Philadelphia Indemnity Insurance v. Morris

STEPHENS, Justice,

dissenting.

I agree with the majority that KRS 342.690 does not preclude recovery of UIM benefits in this case, but I do not believe that the limitations clause in the UIM endorsement is unenforceable and violative of public policy. While the former version of KRS 304.39-320 required the set off of a tortfeasor’s liability limits against the insured’s UIM limits, the new statute neither requires nor prohibits such set offs. The statute authorizes optional, not mandatory, supplemental UIM coverage, and I see nothing in it that prohibits the parties from agreeing to reduce that supplemental coverage by the amount of workers’ compensation benefits. There is nothing inherently objectionable about offsets against the limits of an insurance policy. The language of the insurance contract between the parties was clear and unambiguous. Philadelphia Indemnity Insurance Company (Philadelphia) was entitled to a setoff against the workers’ award for sums paid under the policy. Unfortunately, because the amount Morris sought from Philadelphia was exceeded by the workers’ compensation benefits awarded to him, Morris would be unable to recover his noneconomic losses while Philadelphia would avoid all supplemental liability for his uncompensated damages. I believe, however, that the public policy concerns raised by this anomalous result are best addressed by the General Assembly, which alone has the power to proscribe such contractual set offs. Therefore, I would reverse the Court of Appeals.

COOPER and JOHNSTONE, JJ., join this dissenting opinion.