Batten v. State Farm Mutual Automobile Ins. Co.

Any added term that causes the UM/UIM coverage under a policy to be less favorable to the insured than the model policy is “unenforceable.” Erickson v. Farmers Ins. Co., 331 Or 681, 685, 21 P3d 90 (2001).

Plaintiffs sought to recover the unsatisfied loss under the other applicable policies, but Defendant, State Farm Mutual Automobile Insurance Company (State Farm), refused to cover the excess loss, citing a term in the policies that allows State Farm “to limit its liability to the amount that it agreed to pay under the single policy with the highest … limit of liability.” Plaintiffs assigned error to that interpretation. Plaintiffs argued that Oregon law precludes State Farm from limiting its UM/UIM coverage in that way. State Farm argued that the term in its policies is enforceable. The Court stated that the legislature has set out in ORS 742.504 “a comprehensive model” of coverage, and the statute specifies that “[e]very policy” providing the mandated UM/UIM coverage must provide “coverage that in each instance is no less favorable in any respect to the insured or the beneficiary than if” those model policy terms “were set forth in the policy.” ORS 742.504(1). Any added term that causes the UM/UIM coverage under a policy to be less favorable to the insured than the model policy is “unenforceable.” Erickson v. Farmers Ins. Co., 331 Or 681, 685, 21 P3d 90 (2001). The Court found that the term at issue made defendant’s uninsured motorist coverage less favorable to its insureds than the model coverage that the legislature has required, therefore, the term is unenforceable.