“An Overview of Oklahoma Law Insurance”

by Jon Starr on Jan. 18, 2021

Business Insurance Accident & Injury  Car Accident 

Summary: This article gives a basic overview of automobile insurance law.

Overview of Oklahoma Automobile Insurance Law

By Jon Starr

This article is intended to give legal practitioners a basic overview of automobile insurance law so they may gain a general understanding as well as some starting points before they begin more detailed research on specific issues involving their cases.

When addressing any issue involving automobile insurance in Oklahoma, it is important to determine whether or not the issue is a “first-party” issue, a “third-party” issue or some combination of the two. “First-party” refers to coverage on an insurance policy that belongs to the person who is making a claim for benefits from that policy. These coverages include, but are not limited to, uninsured/underinsured motorist coverage (“UM/UIM”), medical payment coverage (“med pay”), collision coverage, comprehensive coverage and rental reimbursement coverage. “Third-party” claims are when the claimant makes a claim against someone or entity who has liability coverage to cover at least a portion of any legal liability they may have as a result of an accident either for bodily injury or property damage. This article will address some third-party liability coverage issues first.

Third-Party Liability

Minimum Limits

For years, the Oklahoma financial responsibility and compulsory insurance laws required liability limits of $10,000/$20,000/$10,000. This meant that there was $10,000 per person for personal injury claim maximum limits, $20,000 aggregate for all personal injury claims per accident and $10,000 maximum for property damage. Any policy written or renewed after April 2005, however, is required to provide minimum limits of $25,000 per person, $50,000 per accident and $25,000 for property damage.1

Discovery of Limits

Once litigation has commenced, the insurance liability limits of the opposing parties are discoverable.2 However, there is no requirement in Oklahoma that an insurance company or its insureds disclose liability limits prior to litigation being filed. This sometimes complicates handling of uninsured/underinsured motorist claims by UM/UIM carriers because, in potential underinsured motorist situations, the UM/UIM carrier needs to know the underlying liability limits to determine whether or not the claim would trigger UM/UIM benefits. This issue will be addressed in more detail later in this article.

The Oklahoma Compulsory Liability Insurance Act3 provides that:

On or after January 1, 1983, every owner of a motor vehicle registered in this state . . . shall, at all times, maintain in force . . . security for the payment of loss resulting from the liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation, or use of the vehicle . . .

The phrase “arising out of the operation, ownership, maintenance, or use” or some similar language has been interpreted fairly broadly by both Oklahoma state courts and federal courts. In Earl W. Baker & Co. v. Lagaly,4 the court found that a driver opening the door of a bus to allow a child to exit and then cross traffic where she was injured would fall under the “arising out of” language. In Penley v. Gulf Ins. Co.,5 a truck driver negligently pumping gasoline from a tanker into a diesel motor grader was held to be “incident to and out of the use of the truck.” In Oklahoma Farm Bureau Mut. Ins. Co. v. Mouse,6 the court held that a claimant who had been instructed to climb up on a combine, which was on a truck, to dislodge the breather pipe that had been stuck under a bridge and who subsequently fell and injured himself was “the result of the use of the truck.”


Because of the financial responsibility act and compulsory law in Oklahoma, the courts have routinely held that attempts to exclude liability coverage from otherwise innocent victims are void as a matter of public policy up to the minimum liability limits required by statute. However, these exclusions are valid and enforceable above the minimum limits because once the state-imposed minimum limits have been satisfied, public policy favors the issue as one of basic contract between the two parties.

