second
policy, National paid $97,000 to Richard, and $1,000 each to
Richard's wife, Nathan's estate, and Shannon. Finally, Mac's
Transport paid $150,000 to Richard for release of all claims
against it.
Dennis and Anita Andrews submitted claims to Dennis' own
automobile insurer, Motorists Mutual Insurance Company
("Motorists"), for underinsured motorist coverage on behalf of
themselves, Nathan's estate and Shannon. The policy limits of
the underinsured motorist coverage are in dispute, but the
parties agree that the limit is less than the $750,000 limit of
Mac's Transport policy.1 Motorists denied underinsured
motorist coverage. Motorists then filed a declaratory judgment
action seeking a determination that the Andrewses were not
entitled to underinsured motorist coverage.
The trial court determined that the Andrewses were not
entitled to underinsured motorist coverage, based on Hill v.
Allstate Ins. Co. (1990), 50 Ohio St.3d 243, 553 N.E.2d 658.
The court of appeals reversed, holding that Hill could be
distinguished and, therefore, did not preclude underinsured
coverage in this case.
The court, finding its decision to be in conflict with the
decisions in Estate of Bondurant v. J.C. Penney Cas. Ins. Co.
(Oct. 31, 1990), Fairfield App. Nos. 35 C.A. 89, 39-CA-89 and
40-CA-89, unreported; Sellars v. Safeco Ins. Co. (Oct. 15,
1990), Butler App. No. 90-02-034, unreported; and Transamerica
Ins. Co. v. Nolan (Sept. 4, 1990), Warren App. Nos. 89-12-077
and 89-12-079, unreported, certified the record of the case to
this court for review and final determination in case No.
91-2351. This cause is also before this court pursuant to an
allowance of a motion to certify the record on the certified
question in case No. 91-2214.

Carpenter, Paffenbarger, McGimpsey & Lux and Earl R.
McGimpsey, for appellant.
Murray & Murray Co., L.P.A., and W. Patrick Murray, for
appellees.
Williams, Jilek, Lafferty & Gallagher Co., L.P.A., Thomas
W. Gallagher and Dale M. Grocki, urging affirmance on behalf of
amicus curiae, Ohio Academy of Trial Lawyers.
Cacioppo, J. The question presented to this court is
whether underinsured motorist coverage is available to an
insured where the tortfeasor's policy limit is greater than the
insured's policy limits but the claims of multiple claimants
have resulted in undercompensation of the insured's injuries.
For the reasons which follow, we hold that underinsured
motorist coverage is available, and affirm the court of appeals.
The central dispute in the case at bar is whether the
accident involved an underinsured motorist within the meaning
of R.C. 3937.18(A)(2). Motorists asserts that Mac's Transport
was not underinsured because its policy limit, $750,000, was
greater than the Andrews policy limits. On the other hand, the
Andrewses contend that Mac's Transport was underinsured because
the amount available for payment to the Andrewses was zero
after the policy limit had been paid to Richard Andrews.
In considering this question, we first examine R.C.
3937.18(A)(2), which requires insurance companies to offer

