The Missouri Supreme Court in Jones v. Mid-Century Insurance Company, 209 WL 187211 (Mo. banc 2009) appears to have ruled that set off clauses in underinsured motorist policy provisions are now void as against public policy because the clauses that limit coverage are illusory. If these clauses are enforced, the insurer will never have to pay the total amount of the underinsured motorist coverage.
In the Jones case, the person who caused the injury to the Plaintiff had $50,000.00 worth of liability insurance and the Plaintiff had $100,000.00 of underinsured motorist coverage. The Plaintiff's insurance company claimed it only owed the Plaintiff $50,000.00, which was the difference between the $100,000.00 and the amount the Plaintiff recovered from the liable person's insurance. Almost all underinsured motorist coverage policies contain setoff provisions that to date have largely been enforced by appellate courts.
If the setoff provisions are enforced, the insurance company will never pay the full amount of the stated amount of coverage. As the court stated in Jones, if an insured for example suffered $225,000.00 in total damages, the underinsured motorist insurer would only be liable for $75,000.00 of their $100,000.00 worth of available coverage, if the person causing the injury had Missouri's mandated minimum coverage of $25,000.00.
Insurance companies typically advertise and sell the policies based on representations that the underinsured motorist coverage is to pay damages when the person who caused the injury does not have enough insurance to totally compensate an injured victim
Lower courts have traditionally enforced these setoff provisions by observing the insurance policy says what it says, and if the customer does not like it, the insurance buyer can to go to a different company. This may not be the case anymore.