The following Oklahoma cases have dealt with the exclusions in the face of the minimum liability limits and found those exclusions invalid. In Young v. Mid Continent Cas. Co.,7 the court held an exclusory clause, which excluded liability coverage for the operation of the insured vehicle if operated by a person under the age of 25, was invalid up to the minimum limits. In Equity Mutual Ins. Co. v. Spring Valley Wholesale Nursery Inc.,8 the court held an exclusion that sought to preclude liability coverage on a commercial vehicle outside a 200 mile radius of the company location was invalid up to the minimum limits. In Nation v. State Farm Ins. Co.,9 the court invalidated an exclusion that precluded residents of the named insured’s household from recovering under the liability coverage in the policy. In Harkrider v. Posey,10 the court held that a misrepresentation on the insured’s application that there were no residents of the household 14 years of age or older and would not invalidate the coverage under the liability portion of the policy up to the statutory minimum limits. In Hartline v. Hartline,11 the court held that another “named insured” on the policy living in the household would not be excluded from liability coverage up to the minimum limits where there was no UM/UIM coverage available. In O’Neill v. Long,12 the court held that once the omnibus clause in the policy was triggered by permissive use, even if it was restricted to not allowing anyone else to drive, the subsequent granting of permission by the original permissive user to someone else outside those restrictions would not preclude an innocent victim from recovering the liability limits up to the minimum statutory rate. In Tapp v. Perciful,13 the court held that the “automobile business exclusion” that precluded coverage for a vehicle that was being “repaired, serviced, or used by any person employed or engaged in any way in a car business” was invalid up to the minimum limits.

While there are exclusions contained in every policy that may ultimately be held valid, to this point the “specifically named driver” exclusion is the only exclusion which has withstood a challenge before the Oklahoma Supreme Court. In Pierce v. Oklahoma Property & Cas. Ins. Co.,14 the court upheld an exclusion of a specifically named driver. The court evaluated conflicting public policies and upheld this exclusion that allows members of a household to obtain coverage by excluding other members of the household who have poor driving records. The court reasoned that it would be bad public policy to preclude all drivers in a household from obtaining liability coverage due to the bad driving records of a single member of the household. The Oklahoma Supreme Court has further narrowed the Pierce holding, in Mulford v. Neal, 2011 Ok 20, by stating the named driver exclusion is on valid if the exclusion is due to a poor driving record.

Intentional Act

A panel of the Oklahoma Civil Court of Appeals recently found no liability coverage for an admitted intentional act. In Equity Insurance Co. v. Garrett,16 the court found that the driver’s admission that she intentionally drove her vehicle into another person – although she claimed she did not intend to injure – was sufficient to preclude liability coverage under a policy which covered injury for automobile accidents but excluded coverage for intentionally caused injuries.

Duty To Defend and Duty to Indemnify

An insurance company owes two duties within the liability portion of any policy. One is a duty to defend, and one is a duty to indemnify. In Conner v. Trans America Ins. Co.,17 the court held that sometimes a duty to defend will arise even though a duty to indemnify may not be triggered. Generally, a duty to defend is based upon allegations in the pleading by the adversary to the insured.18 However, the 10th Circuit Court of Appeals held that even if the allegations in the pleadings do not trigger coverage, actual facts known to the insurance company may be sufficient to still trigger the duty to defend.19

First-Party Coverages

Uninsured/Underinsured Motorist Coverage

In Oklahoma, uninsured/underinsured motorist coverage tends to be the most prominent in case law concerning first-party automobile coverage. UM/UIM coverage is applicable when the insured is “legally entitled to recover” from an “owner or operator of an uninsured/underinsured motor vehicle.”20 UM/UIM coverage in Oklahoma applies to situations when the adverse tortfeasors are totally uninsured, as well as situations when they merely carry insufficient liability limits, thus making them underinsured. Typically, UM/UIM coverage comes into play when there is no liability insurance for the tortfeasor, such as “hit and run” situations, insolvent liability carriers, or insufficient liability limits.

