Background
Matthew Walker and Matthew Washburn were injured in separate motorcycle accidents caused by underinsured drivers. Each had motorcycle insurance and a separate Progressive automobile policy covering other vehicles. After their injuries exceeded the UIM benefits available under their motorcycle policies, they sought additional UIM benefits under their Progressive auto policies.
Progressive denied both claims under a “regular use” exclusion for injuries sustained while occupying a vehicle owned by or furnished for the regular use of the insured, unless it was a “covered auto.” The policies defined an auto as a land motor vehicle with at least four wheels and preserved coverage for additional and replacement autos, but not substitute vehicles. The plaintiffs sued for breach of contract, arguing that the exclusion provided less favorable coverage than Oregon’s statutory model UM/UIM policy. On cross-motions for summary judgment, the trial court ruled for Progressive and dismissed the claims.
The Court’s Holding
The Oregon Court of Appeals held that the regular-use exclusion was directly implicated—not merely challenged through hypothetical facts—because Progressive relied on it to deny the plaintiffs’ claims. Comparing the policy’s coverage with Oregon’s statutory model policy, the court concluded that Progressive’s exclusion provided less favorable coverage and therefore was unenforceable.
The policy improperly limited preserved coverage to autos with at least four wheels, while the statutory definitions of “motor vehicle” and “vehicle” include motorcycles. It also preserved coverage for additional and replacement autos requiring ownership or permanency but omitted substitute vehicles covered by the model policy. The court held that the exclusion must be stricken and that, under the remaining policy terms, the plaintiffs were entitled to UIM coverage. It reversed the summary judgments for Progressive and remanded both cases.
Key Takeaways
- An Oregon UM/UIM policy term is unenforceable if it provides coverage less favorable than the statutory model policy.
- A policy definition limited to vehicles with at least four wheels cannot narrow statutory model-policy coverage that includes motorcycles.
- When an invalid exclusion is stricken and the remaining policy terms provide coverage, a court does not replace the exclusion with the model policy’s corresponding provision.
Why It Matters
The decision reinforces that Oregon courts compare the coverage supplied by an insurer’s policy with the statutory model policy, and that narrower definitions or omissions can invalidate an exclusion. Insurers cannot avoid that review by characterizing the disparity as hypothetical when the challenged exclusion was the actual basis for denying the claim.
The ruling may affect Oregon UIM claims involving motorcycles and substitute vehicles, particularly where an auto policy’s regular-use exclusion preserves coverage only for four-wheeled, owned, or permanent replacement vehicles.