Road rules

In a long-anticipated but nonetheless startling decision, the Ohio Supreme Court in early November overturned and overruled two prior decisions that have played havoc with Ohio’s uninsured/underinsured motorists coverage law for the past four years — the Scott-Pontzer v. Liberty Mutual decision and the Ezawa v. Yasuda Fire & Marine Ins. Co. of Am. decision.

The Ohio Supreme Court held in its most recent decision that “absent clear language to the contrary, a policy of insurance that names a corporation as an insured for uninsured or underinsured motorist coverage covers a loss sustained by an employee of the corporation only if the loss occurs within the course and scope of employment.” The court also said that “where a policy of insurance designates a corporation as a named insured, the designation of ‘family members’ of the named insured as other insureds does not extend insurance coverage to a family member of an employee of the corporation, unless that employee is also a named insured.”

In other words, now in most instances, a company’s uninsured and underinsured motorist insurance only covers work-related accidents. The broader extension of coverage to employees’ family members resulting from the Ezawa decision now is limited to family members of employees who are actually named in the policy.

In the Scott-Pontzer decision, the Ohio Supreme Court held that the definition of “you” in a corporation’s commercial automobile policy referred only to the corporation’s employees, meaning that the uninsured and underinsured motorists coverage in the policy applied to all employees, regardless of what car they were driving or whether they were driving for work. In its Ezawa decision, the court went further, determining that when “you” in a policy is defined to include family members, a corporation’s uninsured/underinsured motorists coverage must be extended to all family members of all employees.

The remarkable holdings in these two cases spawned a huge volume of litigation in Ohio, caused an upheaval in the commercial automobile insurance market in Ohio and engendered widespread criticism from other jurisdictions. Many insurance companies attempted to rewrite their policies to avoid the effect of the Scott-Pontzer and Ezawa decisions.

Some insurance companies withdrew from the Ohio commercial automobile insurance market entirely, and the cost of uninsured and underinsured motorists coverage for Ohio businesses skyrocketed. Prior lawsuits were reopened as plaintiffs sought to recover under the insurance policies of the employers of the persons involved in the accident.

Businesses with large deductibles or self-insurance were particularly impacted.

The Ohio Supreme Court’s new decision, Westfield Insurance Company v. Galatis, 100 Ohio St. 3d ___ (2003), was issued Nov. 5, 2003, and its impact is already being felt. At least one pending lawsuit against an employer’s insurance company has been dismissed in Lorain County on the grounds that the employer’s policy no longer can be called upon to cover its employees’ nonwork-related accident.

Although the language in different companies’ insurance policies can vary, the decision in the Westfield case should provide welcome relief to Ohio businesses and their insurers that want to provide uninsured and underinsured motorist insurance to protect employees when driving for work.