PRIMER ON MISSISSIPPI UM LAW FROM
A CLAIMS PROCESSING PERSPECTIVE[1]
Almost every state requires drivers to carry liability insurance to cover damages they cause in an accident. Despite these laws, nobody seems to have it, or have enough of it. That is where Uninsured Motorist (UM) insurance comes in. Uninsured motorist coverage provides protection to innocent insureds who suffer injuries or damages as a result of the negligence of financially irresponsible drivers. Mississippi law statutorily requires this first-party coverage be included in every policy of automobile insurance issued in Mississippi, unless rejected in writing by the insured. As an important form of coverage, it is helpful to review the basics of this coverage and understand how this insurance is designed to function. This article seeks to provide general guidance to the insurance professional and their counsel to assist with proper policy interpretation and claims handling practices.
Key to an understanding of UM coverage is knowing what Mississippi had in mind when enacting it as a required form of insurance. The stated purpose of UM coverage is to provide the insured the means of collecting what the insured would have been legally entitled to recover for bodily injuries or property damage caused by an accident arising out of the ownership, maintenance, or use of an “uninsured motor vehicle.” See Harthcock v. State Farm Mut. Auto. Ins. Co., 248 So. 2d 456 (Miss. 1971); Hodges v. Canal Ins. Co., 223 So. 2d 630 (Miss. 1969). The law is designed to provide “the same protection to one injured by an uninsured motorist as that individual would have if injured by a financially responsible driver.” Lawler v. Government Employees Insurance Co., 569 So. 2d 1151 (Miss.1990).These laws are codified in the Mississippi Code at sections 83-1-101 through 83-1-111 (UM Statutes).
UM coverage is a form of “family protection” insurance, as it applies by statute, to all household members of the family as well as persons using or riding in the family roadster. It is designed to provide an insurance consumer with similar protection as they would have received under compulsory insurance law. Thus, it may seem logical to think that this coverage will pay an insured who is injured in an amount that exceeds the at-fault party’s ability to pay. Not so in Mississippi. Since the coverage is born out of the desire to ensure that the insured is similarly compensated as he would have been if the uninsured motorist had been covered for liability, if an insured’s UM coverage equals that of the at-fault driver, then no UM benefits are available. In other words, equal coverage equals no coverage. Only when an insured has purchased more UM coverage than the at-fault driver possesses in liability insurance does the UM carrier pay any benefits.
DELIVER YOUR PROMISE
The “insuring agreement” is the insurance company’s promise to its customers. As such, it should be the launching point when evaluating a UM claim. Your goal should always be focused on delivering the promise of the insurance provider.
The UM claim presents an additional twist to the typical dependence on the policy terms and conditions. Since UM insurance is mandated by statute, a claims processor should make sure to read both the UM Statutes as well as the policy language when analyzing a claim. The UM statute is the coverage floor. This statutory minimum coverage is written into every auto policy in Mississippi. No policy is permitted to provide less than what the benefits would have been under the statutes. Nevertheless, insurance companies are free to provide broader and more expansive coverage. There may be a tendency for the veteran insurance professional to rely on their hard-won knowledge of Mississippi UM law. The insured has nevertheless paid a premium for the contractual coverage contained in the policy and if that policy provides broader-than-minimum benefits, it is important to deliver on the company’s commitment.
READ IT IN – READ IT OUT
The “Read it in – Read it out” method of examining a claim for coverage is a useful tool for evaluating the UM claim in many cases. As you begin your evaluation of a claim, you should first attempt to determine if a particular claim or loss falls within the scope of coverage afforded by that policy under its insuring agreements (i.e., read it in). For example, a typical UM policy may agree to cover an insured for damages because of bodily injury or property damage caused by an accident resulting from the ownership, maintenance, or use of an uninsured motor vehicle. These short statements of coverage eligibility contain quite a bit of information. Almost every term or phase is further defined in separate sections. You can spot the potential coverage issues easily from this perspective. Who is the “insured?” Is the loss complained of “bodily injury,” “property damage,” or is it purely economic loss? Was it caused by an “accident?” You should work your way through each term or phrase to ensure that a claim meets each definition.
