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Law When Policy Issued Governs Later Claim
Description Insured, injured in accident, invoked underinsured motorist coverage in her policy to cover damages. Ohio high court held that the law at the time her policy was made formed a binding contract that was not altered by later changes in insurance statutes.
Topic Insurance
Key Words Underinsured Motorist Coverage
C A S E   S U M M A R Y
Facts Ross was injured while riding in a car driven by Price. Price was negligent and her insurer paid Ross $100,000, the limit of liability coverage provided under Price's policy. Ross then sued her insurance company, under the underinsured motorist (UIM) clause, to cover more of her losses. Insurer refused to pay because the law at the time of the accident would not invoke UIM coverage; Ross sued.
Decision A claim for UIM coverage is governed by the law in effect on the date of the contract, not the date of the accident giving rise to the claim. The law in effect when the contract was created controls the rights and duties of the contracting parties. Later changes in insurance statutes cannot alter the binding terms of a preexisting agreement. Since the law at the time of the creation of Ross's policy held that UIM coverage is available when the insured suffers damages that exceed the limits of the tortfeasor's liability coverage, Ross prevails.
Citation Ross v. Farmers Insurance Group, 695 N.E.2d 732 (Sup. Ct., Ohio, 1998)

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