TCA § 56-7-1205 — Minimum policy limits not increased

Nothing contained in this part shall be construed as requiring the forms of coverage provided pursuant to this part, whether alone or in combination with similar coverage afforded under other automobile liability policies, to afford limits in excess of those that would be afforded had the insured under the policies been involved in an accident with a motorist who was insured under a policy of liability insurance with the minimum limits described in § 55-12-107 , or the uninsured motorist liability limits of the insured's policy if the limits are higher than the limits described in § 55-12-107 . The forms of coverage may include terms, exclusions, limitations, conditions, and offsets that are designed to avoid duplication of insurance and other benefits. Acts 1967, ch. 371, § 5; 1974, ch. 697, § 2; T.C.A., § 56-1152. Code Commission Notes. Contrary to editorial statements in 600 S.W.2d 247 and 606 S.W.2d 290, this section has not been repealed. Textbooks. Tennessee Jurisprudence, 15 Tenn. Juris., Insurance, § 141. Law Reviews. Underinsured Motorist Coverage in Tennessee, 43 Tenn. L. Rev. 663. NOTES TO DECISIONS 1. Purpose of Statute. 2. Construction. 3. Payments From More Than One Policy. 4. Coverage Limited. 5. Avoidance of Duplication. 6. Multiple Tortfeasors. 7. Workers' Compensation Offset Provision. 8. Vehicles Not Listed in Policy. 9. Insolvent Insurer. 10. Credit. 1. Purpose of Statute. It was the basic purpose of the general assembly to enact an uninsured motorist statute to provide protection against the risk of inadequate compensation for injuries or death caused by the negligence of a financially irresponsible motorist. State Farm Mut. Auto. Ins. Co. v. Barnette, 485 S.W.2d 545, 1972 Tenn. LEXIS 380 (Tenn. 1972), overruled, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975), overruled in part, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975). This section is an express declaration of legislative intent to limit the recovery which may be had under the uninsured motorist statute and the language clearly reflects the legislative design that the insured be placed in as good a position but no better than he would occupy if he had been injured by an individual who had complied with the financial responsibility law. Shoffner v. State Farm Mut. Auto. Ins. Co., 494 S.W.2d 756, 1972 Tenn. LEXIS 308 (Tenn. 1972), overruled, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975), overruled in part, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975) (decision prior to 1974 amendment). By enactment of this section as a section of the uninsured motorist statutes, it was the legislative purpose to provide an insured motorist a right of recovery under the uninsured motorist provisions of his policy only up to the statutory required minimum established in § 56-7-1201 , and policy provisions operating to reduce such coverage where other coverage or benefits are available to the insured arising from accident causing the loss are valid if such provisions do not operate to deny payments to an insured of less than the statutory minimum. Mathis v. Stacy, 606 S.W.2d 290, 1980 Tenn. App. LEXIS 383 (Tenn. Ct. App. 1980). 2. Construction. T.C.A. § 56-7-1205 does not obviate the requirement of § 56-7-1201 that uninsured motorist coverage is included in every automobile insurance policy unless the uninsured motorist insurance is rejected by the insured in writing. Integrity Ins. Co. v. Dudney, 745 F. Supp. 1299, 1990 U.S. Dist. LEXIS 11168 (M.D. Tenn. 1990). 3. Payments From More Than One Policy. It is the legislative purpose to provide an insured motorist a right of recovery under the uninsured motorist provisions of his policy only up to the statutory required minimum, § 56-7-1201 , and provisions in such policies operating to reduce such coverage where other coverage or benefits are available to the insured arising from the accident are valid if such provisions do not limit payments to an insured of amounts less than the statutory minimum. Terry v. Aetna Casualty & Surety Co., 510 S.W.2d 509, 1974 Tenn. LEXIS 507 (Tenn. 1974), superseded by statute as stated in, Weir v. Glens Falls Ins. Co., — S.W.2d —, 1987 Tenn. App. LEXIS 2808 (Tenn. Ct. App. July 16, 1987), superseded by statute as stated in, Albin v. Memphis, — S.W.2d —, 1988 Tenn. App. LEXIS 537 (Tenn. Ct. App. Aug. 24, 1988), superseded by statute as stated in, English v. Pretti, — S.W.3d —, 2002 Tenn. App. LEXIS 752 (Tenn. Ct. App. Oct. 24, 2002). This section authorizes policy provisions limiting recovery of tort victim having uninsured motorist coverage to a maximum of $10,000 (or policy limits) from all insurance available to him, thus where plaintiff passenger recovered $10,000 from driver's insurance carrier, such a policy provision in plaintiff's father's policy effectively precluded plaintiff from collecting further amounts on the uninsured motorist clause in this second