Once you are satisfied that an insured has a claim or loss that comes within the scope of the coverages afforded by the particular policy, you then need to scourer the other provisions, conditions and exclusions in the policy for language which may preclude an otherwise covered claim (i.e., read it out). Using this method will help to ensure that you are fulfilling the contractual promises and only covering claims the policy is designed to cover. It is critical to review the entire policy, including all the endorsements that may have altered the scope of coverage and the exclusionary language. If you read it in and cannot read it out, you have a covered claim.
Next, we will examine various features of the Mississippi UM Statutes.
WHO IS AN UNINSURED MOTORIST?
The statute defines what is considered an “uninsured motor vehicle.” Mississippi bundles the concept of under-insurance within uninsured motorist coverage. The statute defines an uninsured motorist (UM) to include the under-insured motorist (UIM). For most claims handling situations, there are five main types of UM/UIM vehicles: (1) a vehicle that has no liability insurance, (2) a vehicle that had liability insurance but the carrier denied coverage, or became insolvent within 12 months of the accident, (3) a vehicle that has liability insurance, but has limits of liability that are less than the limits of the insured=s UM coverage, (4) physical contact with a hit-and-run vehicle, and (5) most state or local government vehicles. See 83-11-103.
MINIMUM COVERAGE/WRITTEN REJECTION
Unless the insured rejects the coverage in writing, the policy must provide minimum UM coverage of at least $25,000 per person, $50,000 per accident, and $25,000 for property damage. See Miss. Code Ann. 83‑11‑101(1) and (2); 63‑15‑3. Mississippi has a state-approved UM Rejection Form that, if substantially complied with, will be binding on all the insureds and will operate as an effective waiver of UM coverage. There is no requirement of a written rejection of UM coverage above the minimum amount, and there is no duty on an agent to provide an explanation of such optional coverages. Owens v. Mississippi Farm Bureau Cas. Ins. Co., 910 So. 2d 1065, 1074 (Miss. 2005).
Interestingly, while the statute requires a rejection of UM coverage to be in writing, the statute does not require that the written paperwork be maintained. In other words, the mere fact that an insurance carrier has lost or cannot locate the written rejection does not automatically create a violation of the statute. The carrier is free to provide affidavits or other circumstantial evidence that an insured at one time had signed a written rejection of coverage, and it is up to the insured to present proof to the contrary. Travelers v. Stokes, 838 So. 2d 270 (Miss. 2003).
CLASSES
The UM Statutes separate insureds into two categories, or classes. Mississippi case law has designated insureds as either “Class I or Class II.” These categories are derived from the structure of the UM Statutes. The statutes provide that the named insured, resident spouse and resident relatives receive UM benefits whether they are in the insured vehicle “or otherwise.” In other words, UM coverage is personal insurance as to these insureds. Coverage “follows the insured,” very much like life insurance. Indeed, it follows them wherever they go – in a car, house, walking down the street, or even in a bathtub. One of the key concepts to keep in mind is that all an insured’s property is covered by the statutory language. If an uninsured motorist jumps the curb and ends up damaging an insured’s house (or injures the homeowner while sitting in the bathtub), that is covered under his UM benefits. Even if the insured did not purchase UM coverage for a particular vehicle in his family, if he purchased it for at least one vehicle, that UM coverage follows him and applies to all the vehicles he owns. Class II insureds are permissive drivers and guest passengers. The benefits for these Class II persons are derived solely by virtue of their occupancy in the insured motor vehicle. To summarize: “Class I” insureds are the named insured, resident spouse and resident relatives, while “Class II” insureds are permissive drivers and guest passengers. The distinction is important for purposes of stacking policies as discussed below.
