Section 6.37 Other Insurance, Excess Insurance Clauses

• Library: Insurance Practice 2015

Several cases have held that other insurance and excess clauses are ambiguous and, as a consequence, have construed them against the insurer. In Zemelman v. Equity Mutual Insurance Co., 935 S.W.2d 673 (Mo. App. W.D. 1996), the plaintiff’s policy, which provided UIM coverage, had an “excess” or “other insurance” clause that provided that UIM coverage would be excess over all other collectable insurance at the time of the accident. The insureds had collected the limits of the tortfeasor’s policy and were attempting to collect their UIM coverage. The insurance company argued that the excess/other insurance clause provided an exclusion and, as a consequence, that it did not owe anything on the UIM policy. The court held that these clauses conflicted with the coverage clause, which defined an underinsured vehicle as one with less coverage than the underinsured limits of the policy and provided a set-off for all sums paid by the tortfeasor. Because of this ambiguity, the insured was entitled to recover. In Zemelman the Western District strongly urged the legislature to clearly define UIM coverage and discussed and criticized the often-illusory coverage provided in UIM policies.

On the heels of Zemelman, 935 S.W.2d 673, the Southern District handed down Jackson v. Safeco Insurance Co. of America, 949 S.W.2d 130 (Mo. App. S.D. 1997), which also held that the “other insurance” clause created an ambiguity in the “underinsured” coverage and, therefore, UIM coverage was available to the insured. In Jackson the insured’s daughter was killed when the automobile in which she was riding as a passenger left the roadway and overturned. That vehicle had an...