underinsured motorist coverage as part of every automobile
insurance policy. This provision states that insurance
companies must offer:
"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, whether 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."
Motorists asserts that the comparision-of-the-limits
approach applied by this court in Hill v. Allstate Ins. Co.
(1990), 50 Ohio St.3d 243, 553 N.E.2d 658, leads to the result
that Mac's Transport was not underinsured. The Andrewses
counter that the Hill rationale is inappropriate in a case such
as this, where the claims of multiple claimants have limited
the amount which each injured party can recover. The Andrewses
assert that if the position advanced by Motorists were adopted
by this court, the public policy behind requiring underinsured
motorist coverage would be circumvented.
This court examined the public policy behind underinsured
motorist coverage in James v. Michigan Mut. Ins. Co. (1985), 18
Ohio St.3d 386, 389, 18 OBR 440, 443, 481 N.E.2d 272, 274-275:
"Underinsured motorist coverage was first required by
statute after the legislature discovered the 'underinsurance
loophole' in uninsured motorist coverage--i.e., persons injured
by tortfeasors having extremely low liability coverage were
being denied the same coverage that was being afforded to
persons who were injured by tortfeasors having no liability
coverage. Thus, the original motivation behind the enactment
of R.C.3937.181(C) was to assure that persons injured by an
underinsured motorist would receive at least the same amount of
total compensation that they would have received if they had
been injured by an uninsured motorist." (Emphasis sic.)
This court reiterated this policy in Hill, supra, 50 Ohio St.3d
at 245, 553 N.E.2d at 661. Lower courts have also recognized
and considered this policy in addressing these issues. See,
e.g., Felber v. Grange Mut. Ins. Co. (Aug. 28, 1991), Summit
App. No. 15003, unreported; Wilson v. Grange Mut. Cas. Co.
(Aug. 29, 1989), Franklin App. No. 87AP-1197, unreported;
Knudson v. Grange Mut. Cos. (1986), 31 Ohio App.3d 20, 23, 31
OBR 34, 37, 507 N.E.2d 1155, 1157-1158. Simply stated, the
well-reasoned public policy behind requiring underinsured
motorist coverage is to assure that an injured person receive
at least the same amount of compensation whether the tortfeasor
is insured or uninsured.
Returning to R.C. 3937.18(A)(2), we must interpret this
statute in light of the public policy responsible for its
adoption. In Hill, this court interpreted R.C. 3937.18(A)(2)
to mean that:

"Unless otherwise provided by an insurer, underinsured
motorist liability insurance coverage is not available to an
insured where the limits of liability contained in the
insured's policy are identical to the limits of liability set
forth in the tortfeasor's liability insurance coverage (R.C.
3937.18[A][2], construed and applied; Wood v. Shepard [1988],
38 Ohio St.3d 86, 526 N.E.2d 1089, distinguished and
explained.)" Hill, supra, 50 Ohio St.3d 243, 553 N.E.2d 658,
syllabus. In Hill, the insured-decedent and the tortfeasor had
policies with identical limits of underinsured motorist and
liability coverage, respectively; $50,000 per person and
$100,000 per occurrence. The decedent's estate had been
compensated by the same amount as the limit of the underinsured
coverage. Therefore, the estate was not entitled to recover
under the underinsured motorist coverage.
The Hill rationale is appropriate in a case involving a
single claimant. However, Hill fails to address the situation
where, as in the case at bar, the claims of multiple claimants
result in reduction of the amount available for payment to the
insured below the underinsured motorist limits. Several courts
of appeals, including the courts below, have considered this
issue, with similar results.
In Knudson v. Grange Mut. Cos., supra, 31 Ohio App.3d at
21, 31 OBR at 35, 507 N.E.2d at 1156, the issue before the
Court of Appeals for Lucas County was whether underinsured
coverage was available where the tortfeasor's liability limits
were identical to the insured's, but the amount available for
payment to the insured was reduced below the liability limits
because of the claims of multiple claimants The court reviewed
R.C. 3937.18(A)(2) and this court's pronouncement of the policy
behind requiring underinsured motorist coverage. The court
held that the insured was entitled to underinsured coverage.
The Knudson court stated that "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." (Emphasis
sic.) Id. at 23, 31 OBR at 37-38, 507 N.E.2d at 1158.
In Wilson v. Grange Mut. Cas. Co. (Aug. 29, 1989),
Franklin App. No. 87AP-1197, the Court of Appeals for Franklin
County considered the same issue. As in Knudson, the claims of
multiple claimants resulted in the insured receiving less than
the tortfeasor's insurance limits. The Wilson court held that
the clear language of R.C. 3937.18(A)(2) required the court to
consider the amount actually available for payment, and not to
consider only the policy limits. The court continued that,
"[c]learly, in a situation where the limits of a third party's
liability coverage are identical to the limits of the insured's
uninsured motorist coverage, the presence of multiple claimants
making claims against the third party decreases the available
limit of the third party's liability coverage to the insured."
(Emphasis sic.) Id. at 8.
We agree with the above-mentioned appellate courts that
the clear language of R.C. 3937.18(A)(2) requires a comparison
between the amount actually available for payment to an insured
and the policy limits of the insured's underinsured motorist
coverage. The operative language of R.C. 3937.18(A)(2) states

