Section 6.38 Set-Off Clauses

• Library: Insurance Practice 2015

There is wide disparity in the language used within the “set-off” section of the policy. Common set-off clauses, which are normally found within the “limits of liability” section of a policy, include the following:

Any amounts payable will be reduced by:

(1) A payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an accident with an underinsured motor vehicle. (emphasis added).

Am. Family Mut. Ins. Co. v. Turner, 824 S.W.2d 19, 20–21 (Mo. App. E.D. 1991).

Any amounts payable under Part 6 shall be reduced by all sums: (a) paid because of bodily injury by or on behalf of someone who may be liable.

Krombach v. Mayflower Ins. Co., Ltd., 827 S.W.2d 208, 211 (Mo. banc 1992).

However, the limit of liability shall be reduced by all sums paid because of the “bodily injury” by or on behalf of persons or organizations who may be legally responsible.

Rodriguez v. Gen. Accident Ins. Co. of Am., 808 S.W.2d 379, 382 (Mo. banc 1991).

If a policy contains no clear definition of “underinsured” and mixes and matches the uninsured and underinsured portions, any set-off language may be deemed ambiguous. The court may turn to the reasonable expectations of the insured. See Tegtmeyer v. Snellen, 791 S.W.2d 737 (Mo. App. W.D. 1990).

In contrast, however, Rodriguez, 808 S.W.2d 379, stands for the proposition that, in a clear and unambiguous policy, the courts will allow a set-off provision to stand. The Supreme Court of Missouri held that an unambiguous UIM policy set-off provision was enforceable. It concluded that the set-off and the UIM definitional...