The Missouri Supreme Court in Swadley v. Shelter Mutual Insurance Co., 513 S.W.3d 355 (Mo. 2017) held that UIM coverage did not apply when the underinsured motorist had liability coverage limits greater than the insured’s underinsured motorist limits. Previously, the Missouri Court of Appeals had explained the purpose of UIM coverage. “The purpose of underinsured motorist coverage is to provide insurance coverage for insureds who have been bodily injured by a negligent motorist whose own automobile liability insurance coverage is insufficient to pay for the injured person’s actual damages.” Wasson v. Shelter Mutual Insurance Co., 358 S.W. 3d 113, 117 (Mo. App. 2011).
In this case, Shelter Mutual issued an automobile policy with UIM policy limits of $100,000.00 per person. The policy defined an underinsured motor vehicle as a vehicle covered by a bond, statutory coverage, or policy, the limits of which were less than the limits of the UIM coverage shown in the declarations page of the policy. The insured’s vehicle was struck by a truck, causing the insured vehicle to overturn. Then, a motorcyclist struck the overturned vehicle, lost control, and struck and killed the insured. A wrongful death lawsuit was brought against the truck driver and the trucking company. The trucking company had liability limits of $1,000,000.00. The insureds settled with the trucking company for less than the $1,000,000.00 limits. Then the insureds made a claim under their UIM coverage. The UIM claim was denied because the truck was not an underinsured motor vehicle, inasmuch as the truck had $1,000,000.00 of coverage, which was greater than the $100,000.00 UIM limits.
On appeal the insureds argued that the policy was ambiguous because, on the one hand, the policy declarations promised $100,000.00 of UIM coverage while the definition of underinsured motor vehicle placed restrictions on when UIM coverage applied and set-off provisions in the policy ensured that the insurance company would never be obligated to pay up the $100,000.00 in UIM coverage. The trial court ruled the UIM policy was ambiguous. However, the Missouri Supreme Court reversed and remanded. The high court found that the policy definition did not render the policy ambiguous. The court found that the policy did not promise UIM coverage under every circumstance and nowhere in the policy did the insurer promise UIM coverage when the underinsured motorist had liability equal to or greater than the UIM limit in the policy.