Owned-but-not-scheduled-for-coverage insurance exclusions permissible in Kentucky

by Mandy Hicks

How much do you know about your insurance coverage? For instance, if you have two cars insured under separate uninsured/underinsured motorist policies, do you assume that you are covered under both policies for an accident in either vehicle? Or do you know that there may be an insurance exclusion that applies?

This issue was the subject of a recent Kentucky Supreme Court case in which the justices strongly disagreed about whether an “average American” could understand certain exclusions in two insurance policies issued to a man who was later hurt by an underinsured driver.

Facts of the Case

In the case of Philadelphia Indemnity Insurance Company, Inc. v. Tyron (and the companion case of Encompass Indemnity Company v. Tyron), the plaintiff was a man who was injured in an accident with an underinsured motorist. At the time of the accident, the man was riding a motorcycle. He first made a claim under a policy of underinsured motorist coverage that covered the motorcycle. He also filed claims under two other underinsured motorist policies that covered two automobiles that he owned at the time of the accident.

The motorcycle underinsured motorist insurance company did not dispute coverage, but the insurers of the two automobiles denied the man’s claim. As grounds, the two companies contended that their policies contained “owned-but-not-scheduled-for-coverage exclusions” that did not cover an accident on the plaintiff’s motorcycle.

The trial court granted summary judgment to the insurance carriers of the plaintiff’s two vehicles. The plaintiff appealed, and the Kentucky Court of Appeals reversed. The insurance companies then sought further review from the Kentucky Supreme Court.

The Opinion of the State’s Highest Court

The Supreme Court of Kentucky reversed the court of appeals as to one of the underinsured motorist insurance carriers and affirmed summary judgment in its favor, but it affirmed the court of appeals’ judgment as to the other carrier. The court found that, generally speaking, owned-but-not-scheduled provisions for underinsured motorist coverage are enforceable in Kentucky if they expressly and plainly apprise an insured of the exclusion. In the court’s opinion, one of the underinsured motorist insurance policies at issue plainly excluded coverage, but the other failed in this regard.

In a dissenting opinion, one of the justices opined that the insurance documents at issue were much more difficult for an average person to understand than the majority of the court believed. In support, that justice pointed out that one of the documents was 113 pages long and required at least some college-level education to read (according to an online software tool that the judge used to calculate the readibility of the document).

Talk to an Experienced Kentucky Injury Attorney

It’s important to understand your insurance coverage before you have an accident. If you are not sure about yours, contact your agent and ask detailed questions about what is and what is not covered. It’s also important to know your legal rights after an accident. The knowledgeable motor vehicle accident lawyers at English, Lucas, Priest & Owsley can help you understand your right to seek compensation for an injury caused by another party’s negligence – or assert a uninsured or underinsured motorist claim against your own insurance company. Call us at (270) 781-6500 to schedule your free case evaluation.

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