Watch the full video at https://rumble.com/v2hknb6-exclusion-for-vehicles-with-less-than-four-wheels-invalid-in-oregon.html and at https://youtu.be/WTZBOKaoIHE
Progressive Classic Insurance Company challenged the district court’s entry of summary judgment in favor of the plaintiff. The only issue before the Court of Appeal was whether the insurer was required by law to provide coverage for “newly acquired vehicles,” such as the plaintiff’s motorcycle, despite an insurance term that excluded transportation devices with less than four wheels. The district court granted the plaintiff’s motion and rejected the defendant’s motion.
IN Steven Cantu v. Progressive Classic Insurance Company, 325 Or.App. 184, A175784, Court of Appeals of Oregon (Apr. 5, 2023), the court interpreted Oregon’s UM/UIM statute.
The plaintiff was insured by the defendant for three cars. The current policy did not list any motorcycles on the declaration page. Approximately eight days after purchasing a motorcycle, the plaintiff was seriously injured when another driver negligently made a left turn in front of the plaintiff.
As a result of the injuries, the plaintiff sought damages that exceeded the other driver’s liability limits. The defendant denied underinsured motorist bodily injury benefits based on specific terms of the policy that excluded vehicles with less than four wheels.
The district court granted summary judgment to the plaintiff after concluding that the relevant definitions in the policy impermissibly provided underinsured motorist benefits less favorable to the insured than the terms of ORS 742.504 required.
A motorcycle, in a common understanding of the term, is a “device” “on or by which any person” “may be transported *** on a public road” and not “moved by human power” or “used exclusively on stationary rails or track.” A motorcycle is therefore a vehicle within the definition given by the legislature.
Defendant argued that the trial court erred by construing the statute to require the newly acquired vehicle provision to cover the motorcycle when the policy itself did not cover any motorcycles.
There is no evidence to suggest that the Legislature intended the word “vehicle” to have a different meaning when defining “insured vehicle” than it did when defining “hit vehicle,” “phantom vehicle,” “stolen vehicle,” or “uninsured vehicle. “
The Court of Appeal concluded that it was clear that the Legislature intended the term “vehicle” to bear the definition provided by the Legislature in paragraph (m) and that the district court did not err in concluding that the definition in paragraph (m) of vehicle was the applicable definition of that word and it included motorcycles.
The court concluded that the motorcycle did not have “at least four wheels” and was therefore excluded as a “covered automobile” under the terms of the policy. A UM policy provides “less favorable” terms to an insured, not by a direct comparison of the challenged provision with a single statutory provision, rather the insurances provided in the policy versus those required by law.
Thus, the court concluded that, by limiting the definition of “auto” in the policy to units with “at least four wheels,” the defendant impermissibly provided less beneficial coverage to the plaintiff than required by law. The trial court did not err in concluding, or in granting summary judgment to plaintiff, on this basis.
Legislators have an amazing ability to deprive an insurer and an insured of the opportunity to accept the terms of the insurance contract. Here, the plaintiff and his insurer agreed not to insure motorcycles. The plaintiff knew that when he bought his motorcycle. He led the court to provide coverage other than that agreed to in the policy by interpreting the UM/UIM statute to make a motorcycle an automobile as defined in the statute because Progressive provided policy wording—approved by the Department of Insurance—that provided coverage for operation of the motorcycle. Of course, if the accident was the plaintiff’s fault, he would not have had liability insurance.
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Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and firstname.lastname@example.org
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