STACKING
Mississippi is a “stacking state.” Insureds can aggregate, or stack, individual UM policies for any given claim. UM stacking is fully permitted for “Class I” insureds (named insureds, spouses and resident relatives), and in a more limited fashion for “Class II” (permissive drivers and guest passengers). Meyers v. American States Ins. Co., 914 So. 2d 669, 674 (Miss. 2005). Class II insureds can only stack the accident vehicle’s coverage with any of his or her own personal coverage (i.e., other coverage he or she qualifies as an “insured” on). Class II insureds cannot stack other vehicles insured by the vehicle owner (unless the policy provides for this broader right). Similarly, a Class II insured does not have the right to stack an employer’s uninsured motorist coverage unless policy language provides otherwise. Deaton v. Mississippi Farm Bureau Cas. Ins. Co., 994 So. 164, 167 (Miss. 2008). Anti‑stacking provisions in policies are generally void in Mississippi.
EVALUATING UIM COVERAGE (TRIGGERING THE UIM CLAIM)
Mississippi law defines an under-insured vehicle by reference to policy limits, as distinguished from the availability of funds to compensate damages. Accordingly, in determining whether an at-fault driver is properly considered to be an under-insured motorist with regard to a particular insured, the limits of the at-fault driver’s liability should be compared to the total stacked UM benefits applicable to the insured. In short, compare liability limits to stacked UM limits. Cossitt v. Federated Guar. Mut. Ins. Co., 541 So. 2d 436 (Miss. 1989). It does not matter that a particular insured does not recover the full liability limits to determine coverage for UM. The statute only requires comparing limits to limits. For a UM claim to be valid, for policies following the Mississippi statute, the stacked UM limits must exceed the liability limits. If they are equal or less than then liability limits, there is no UM claim. Again, the fact that an insured may not actually receive the limits does not matter. It is a limits-to-limits analysis only. If a UM claim is triggered via the limits‑to‑limits analysis, you then determine how much UM is available under other rules, discussed below.
OFFSETS AND MULTIPLE CLAIMS
Apart from determining if UM coverage exits, a policy may, by its language, provide for offsets (also referred to as credits or set‑offs) from the UM coverage by amounts paid by the at-fault driver’s carrier. State Farm Mut. Auto Ins. Co. v. Kuehling, 475 So. 2d 1159 (Miss. 1985). Known as the Kuehling offset, it is important to closely review the language of the policy. While the UM Statutes allow for this offset, Mississippi courts will not infer broader rights of the insurer to offset when the language of its own policy provides for a narrower right than the law would allow. The offset cannot, however, reduce the amount received by the insured to less than the minimum required by statute. Jeffcoat v. American Nat. Property and Cas. Co., 919 So. 2d 982 (Miss. App. Ct. 2005).
In some situations, you will be faced with multiple claimants all seeking a limited pool of liability insurance. When a UM claimant cannot obtain the full “per person” share of liability limits, Mississippi law holds that the UM carrier may only validly offset benefits by the amount of liability amounts “actually received” by the UM insured. In this context, “actually received” has been defined as those amounts that are either tendered by the at-fault driver’s liability carrier or otherwise available to the UM insured. Fidelity & Guaranty Underwriters, Inc. v. Earnest, 585, 591‑92 (Miss. 1997). Therefore, if multiple claimants are involved and an insured does not receive the full limits available to him, the carrier can only offset those amounts received or that he could have received.
To the extent a claimant contends that the offset should not apply to him or her because he or she has not been “made whole” for the injuries sustained, Mississippi has held that the made whole rule does not apply to the offset. The offset is a right that a carrier can assert (through its policy language) regardless of the level of compensation a claimant obtained. USAA v. Stewart, 919 So. 2d 24 (Miss. 2005).
You may also encounter a situation where multiple carriers all claim the right to the same offset. It has been held that the primary insurer has the right to offset its UM limits first. Dixie Ins. Co. v. State Farm Auto. Ins. Co., 614 So. 2d 918 (Miss. 1992). The primary insurer is generally deemed to be the carrier covering the accident vehicle. It is important to consult the “other insurance” clauses of the various insurance policies to determine if the collective language alters the default position.
