UIM is ‘constituent part’ of UM coverage

The Supreme Court of Virginia reversed a ruling by a trial court earlier this month, agreeing with the appellant insurance company that separate segments of insurance did not exist in the case for underinsured motorist coverage and uninsured motorist coverage.

The high court reached this conclusion by looking at Va. Code § 38.2-2206(A), which is Virginia’s statute governing uninsured motorist insurance coverage.

“Affording the words chosen by the General Assembly their plain and ordinary meanings, we conclude that [underinsured motorist] coverage is a constituent part of [uninsured motorist] coverage and does not represent a separate tranche of available coverage when [uninsured motorist] coverage has been exhausted,” Justice Wesley G. Russell Jr. wrote.

Russell authored the court’s opinion in GEICO Advantage Ins. Co., et al. v. Miles (VLW 022-6-053).

Background

In 2019, Liosha Miles was injured “in a single automobile accident caused by the negligence of two different drivers.”

The first driver was insured by Integon General Insurance Company with a liability limit of $25,000. The second driver, who failed to stop at the accident scene, was never identified and was treated as an uninsured motorist per Virginia law.

When the accident occurred, Miles was insured under two policies — a GEICO Advantage policy that covered her vehicle and a GEICO Choice policy maintained by her brother that she was a covered insured on. That policy contained uninsured and underinsured coverage with “bodily injury limits of $50,000 per person and $100,000 per occurrence.”

Per the opinion, GEICO conceded Miles’ injuries resulted in damages that would exceed available insurance coverage “no matter how that is calculated.”

The first driver’s Integon policy tendered policy limits of $25,000. Claiming that as a credit, the GEICO Advantage policy tendered $25,000 to each claim, totaling $50,000. GEICO Advantage asserted it exhausted the available coverage limits.

The GEICO Choice policy separately tendered $50,000 related to claims against the first driver and made no tender to claims against the second driver. As a result, GEICO Choice asserted that it, too, had exhausted the available coverage limits.

But Miles argued that neither GEICO policy exhausted coverage limits, and contended the policies provided a $50,000 limit for uninsured motorist coverage and a separate $50,000 limit for underinsured motorist coverage. As such, Miles claimed the policies owed her $75,000 more than tendered. She filed a complaint in Richmond Circuit Court, “seeking a declaration that each policy contained separate $50,000 limits for UM and UIM coverage” and that she was owed $75,000 in total.

GEICO countered that each policy provided one $50,000 limit for both UM and UIM claims. The insurer asserted that “UIM coverage is properly understood as a subset of UM coverage.”

The trial court granted Miles’ motion for summary judgment and denied GEICO’s cross-motion. It entered an order granting judgment in favor of Miles, which stated that each of the policies were “obligated to provide separate uninsured motorist (UM) and separate underinsured motor vehicle (UIM) coverages where a plaintiff is injured by the concurring negligence of one uninsured motorist and the operator of one underinsured motor vehicle.”

Reversed

GEICO appealed, alleging multiple assignments of error.

But Russell said the assignments “can be distilled to one question: did the circuit court err in concluding that Code § 38.2-2206 requires insurers to provide separate coverage limits to cover both UM and UIM claims arising from a single accident as opposed to there being a single limit with UIM coverage being a constituent part of a policy’s UM coverage limit?”

“Recognizing that there is a split in the circuit courts on this question, we granted GEICO’s petition to resolve the issue,” Russell wrote.

The judge looked to Va. Code § 38.2-2206(A), which says in part that an automobile liability insurance policy with an uninsured motor vehicle endorsement must “also obligate the insurer to make payment for bodily injury or property damage caused by the operation or use of an underinsured motor vehicle to the extent the vehicle is underinsured.”

“[W]e first note that the statutory language makes clear that there is but one endorsement, not two, required by Code § 38.2-2206(A),” Russell wrote.

The justice noted the policy requires that every automobile liability policy in Virginia “contain an endorsement” insuring against drivers of uninsured vehicles.

“In using the singular ‘an’ to modify endorsement, the General Assembly required that every automobile liability insurance policy contain a single endorsement that provides coverage for damages caused by ‘the owner or operator of an uninsured motor vehicle,’” Russell wrote, noting that the statute includes no separate language requiring motorists to have separate endorsements for UIM coverage.

“[T]he language chosen by the General Assembly makes plain that UIM coverage is a constituent part of UM coverage,” the justice said, again stating the specific word choice used in the statute — namely that the use of the phrase “the endorsement” after “an endorsement” — shows that the phrase references the UM endorsement previously referenced in the statute.

As such, Russell said the statute is clear in requiring one UM/UIM endorsement rather than two separate endorsements.

“The fact that the statute requires one endorsement for both UM and UIM incidents provides a sufficient basis to conclude that UIM coverage is a constituent part of the UM endorsement, and thus, is not a separate tranche of insurance,” the justice wrote.

Russell added that, while the conclusion stems from the specific word choice by the statute, the ruling is also consistent with prior cases heard by the Virginia Supreme Court, including Hackett v. Arlington County from 1994.

The justice also said the General Assembly modified the UM statute in 1982 to include UIM coverage, which was amended to correct an “anomaly” under the prior statute where persons injured by uninsured motorists could receive greater financial protection than if injured by insured motorists.

“Under the circuit court’s interpretation, Miles would be in a better position from an insurance coverage perspective because she was hit by one underinsured motorist and one uninsured motorist as opposed to two underinsured motorists. Such a result cannot be reconciled with our prior cases or the purpose of Code § 38.2-2206(A),” Russell wrote.

Having ruled the Richmond Circuit Court erred, the high court reversed the circuit court’s judgment and entered final judgment in favor of GEICO.

‘Crystal clear’

Norfolk attorney Alan B. Rashkind, who represented GEICO, told Virginia Lawyers Weekly the opinion makes “crystal clear” that UM and UIM limits are not separate from, nor independent of, each other.

“The decision in GEICO Advantage et al. v. Miles merely reaffirms what the Supreme Court has said or indicated over the years: that UIM coverage is a part of and included within UM coverage, not separate from it,” Rashkind said via email.

He added that the decision is consistent with prior rulings from the court on the issue.

Attorneys for the appellee did not respond to a request for comment by deadline.