In “hit and run” situations, physical contact is “not required.”21 UM/UIM coverage can be triggered in a “hit and run” situation even when the owner of the vehicle has been identified, but the driver of the vehicle at the time of the accident remains unknown.22

In Oklahoma, the UM/UIM carrier is required to conduct an independent investigation and evaluation, and it may not rely upon the tortfeasor carrier’s investigation and evaluation.23 Once the UM/UIM carrier’s evaluation of the “most likely worth” of the claim exceeds the underlying tortfeasor’s limits, the UM/UIM carrier must pay from dollar one of the value of the claim up to their policy limits and seek reimbursement from the tortfeasor’s carrier under its rights of subrogation.24

Stacking of UM/UIM limits is allowed by an insured if separate premiums are paid for UM/UIM coverage on multiple vehicles within a household.25 There is no such thing as “excess” UM/UIM in Oklahoma; all UM/UIM is primary.26 If an umbrella liability policy requires some amount of UM/UIM coverage in the underlying liability policy, the umbrella policy limits may not count when examining coverage to determine whether the tortfeasor is underinsured.27

The statute of limitations for UM/UIM coverage is five years – the same for any written contract.28 Allowing the two-year statute of limitations to run against the tortfeasor does not prohibit collection of UM/UIM funds if UM/UIM coverage would still have been triggered.29 However, allowing the two-year statute of limitations to run against the tortfeasor does not change a potential underinsured case into an uninsured case.30 The UM/UIM carrier’s right to pursue subrogation against the tortfeasor is still subject to the two-year statute of limitations applicable to all negligence cases despite the fact that there is a five-year statute of limitations for claimants to pursue UM/UIM benefits.31

Once a tortfeasor’s liability policy limits are tendered, the insured may exercise a statutory remedy requiring the UM/UIM carrier to substitute payment of the tortfeasor’s limits or waive subrogation rights within 60 days. The statute requires sending a certified letter advising the UM/UIM carrier of the tender, providing a medical authorization and providing an employment authorization if wages or income are at issue.32 Failure to follow the prescribed statutory procedure and providing the required authorization will prevent the 60 days from beginning to run on such a request.

Hospital liens are not enforceable against UM/UIM benefits in Oklahoma.33 Doctor liens, however, are enforceable against UM/UIM benefits in Oklahoma.34 There is no right of setoff for medical payment coverage payments under Oklahoma UM/UIM.35 There is no right of setoff for worker’s compensation payments against UM/UIM coverage in Oklahoma.36

The Oklahoma Supreme Court has recognized that a UM/UIM carrier can be bound by the outcome of litigated matters in at least three scenarios. In Keel v. MFA Ins. Co.,37 the court held that the UM/UIM carrier is bound 1) by a direct action brought against the UM/UIM carrier without suing the tortfeasor; 2) by an action brought against the tortfeasor and the UM/UIM carrier in the same action; and 3) by litigation against the tortfeasor in which the UM/UIM carrier is put on notice of the litigation so that the UM/UIM carrier may, under certain circumstances, intervene in the action and participate in discovery and/or trial.38 The UM/UIM carrier, however, would not be bound by litigation filed against the tortfeasor if no notification is given to the UM/UIM carrier.

Under Oklahoma Statutes, insurance companies are required to offer UM/UIM coverage in an amount equal to the minimum liability limits on the vehicle.39 If the insured elects not to purchase UM/UIM coverage or to purchase UM/UIM coverage with lower limits than the liability limits, a written waiver must be signed by one of the named insureds.40

Medical Payment Coverage

Oklahoma insurance companies also typically offer medical payments coverage commonly referred to as “med pay,” rather than personal injury protection coverage, which is sometimes sold in other states. Medical payment coverage covers reasonable and necessary medical expenses up to the limits of the coverage regardless of who was at fault in the accident. The insurance company does not have a right of subrogation for medical payment coverage against its named insureds or members of their household, but may subrogate against liability claims of guest passengers in the car who are not named insureds or a member of the named insureds household.41 According to an Oklahoma ethics opinion, attorneys handling matters on a contingent fee probably should not take a contingent fee out of a medical payment benefit paid to the insured if the attorney did no more than collecting and mailing in the bills to the insurance company.42

