Limits-to-Limits UIM Definition is Unambiguous: Lawson v. Progressive Cas. Ins. Co.

A new decision by the Eastern District of the Missouri Court of Appeals has once again rejected an insured’s argument that his auto policy’s limits-to-limits definition of “underinsured motor vehicle” was ambiguous.  Relying heavily on the recent Supreme Court of Missouri case of Swadley v. Shelter Mut. Ins. Co., 513 S.W.3d 355 (Mo. banc 2017), the Eastern District held on August 29, 2017 that the definition was clear and unambiguous and resulted in the insured not being entitled to UIM coverage where the tortfeasor’s coverage limit was greater than the UIM limit.

Richard Lawson was a passenger in his daughter’s car when Sophie Rehagen caused a collision.  Rehagen’s had auto liability coverage of $100,000, which was tendered to Lawson. Lawson then sought UIM coverage under his daughter’s policy with Progressive Casualty Insurance Company, which had a limit of $50,000.  Progressive denied coverage on the basis that Rehagen was not operating an underinsured motor vehicle.  The policy defined “underinsured motor vehicle” as “a land motor vehicle or trailer of any type for which the sum of the limits of liability under all bodily injury liability bonds or policies applicable at the time of the accident is less than the coverage limit for Underinsured Motorist Coverage shown on the declarations page.”  Additionally, just above the table of coverage limits, the declarations stated, “All Limits listed below are subject to all terms, conditions and applicable reductions described in the policy.”  The trial court granted summary judgment to Lawsuit, and Progressive appealed.  Ultimately, the Eastern District agreed that the definition was “clear and unambiguous when read within the context of the Policy as a whole” and “plainly and unambiguously requires that any liability coverage applicable to the tortfeasor’s vehicle be less than the Progressive policy’s UIM coverage limit.”

After discussing the holdings in Swadley, the court reasoned that “the clear and intended effect of the Progressive policy’s definition of ‘underinsured motor vehicle’ is that UIM coverage will not be provided when the tortfeasor has liability coverage equal to or greater than the UIM coverage limit.”  Responding to Lawson’s argument that the definition took away coverage granted elsewhere, the court found, “The Progressive policy, in the declarations page or elsewhere, does not promise UIM coverage will be provided under every circumstance.”  The court did note the warning language in the declarations, but it considered more important the fact that the policy did “not expressly promise UIM coverage where the tortfeasor has liability coverage greater than or equal to the UIM coverage limit.” 

The court also followed Swadley in determining it “need not decide whether the limits of liability, insuring agreement, or other insurance clause provisions render the Policy ambiguous because these alleged ambiguities would relate to the amount of UIM coverage provided under the Progressive policy, and they would not render the Policy ambiguousas to when UIM coverage applies.”  In other words, the court treated the existence of UIM coverage essentially as a threshold issue to be decided before reaching the question as to the amount of coverage, which might involve issues of stacking, setoffs, and the like.