that "[u]nderinsured motorist coverage * * * shall provide
protection * * * where the limits of coverage available for
payment to the insured * * * are less than the limits for the
insured's uninsured motorist coverage at the time of the
accident. * * *" Reading this statute, in conjunction with
the public policy behind its adoption, the inescapable
conclusion is that, when determining whether a motorist is
underinsured, the amount actually available for payment under
the tortfeasors's policy must be compared with the insured's
underinsured motorist coverage limits. If the amount available
for payment is less than the insured's underinsured policy
limits, then the insured is entitled to underinsured motorist
coverage. This is the only reading of R.C. 3937.18(A)(2) which
can give full effect to the General Assembly's stated intent.2
Turning to the case at bar, we find that Mac's Transport
was an underinsured motorist within the meaning of R.C.
3937.18(A)(2). The decision is achieved by comparing the
amount available for payment to the Andrewses, zero, to the
underinsured motorist coverage limits, at least $25,000 per
person, $50,000 per occurrence. To hold otherwise would place
the Andrewses in a better position had they been struck by an
uninsured vehicle.3 This decision also recognizes the
importance of the insurance protection which Dennis Andrews
sought. Dennis contracted for coverage from his insurer for at
least $25,000 per person/$50,000 per occurrence in the event of
an accident with an underinsured motorist. Our decision allows
the Andrewses to recover that for which Dennis contracted. See
Felber v. Grange Mut. Ins. Co. (Aug. 28, 1991), Summit App. No.
15003, unreported, at 4-5.
Therefore, for the foregoing reasons, the judgment of the
court of appeals is affirmed.
Judgment affirmed.

Moyer, C.J., Sweeney, Douglas, Wright and H. Brown, JJ.,
concur.
Holmes, J., dissents.
Mary Cacioppo, J., of the Ninth Appellate District,
sitting for Resnick, J.

Footnotes:
1 The parties disagree on the limits of coverage
provided by Dennis Andrews' underinsured motorist coverage. As
a result, the trial court left that issue unresolved after
determining that underinsured coverage was not available. The
parties agree that the limits are at least $25,000 per person
and $50,000 per occurrence.
2 We note that this is a sound result as underinsured
motorist coverage attaches to individuals, not accidents.
Zelko v. Parsons (1985), 29 Ohio App.3d 302, 306, 29 OBR 400,
405, 505 N.E.2d 271, 275, following Auto-Owners Mut. Ins. Co.
v. Lewis (1984), 10 Ohio St.3d 156, 158, 10 OBR 490, 492, 462
N.E.2d 396, 399. Therefore, it is appropriate to compare the
amount actually available for payment under the tortfeasor's
policy to the injured party rather than a strict policy limits
comparison. A strict policy limits approach would attach
underinsured motorist coverage to the accident, not the
individual.

3 Clearly, had Mac's Transport been uninsured, the
Andrewses would be entitled to uninsured motorist coverage and
would receive Dennis' policy limits. If we were to adopt
appellant's position, the Andrewses would be denied coverage.
This result would be contrary to the General Assembly's policy
for requiring underinsured motorist coverage.