UM coverage limits may not be offset by medical payments coverage (MedPay). Prudential Prop. & Cas. Ins. Co. v. Mohrman, 828 F. Supp 432, 438 (S.D. Miss. 1993). In other words, a carrier cannot reduce the UM limits available by benefits paid under MedPay. However, a carrier may have language in its policy that prevents double recovery thereby validly avoiding paying under both coverages for the same charges. See Welborn v. State Farm, 480 F.3d 685 (5th Cir.2007). Thus, while not reducing the UM limits available, a carrier can consider the MedPay benefits paid as counting towards the overall compensation of a claimant.
An insurer also may not offset workers compensation payments to the insured against UM coverage limits. Nationwide Mut. Ins. Co. v. Garriga, 636 So. 2d 658 (Miss. 1994). In addition, workers compensations liens do not apply to UM proceeds. Miss. Ins. Guaranty Assoc. v. Blakeney, 51 So. 2d 208 (Miss. App. 2009). Accordingly, a carrier does not need to seek approval from a court or workers compensation commission in order to pay UM proceeds.
EXCLUSIONS
Mississippi courts have taken an extremely dim view of any limitations that reduce the statutory minimum amount of UM benefits. The courts have said that “an insurer cannot limit, restrict or reduce the coverage limits of the UM statute by omitting language or inserting restrictive language into its insurance policies.” Spradlin v. State Farm Mut. Auto. Ins. Co., 650 So. 2d 1383 (Miss. 1995). While there is some debate on what should be considered the minimum amount of UM benefits, the statutes permit insureds to purchase supplemental UM coverage over and above the minimum limits. Insurance carriers are free to contract for restrictions and limitations on that excess or additional coverage. Miss. Code Ann. 83-11-111 (excess or additional insurance coverage); Nationwide Mut. Ins. Co. v. Garriga, 636 So. 2d 658 (Miss. 1994).
When evaluating a UM claim, be extremely wary of applying any policy exclusions or limitations that serve to reduce the benefits to the insured below the statutory minimum unless it falls within one of the few recognized exceptions. Liability offsets, which obviously serve to reduce UM benefits available have been held to be valid, as long as the offset does not reduce the amount received by the insured to less than the minimum required by statute. Jeffcoat v. American Nat. Property and Cas. Co., 919 So. 2d 982 (Miss. App. Ct. 2005).
Another exclusion permitted involves the situation where an insured settles and releases the at-fault driver, without written consent of the insurer. The court has held this circumstance creates a valid and enforceable exclusion of all benefits. USF&G v. Hillman, 367 So. 2d 914 (Miss. 1979). The workers compensation exclusivity rule can also serve to completely bar an employee from recovering UM benefits from his personal insurer when injured by an employer or a co‑employee. Wachtler v. State Farm Mut. Auto. Ins. Co., 835 So. 2d 23, 28 (Miss. 2003).
A relatively new exclusion now permits policies to contain language excluding all coverage, including UM coverage, for insureds involved in Uber and Lyft accidents. See Miss. Code Ann. 77‑8‑19. The statute also requires transportation network companies to cooperate with insurers in its investigation and facilitate the exchange of relevant information.
LIABILITY EXCLUSIONS CREATE UM COVERAGE
It is important to keep in mind that any exclusion or limitation of coverage on the liability-side of coverage may trigger UM coverage for an insured. The UM Statutes defines an “uninsured motor vehicle” to include motor vehicles that have no liability insurance, as well as vehicles that have liability insurance, but the carrier has legally denied coverage.
Mississippi courts have consistently held that UM must be construed from the perspective of the injured insured. So, from that view, one must look to see if an at-fault driver has any liability insurance to compensate the insured’s damages. The courts have held “it is all the same to him whether there is no insurance at all, or a policy that is incapable of being applied to satisfy his claim because the tortfeasor’s insurer lawfully disclaims liability.” Hodges v. Canal Ins. Co., 223 So. 2d 630 (Miss. 1969).
Therefore, whenever there is an event that renders the at-fault driver without liability coverage (through exclusions, lack of cooperation, etc.), that event will likely trigger an insured’s first party UM benefits. In other words, once the driver becomes uninsured for any reason, UM benefits become potentially available. This will occur even under the same automobile insurance policy, as the coverages apply separately to each insured.
