When an Automobile Policy Coverage Exclusion or Limitation Is Valid
| Publication year | 1996 |
| Pages | 103 |
1996, August, Pg. 103. When an Automobile Policy Coverage Exclusion or Limitation is Valid
The Colorado Uninsured Motorist Act, enacted in 1965,(fn1) provides for a "mandatory offer" of uninsured motorist coverage but does not mandate such coverage.(fn2) A 1983 amendment extended such coverage to bodily injury damages due to an underinsured motor vehicle.(fn3) The Colorado Auto Accident Reparations Act ("No-Fault Act"), enacted in 1973, by contrast mandates that every automobile policy must provide both liability coverage and personal injury protection ("PIP") coverage.(fn4)
Many automobile policy provisions purporting to limit or exclude coverage have been held to be invalid when challenged in the courts. This article surveys the present state of the law and, it is hoped, provides some indication as to the validity of policy exclusions or limitations not yet considered by the courts. It does not consider the statute providing for uninsured motorist protection for property damage caused by an uninsured motor vehicle, which was enacted in 1988.(fn5)
As the uninsured motorist coverage is not mandatory, coverage exclusions or limitations have been upheld by the Colorado appellate courts, except where they were found to be against public policy.
An auto insurance policy listing a described vehicle does not provide uninsured ("UM") or underinsured ("UIM") coverage to the insured under that policy for injuries received while occupying another vehicle owned by the insured but not insured under that policy or any other. This exclusion was upheld as being consistent with public policy in view of the No-Fault Act exclusion of PIP coverage under these circumstances.(fn6)
Where an auto insurance policy provides liability coverage to one of its insureds for bodily injury claims by another insured who has been injured, but excludes UIM coverage for the injured insured for sums above the liability coverage limits, the exclusion is valid. Compensation that compensates an insured injured by another insured to the same extent as an insured injured by a motorist insured by a different insurer was held to satisfy the legislative intent and not to violate public policy.(fn7)
Under a statute enacted in 1992,(fn8) an auto insurance policy may contain a clause prohibiting the stacking of UM/UIM coverage limits set forth in a single policy covering multiple vehicles. A policy also may contain a clause prohibiting the stacking of UM/UIM coverage limits set forth in multiple policies that are all issued by a single insurer to the same insured or a resident relative on multiple vehicles.
However, a policy may not contain a clause prohibiting the stacking of UM/ UIM coverage limits set forth in a policy issued to a named insured and the limits set forth in a separate policy that was not issued to that insured but provides him or her with UM/UIM coverage (whether the policies are or are not issued by the same insurer). This supplants the case law holding auto policy stacking clauses to be valid.(fn9)
A motorcycle rider or passenger injured in a collision with an uninsured motorist's car may be excluded from uninsured motorist coverage.(fn10) This has been held not to violate public policy by reason of a statutory definition relating to uninsured motorist coverage that makes such coverages apply only to four-wheel motor vehicles.(fn11)
A policy provision excluding a named driver from coverage because of adverse claims experience or driving record also excludes uninsured motorist coverage for an injured passenger in a car driven by such a named driver. The court upheld this exclusion because of the statutory exclusion of named...
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