The application of the UM/UIM statute to commercial excess and umbrella polices was also recently at issue in
Frye v. Auto-Owners Ins. Co., 845 F.3d 782, 784 (7th Cir. 2017). In Frye, the insurer also issued a commercial
umbrella policy to the employer of the plaintiff, under which the plaintiff sought UIM coverage relating to injuries
resulting from a motor vehicle accident. The policy was written to provide UIM coverage, but the stated limits of
the UIM coverage were less than the UIM limits required under Indiana’s UM/UIM statute. The insured asserted
that the policy was required to provide the limits required under the statute, while the insurer asserted that because
the UM/UIM statute did not require it to provide UM/UIM coverage in its commercial umbrella policy, the limits
requirements in the statute were inapplicable.
The Seventh Circuit Court of Appeals held in Frye that, although the UM/UIM statute allowed the insurer to
abstain from providing UIM coverage in its policy, once it elected to provide such coverage, it was required
to provide coverage in limits at least in the amount required under the Indiana statute. 7 The Seventh Circuit
determined that the legislature did not intend the interpretation sought by the insurer, primarily on the basis
that in subsequent amendments to the UM/UIM statute relating to personal (as distinguished from commercial)
umbrella policies, the legislature specifically noted that when an insurer provides UM/UIM coverage, it may
do so “in limits determined by the insurer” and the insurer is “not required to make available the coverage
in limits” required by the UM/UIM statute. While it is difficult to envision a public policy basis for why the
legislature would have intended to require commercial excess and umbrella policies, but not similar personal
policies, to provide coverage in the amounts required under the UM/UIM statute, the Seventh Circuit was unable
to ignore the additional exceptions specifically included in the statute for personal policies when discerning the
legislature’s intent relating to commercial policies. Because the legislature had not included the same language in
the commercial coverage section, the court could not reach the same result as the section of the UM/UIM statute
covering personal policies.
Although the decisions reached in Ackerman and Frye appear to be contradictory in that Ackerman narrowed
application of UIM coverage under the UIM statute, while Frye broadly applied it, the rationales underlying the
decisions were very similar. Both courts looked to other provisions in the UM/UIM statute, where similar terms
or provisions were more specifically discussed, to interpret the legislature’s intent as to the provisions at issue in
the cases. Therefore, any insurer seeking guidance when a dispute arises as to its obligations under any particular
provision of the UM/UIM statute should first look to other portions and previous (or subsequent) iterations of the
statute. If the insurer is unable to find other language potentially supporting its interpretation of the legislature’s
intent, it will be difficult for the insurer to overcome the standard that the statute is to be read in a light most
favorable to the insured.
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1 Indiana Code §27-7-5-2.
2 United Nat. Ins. Co. v. DePrizio, 705 N.E.2d 455, 458-59 (Ind. 1999).
3
The amendment was enacted under Indiana Code §27-7-5-1.5, effective July 1, 2005. Indiana Code §27-7-5-1.5 was
repealed effective January 1, 2010, but the provisions relating to commercial umbrella and excess liability policies were
incorporated into Indiana Code §27-7-5-2.
4
Fireman’s Fund Ins. Co. v. Ackerman, 56 N.E.3d 1209, 1211 (Ind. Ct. App. 2016), transfer denied sub nom. Fireman’s
Fund Ins. Co. v. Ackerman, 62 N.E.3d 1201 (Ind. 2016).
5 Id. at 1214-1215.
6 Id.
7 Id. at 787.
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