policy. State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975), overruling contrary pronouncements in State Farm Mut. Auto. Ins. Co. v. Barnette, 485 S.W.2d 545, 1972 Tenn. LEXIS 380 (Tenn. 1972), overruled, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975), overruled in part, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975) and Shoffner v. State Farm Mut. Auto. Ins. Co., 494 S.W.2d 756, 1972 Tenn. LEXIS 308 (Tenn. 1972), overruled, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975), overruled in part, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975). Because a reductions clause in an insurance contract was ambiguous, and resort to T.C.A. § 56-7-1201 , T.C.A. § 55-12-107(a) , and T.C.A. § 56-7-1205 , did not resolve the issue, and Tennessee law required that the contract be construed in favor of the insured, when calculating the benefits to be paid to each of two estates, an insurer was entitled to an offset only for the primary insurer's benefit payment to that estate, not the payments made to both estates. Harvey v. Tuan T. Tran, 420 F. Supp. 2d 831, 2006 U.S. Dist. LEXIS 16590 (M.D. Tenn. 2006). 4. Coverage Limited. The effect of this section was to permit an insurer to limit uninsured motorist coverage to the minimum required coverage. Keeble v. Allstate Ins. Co., 342 F. Supp. 963, 1971 U.S. Dist. LEXIS 10924 (E.D. Tenn. 1971). The maximum limits placed on recovery under this section depend entirely upon the amount available had the tortfeasor been insured. Shoffner v. State Farm Mut. Auto. Ins. Co., 494 S.W.2d 756, 1972 Tenn. LEXIS 308 (Tenn. 1972), overruled, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975), overruled in part, State Auto. Mut. Ins. Co. v. Cummings, 519 S.W.2d 773, 1975 Tenn. LEXIS 710 (Tenn. 1975) (decision prior to 1974 amendment). Court upheld policy provisions limiting uninsured motorist recovery so as to deny insurer's liability where vehicle had applicable to it at the time of the accident an adequate liability insurance policy with respect to person operating vehicle and responsible for its use, though owner guilty of negligent entrustment was uninsured. Mathis v. Stacy, 606 S.W.2d 290, 1980 Tenn. App. LEXIS 383 (Tenn. Ct. App. 1980). The uninsured motorist insurance statutes of this state provide less than broad coverage since the general assembly has permitted uninsured motorist policies to be written so as to “include such terms, exclusions, limitations, conditions, and offsets, which are designed to avoid duplication of insurance and other benefits.” Thompson v. Parker, 606 S.W.2d 538, 1980 Tenn. App. LEXIS 382 (Tenn. Ct. App. 1980). Limiting coverage to injuries received “while occupying a motor vehicle or, as a pedestrian” does not fall within the ambit of T.C.A. § 56-7-1205 . Dupree v. Doe, 772 S.W.2d 910, 1988 Tenn. App. LEXIS 551 (Tenn. Ct. App. 1988). “Regular use” exclusion in a police officer's personal uninsured motorist policy was properly applied where he was injured in a patrol car while on duty, his employer was not required to, nor did it, carry uninsured motorist coverage, and the “regular use” exclusion did not contravene public policy. Shepherd v. Fregozo, 175 S.W.3d 209, 2005 Tenn. App. LEXIS 344 (Tenn. Ct. App. 2005). 5. Avoidance of Duplication. Provisions in a family automobile liability policy excluding uninsured motorist coverage for bodily injury to an insured while occupying a motor vehicle not owned by named insured or any resident relative were valid, despite contentions that they were contrary to public policy and statute, where such provisions were approved by the commissioner and the provisions could have prevented duplication of coverage and benefits notwithstanding the fact that the insured had refused the uninsured motorist coverage in a liability policy for a motorcycle he was operating at the time of the accident. Hill v. Nationwide Mut. Ins. Co., 535 S.W.2d 327, 1976 Tenn. LEXIS 579 (Tenn. 1976), superseded by statute as stated in, Elam v. Protective Ins. Co., — S.W.2d —, 1987 Tenn. App. LEXIS 2806 (Tenn. Ct. App. July 16, 1987), superseded by statute as stated in, Weir v. Glens Falls Ins. Co., — S.W.2d —, 1987 Tenn. App. LEXIS 2808 (Tenn. Ct. App. July 16, 1987), superseded by statute as stated in, Dockins v. Moore, — S.W.2d —, 1987 Tenn. App. LEXIS 2885 (Tenn. Ct. App. Aug. 25, 1987). This section permits the insurer, by contract, to offset its liability to the insured by whatever amount of money from whatever source the insured may receive it, if the money from the outside source would be a duplication of the amount agreed to be paid by the insurer. Thompson v. Parker, 606 S.W.2d 538, 1980 Tenn. App. LEXIS 382 (Tenn. Ct. App. 1980). Plaintiffs were entitled only to $40,000 of under-insured motorist coverage, rather than to $160,000 which represents the total amount of under-insured motorist coverage for which their deceased was insured under four separate automobile liability policies at the date of his death, because stacking of coverages was not permitted. Jones v. Mulkey, 620 S.W.2d 498, 1981 Tenn. App. LEXIS 473 (Tenn. Ct. App. 1981). 