Holmes, J., dissenting. I strongly dissent from this
court's misinterpretation of Hill v. Allstate Ins. Co. (1990),
50 Ohio St. 3d 243, 553 N.E. 2d 658. In order to point out how
the majority of this court has become misguided with respect to
underinsurance coverage, it is necessary to resort to a factual
analysis of Hill and the present case, and the law applicable
to both.
In Hill, the tortfeasor had liability coverage of $50,000
per person injured in any one accident and $100,000 per
occurrence. The tortfeasor's insurance company settled with
the estate of Shaw ("the decedent") and another victim's estate
for $50,000 each. The decedent's insurance company, Allstate
Insurance Company, provided Shaw with uninsured/underinsured
motorist coverage limits of $50,000 per person injured and
$100,000 per occurrence. The executrix of the decedent's
estate filed a wrongful-death claim with Allstate in order to
recover underinsurance. After Allstate denied the claim, the
executrix filed a declaratory judgment action. This court
ultimately held that:
"* * * [P]ursuant to both the plain meaning of Ohio's
underinsurance motorist statute and the unambiguous terms of
the subject Allstate policy, no underinsurance motorist
coverage was available to the decedent's estate here because
the 'limits of coverage available for payment' to the
decedent's estate were not 'less than the limits for' the
decedent's underinsured motorist coverage 'at the time of the
accident.'" Hill v. Allstate, supra, 50 Ohio St.3d at 245, 553
N.E.2d at 661.
Moreover, this court stated:
"Therefore, under both the Ohio underinsured motorist
statute and the relevant Allstate policy, there plainly can be
no underinsured motorist coverage unless, at the time of the
accident, the underinsured motorist limits of liability
contained in the insured's policy are greater than the
liability coverage limits of the tortfeasor's policy. Here,
that was simply not the case." (Emphasis sic.) Id. at fn. 3.
Thus, a plain reading of both the underinsured motorist
statute and Hill would require a tortfeasor's policy to have
less liability insurance than an insured's underinsured
motorist coverage in order to trigger any recovery under the
insured's underinsurance policy. Therefore, in reviewing the
facts of the case at bar, the emphasis of the inquiry should be
on the "limits of coverage available for payment" from the
tortfeasor compared to the insured's underinsured motorist
coverage "at the time of the accident." R.C. 3937.18(A)(2).
In the present case the insurance covering Mac's
Transport, Inc. was a single liability limit of $750,000 with
National Indemnity Insurance Company ("National"). Upon a
settlement agreed to among all claimants, the entire $750,000
was paid to Richard Andrews for his severe injuries. Fairmont

Homes, Inc., was also insured by National, and the policy named
Mac's Transport as an additional insured. National settled the
matter for a total of $97,000 to Richard Andrews; $1,000 to
Richard's wife, Marian Andrews; $1,000 to Dennis Andrews as
administrator of the estate of Nathan Andrews; and $1,000 to
Dennis Andrews as parent and natural guardian of Shannon
Andrews.
As father of Nathan and Shannon, Dennis Andrews was
insured under a policy issued by Motorists Mutual Insurance
Company ("Motorists"), and had uninsured/underinsured policy
coverage in the amount of at least $25,000/$50,000. The
stipulated facts show that Dennis' policy with Motorists "had
uninsured/underinsured motorist coverage with limits less than
the liability insurance limits of the insurance policy for the
tortfeasor." In other words, the tortfeasor's liability policy
had coverage greater than the insured's underinsured coverage.
Motorists brought a declaratory judgment action against
appellees seeking a declaration that underinsured motorist
coverage in its insurance policy was not available to appellees
since the limits of the tortfeasor's liability coverages were
greater than the underinsured limits of Dennis' policy. The
trial court properly ruled that underinsured motorist coverage
was not available to appellees under this court's rationale in
Hill. The court of appeals reversed the trial court and
attempted to distinguish Hill from the present case, in that
the result of denying recovery to appellees would violate
public policy. The court reasoned that since there were no
funds available for payment to appellees after the parties had
settled with the tortfeasor's insurance company, appellees'
underinsurance coverage was triggered, notwithstanding the fact
that appellees' underinsured motorist coverage was less than
the face amount available under the tortfeasor's insurance
policies (which had been depleted by settlement).
Clearly, the facts in Hill are not distinguishable from
the facts in the present case. In both cases the
representatives (of the insureds and their families) settled
with the tortfeasors' insurance company. More importantly, the
representatives, in the course of their settlements, agreed to
share the proceeds from the liability provisions of the
tortfeasors' policies. See Hill, 50 Ohio St.3d at 243, 553
N.E.2d at 659.
It appears that the majority has simply ignored a
comparison of the facts of both cases and has fashioned a new
accident insurance policy for all insureds in Ohio. However,
the underinsured motorist statute, R.C. 3937.18(A)(2),
explicitly provides that coverage is triggered only:
"* * * [W]here 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. * * *" (Emphasis added.)
In analyzing the above provision in R.C. 3937.18(A)(2),
the following terminology must be defined:
(1) "available for payment," and
(2) "at the time of the accident."
In reviewing the phrase "available for payment," I have
discerned that it can only represent the cumulative amount of