LIMITING STACKING ‑ FLEET POLICIES
In one limited situation, Mississippi allows a multiple‑vehicle policy to limit the stacking available to the vehicles insured therein. You will typically see this on a commercial policy that insures a fleet of vehicles. The UM Statutes allow a single fleet policy to provide for a Non‑Stacking, Single Limit policy, as long as that policy provided for at least 4 times the minimum limits. See 83‑11‑102. So, a fleet policy may provide a single limit of at least 100,000/200,000/100,000.
MINORS
Minor children present a few unique wrinkles when handling claims. The law is heavily slanted toward protecting them. Under the eyes of the law, minors are essentially helpless and therefore are afforded all sorts of protections against waiver of their rights. We can distill the basics of handling claims with minor claimants down to three key concepts: (1) statutes of limitations don’t run against them, (2) they are deemed to be residents of both parents’ household (so there are potentially two sources of insurance for stacking purposes), and (3) in order to settle and release a claim with them, you need to obtain court approval. Although the age of majority in Mississippi is 21, all persons 18 or older are deemed to be adults for purposes of personal property, which includes the right to settle and accept money in the settlement of a claim. Miss. Code Ann. 93-19-13. Garret v. Gay, 394 So. 2d 321, 323 (Miss. 1981).
HIT AND RUN
The hit-and-run situation is considered a covered event for UM benefits. Since we do not know how much insurance, if any, the fleeing driver had, the law presumes him or her to be uninsured. A UM policy may include the requirement that actual “physical contact” occur between the insured and an unidentified motor vehicle. Thus, an insured who claims that he was run off the road by someone, but no contact was made by the offending driver, is not entitled to UM benefits. Some sort of physical contact must occur between the vehicles if the policy so requires.
An object that is simply thrown or tossed from one vehicle and hits the insured’s vehicle has been held not to meet the physical contact requirement as the insured vehicle was neither hit by the unknown vehicle nor was any object struck by that vehicle propelling it into the insured’s vehicle. See Aetna Cas. & Sur. Co. v. Head, 240 So. 2d 280 (Miss. 1970).
While the UM Statute permits carriers to require direct contact between vehicles, be sure to consult the specific policy language. In many cases, the physical contact requirement can be met by indirect contact; that is, if the unknown vehicle is said to have contacted the insured through a medium of an intervening vehicle or object. Southern Farm Bureau Cas. Ins. Co. v. Brewer, 507 So. 2d 369 (Miss. 1987). If the policy makes no distinction between indirect and direct physical contact, courts will permit UM benefits in situations where objects or debris are propelled from a vehicle to impact the insured’s vehicle (and such offender’s identity remains unknown).
STATUTE OF LIMITATIONS
A cause of action against an insurer for uninsured‑motorist benefits is subject to a 3-year statute of limitations. Miss. Code Ann. 15‑1‑49. In many cases, that period will start on the date of the accident. However, that does not have to be the case. Mississippi law states that the statute commences when the insured knew or should have known that the tortfeasor was uninsured or under-insured. Montgomery v. Safeco Ins. Co. of Ill., 99 So. 3d 225 (Miss. App. Ct. 2012). Put another way, the statute begins to run when it can be reasonably known that the damages suffered exceed the limits of insurance available to the alleged tortfeasor. Jackson v. State Farm Mut. Auto. Ins. Co., 880 So. 2d 336 (Miss. 2004). When an insured receives an accident report reflecting that the at-fault party possesses no insurance the statute will be deemed to have commenced.
CONCLUSION
Uninsured motorist coverage is one of the more complicated areas of Mississippi insurance law. However, equipped with the tools for applying policy language to the facts of a loss, coupled with a healthy understanding of the UM Statutes, an insurance professional can properly navigate these claims.
[1] This article was previously printed in the 2021 Summer Issue of The Quarterly and used by permission of MDLA.
[2] Brad Best is the managing partner of Holcomb Law Group and has devoted over twenty-five years of his law practice to insurance coverage disputes and civil litigation defense. He is a former president of the MDLA. Brad is a graduate of Clemson University with honors and Ole Miss Law School with honors.