6. Multiple Tortfeasors. The legal liability of more than one tortfeasor or the involvement of multiple vehicles in one tortious event or accident is immaterial as to the interpretation of exclusions, permitted by this section, which allow an insurer by contract to reduce its liability by any sums paid to its insured by other parties jointly or severally liable to the insured. Thompson v. Parker, 606 S.W.2d 538, 1980 Tenn. App. LEXIS 382 (Tenn. Ct. App. 1980). The legal liability of more than one person for a single tort was immaterial in applying the rule that the uninsured motorist statutes mandate a right of recovery only up to the statutory required minimum. Mathis v. Stacy, 606 S.W.2d 290, 1980 Tenn. App. LEXIS 383 (Tenn. Ct. App. 1980). Insured's uninsured motorist coverage had a limit of $50,000, and the insured had already collected in excess of that amount from her settlement with the dram shop and thus the insurer could reduce its liability by offsetting this payment, such that it had no liability; since the insured received a settlement from one defendant which met or exceeded the policy limits of her uninsured motorist coverage, the settlement amount could be used to offset the insurer's liability. Green v. Johnson, — S.W.3d —, 2007 Tenn. App. LEXIS 460 (Tenn. Ct. App. July 25, 2007), aff'd, 249 S.W.3d 313, 2008 Tenn. LEXIS 168 (Tenn. Mar. 13, 2008). 7. Workers' Compensation Offset Provision. Amendments to the uninsured motorist statutes prior to a November 1978 accident did not render invalid the workers' compensation offset provision in insurance policy. Hutchison v. Tennessee Farmers Mut. Ins. Co., 652 S.W.2d 904, 1983 Tenn. App. LEXIS 569 (Tenn. Ct. App. 1983). Uninsured motorist carrier was entitled to set off the full amount of workers' compensation benefits payable to the plaintiff, even though the plaintiff received such benefit in biweekly installments rather than in a lump sum. Soren v. Ezelle, 737 F. Supp. 49, 1990 U.S. Dist. LEXIS 6497 (M.D. Tenn. 1990). A workers' compensation insurance carrier was not entitled to an award against the proceeds of a settlement between a deceased workers' personal representative and the workers' uninsured motorist (UM) insurer since the UM insurer's liability was not a legal liability for the worker's death but, rather, was a liability in contract determined by the terms of the insurance agreement and, as subrogee of the worker, the workers' compensation carrier had no independent cause of action against the UM insurer. Hudson ex rel. Hudson v. Hudson Mun. Contractors, 898 S.W.2d 187, 1995 Tenn. LEXIS 188 (Tenn. 1995). Summary judgment was properly granted in favor of the insurer on the insured's uninsured motorist policy because the insured was receiving workers' compensation benefits, such that a setoff provision may be reduced by the amount that the insured had collected, or would collect. Sherlin v. Hall, 237 S.W.3d 647, 2007 Tenn. App. LEXIS 209 (Tenn. Ct. App. Apr. 10, 2007), appeal denied, — S.W.3d —, 2007 Tenn. LEXIS 846 (Tenn. Sept. 24, 2007). 8. Vehicles Not Listed in Policy. The uninsured motorist coverage of a family automobile policy did not extend to a collision involving an automobile owned and operated by plaintiff and not listed in the policy of insurance. Graves v. Tennessee Farmers Mut. Ins. Co., 671 S.W.2d 841, 1984 Tenn. App. LEXIS 2599 (Tenn. Ct. App. 1984), superseded by statute as stated in, Elam v. Protective Ins. Co., — S.W.2d —, 1987 Tenn. App. LEXIS 2806 (Tenn. Ct. App. July 16, 1987), superseded by statute as stated in, Dockins v. Moore, — S.W.2d —, 1987 Tenn. App. LEXIS 2885 (Tenn. Ct. App. Aug. 25, 1987). 9. Insolvent Insurer. Insurer was obligated for the entire judgment rendered in favor of the insureds, because the inability to collect from an insolvent insurance carrier constituted an original definition of uninsured motor vehicle under the uninsured motor vehicle statutes, when the definition of motor vehicle adopted in the 1982 statutory amendment, which was substantively identical to the current definition, combined the two categories of insolvency and underinsured, making collectibility from the defendant the primary consideration. Clark v. Shoaf, 302 S.W.3d 849, 2008 Tenn. App. LEXIS 798 (Tenn. Ct. App. Dec. 15, 2008), rehearing denied, — S.W.3d —, 2009 Tenn. App. LEXIS 902 (Tenn. Ct. App. Jan. 14, 2009). 10. Credit. Plaintiff was not entitled to recover under her uninsured motorist policy because plaintiff's insurer was entitled to a credit of $300,000 for money plaintiff received from her settlement with receivership. McHone v. State Farm Mut. Auto. Ins. Co., 785 F.3d 1212, 2015 U.S. App. LEXIS 7617 (8th Cir. May 8, 2015). Collateral References. Uninsured and underinsured motorist coverage: validity, construction, and effect of policy provision purporting to reduce coverage by amount paid or payable under workers' compensation law. 31 A.L.R.5th 116.