all policies "covering persons liable to the insured," as
explicitly stated in the statute. The General Assembly may
have added this language in order to recognize potential
exclusions within liability policies, or split limits in
coverage, that would prevent the face amount of a tortfeasor's
liability policy from applying to the total amount of the
proceeds available to the insured. On the other hand, the
phrase "at the time of the accident" simply indicates that the
calculation of the limits available for payment under the
insured's underinsurance coverage shall be conducted at the
moment the accident occurs. I note that my colleagues
apparently have some difficulty determining the legislative
intent behind the phrase "at the time of the accident." The
majority intimates that the phrase requires insurers to
calculate the limits available under the tortfeasor's policy
(rather than the insured's policy) at the moment the accident
takes place. Thus, if there are several injured parties
claiming proceeds under a tortfeasor's liability insurance
policy, the insured will be able to seek redress under his or
her own underinsurance coverage, rather than be inadequately
compensated for his or her injuries as a result of sharing
among multiple claimants. I understand the argument that all
injured parties should be compensated for their injuries;
however, R.C. 3937.18(A)(2) does not provide such a remedy.
Instead, the statute indicates that the sum of all the
tortfeasor's insurance policies must be less than the limits of
the insured's uninsured motorist coverage, which is fixed, at
the time of the accident. The General Assembly's purpose for
looking to "the time of the accident" in order to review the
limits of the insured's underinsurance coverage reasonably was
to insure that any changes to the policy after the accident
would not impact the insured's potential for recovery. It is a
leap in logic to imply that the insured should look to all
sources of recovery, including his or her own underinsurance
coverage at the time of the accident, where the statute clearly
does not indicate such a result.
In addressing whether insurance companies could set off
from underinsurance coverage amounts insureds receive from
tortfeasors, this court stated in James v. Michigan Mut. Ins.
Co. (1985), 18 Ohio St.3d 386, 18 OBR 440, 481 N.E.2d 272,
paragraph two of the syllabus, that:
"An insurer may apply payments made by or on behalf of an
underinsured motorist as a setoff directly against the limits
of its underinsured motorist coverage, so long as such setoff
(1) is clearly set forth in the terms of the underinsured
motorist coverage and (2) does not lead to a result wherein the
insured receives a total amount of compensation that is less
than the amount of compensation that he would have received if
he had been injured by an uninsured motorist."
This result was premised on the fact that "persons injured
by tortfeasors having extremely low liability coverage were
being denied the same coverage that was being afforded to
persons who were injured by tortfeasors having no liability
coverage." James, 18 Ohio St.3d at 389, 18 OBR at 443, 481
N.E.2d at 274-275. The General Assembly enacted the
underinsurance statute to avoid this situation. Thus, an
insured should not now be denied recovery in cases where the

tortfeasor has minimal liability coverage and the insured has
higher liability limits.
Assuming, arguendo, that the majority's judicial amendment
to R.C. 3937.18(A)(2) is plausible, I believe the outcome of
this case is still unreasonable. In this case appellees were
entitled to receive up to $850,0004 under the cumulative amount
of the tortfeasor's liability policies, but voluntarily settled
for $2,000. It is ludicrous to conclude that the General
Assembly would allow an insured to settle with a tortfeasor's
insurance company in order to trigger his or her own
underinsurance coverage. Here, the anomalous result is that
the appellees could have received the entire amount of their
underinsurance coverage from the tortfeasor's insurance
company, but for the fact that they settled with this company
in order to benefit other family members not a party to Dennis'
insurance policy.
Accordingly, for the foregoing reasons, I would reverse
the court of appeals on the authority of Hill v. Allstate Ins.
Co., supra.

FOOTNOTE:
4 As noted in the facts, Mac's Transport, Inc. had a
single liability limit of $750,000 with National Indemnity
Insurance Company. Mac's was also named as an additional
insured under Fairmont Homes' policy, from which National
settled the matter for an additional $100,000.