The Missouri Supreme Court it appears to have ruled that set off clauses in underinsured motorist policy provisions are now void as against public policy because the clauses that limit coverage are illusory. If these clauses are enforced, the insurer will never have to pay the total amount of the underinsured motorist coverage.

In the Jones case, the person who caused the injury to the Plaintiff had $50,000.00 worth of liability insurance and the Plaintiff had $100,000.00 of underinsured motorist coverage. The Plaintiff’s insurance company claimed it only owed the Plaintiff $50,000.00, which was the difference between the $100,000.00 and the amount the Plaintiff recovered from the liable person’s insurance. Almost all underinsured motorist coverage policies contain setoff provisions that to date have largely been enforced by appellate courts. In Jones the court held the issue was whether the language was ambiguous. Mid-Century wanted to offset the amounts paid under language which the court found at best to be in conflict with other sections of the policy at worst misleading.

The Court held in favor of the insured and against the insurer and remanded back to the trial court. At its core Jones stands for the strong public policy of interpreting conflicting provisions in favor of the insured. Unfortunately, insurance companies will go back to the drawing board, and likely write a new provision that next time will be enforced. In our opinion when an insurance company sells underinsured motorist coverage the full amount of the limits should be available over and above the coverage of the underinsured tortfeasor. Allowing offset clauses or similar provisions is inherently misleading and can lead to policy limits being sold to the public that may never in fact be fully paid. We will have to wait and see if Jones expresses a public policy or is limited to its facts.

Gump & Faiella, handles injury and insurance cases throughout Missouri. We have handled cases in St. Louis City, Kansas City, Columbia, Joplin as well as many rural counties. If you have suffered an injury or are having problems with an insurance company after an injury give us a call at 1-800-264-3455.

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