Physical Damage Coverages

The terms of an insurance contract generally govern comprehensive and collision coverage for the physical damage to a vehicle. Therefore, one should not confuse the law applicable only to third-party liability property damage claims (such as that allowing for depreciation43 or allowing loss of use damage on certain commercial total losses but not personal automobile total losses44) when handling first-party property damage claims. The fair market value for total losses under first-party coverage can be determined by National Automobile Dealer’s Associations Official Used Car Guide, the cost of a comparable motor vehicle in the local market when a comparable vehicle is available, or if a comparable vehicle is not available in the local market, quotations obtained from two or more qualified dealers located in the local market. Any deviation from one of these methods in determining the fair market value under a first-party total loss must be supported by documentation giving the particulars of the condition of the vehicle.45


When faced with an automobile insurance issue, it is always important to determine first whether you are dealing with a third-party liability claim or first-party claim. Once that determination is made, the information in this article should provide an attorney with a better handle on some of the basic automobile insurance law in Oklahoma. Two excellent resources for Oklahoma automobile insurance law are Brad Smith’s treatise “Oklahoma Automobile Insurance Law and Practice,”46 or Rex Travis’ written materials from CLE presentations he has given on UM/UIM law.47

1. 47 O.S. ‘ 7-324.
2. 12 O.S. ‘ 3226(B)(1).
3. 47 O.S. ‘ 7-600 et seq. Section 7-601(B).
4. 144 F.2d 344 (10th Cir. 1944)
5. 1996 OK 84, 414 P.2d 305 (Okla. 1966)
6. 1953 OK 212, 268 P.2d 886 (Okla. 1954)
7. 1987 OK 88, 743 P.2d 1084
8. 1987 OK 212, 747 P.2d 947
9. 1994 OK 54, 880 P.2d 887
10. 2000 OK 94, 24 P.3d 821
11. 2001 OK 15, 39 P.3d 765
12. 2002 OK 63, 54 P.3d 109
13. 2005 OK 49, 120 P.3d 480
14. 1995 OK 78, 901 P.2d 819
15. McElmurry v. Garbow, 2005 OK CIV APP 38, 116 P.3d 198
16. 2008 OK CIV APP 23
17. 1972 OK 64, 496 P.2d 770
18. Maryland Cas. Co. v. Willsey, 1963 OK 4, 380 P.2d 254
19. American Motor Ins. Co. v. Southwestern Grayhound L., 283 F.2d 648 (10th Cir. 1960)
20. 36 O.S. ‘ 3636(B)
21. Biggs v. State Farm Auto. Ins. Co., 1977 OK 135, 596 P.2d 430
22. Brown v. United States Auto. Ass’n, 1984 OK 55, 684 P.2d 1195
23. Buzzard v. Farmers Ins. Co., 1991 OK 127, 824 P.2d 1105
24. Burch v. Allstate Ins. Co., 1998 OK 129, 977 P.2d 1057
25. Keel v. MFA Ins. Co., 1976 OK 86, 553 P.2d 153
26. Burch v. Allstate Ins. Co., 1998 OK 129, 977 P.2d 1057
27. Geico General Ins. Co. v. Northwestern Pacific Indemnity Co., 205 OK 40, 115 P.3d 856
28. 12 O.S. ‘ 95(A)(1)
29. Burch v. Allstate Ins. Co., 1998 OK 129, 977 P.2d 1057
30. Burch v. Allstate Ins. Co., 1998 OK 129, 977 P.2d 1057
31. Employers Mut. v. James Mosby, 1997 OK 93, 943 P.2d 593
32. 36 O.S. ‘ 3636
33. Kratz v. Kratz, 1995 OK 63, 905 P.2d 753
34. Broadway Clinic v. Liberty Mutual Insurance Co., 2006 OK 29, 139 P.3d 873
35. Aetna Cas. and Sur. Co. v. State Bd. for Property and Cas. Rates, 1981 OK 153, 637 P.2d 1251
36. Chambers v. Walker, 1982 OK 128, 653 P.2d 931
37. 1976 OK 86, 593 P.2d 153
38. Brown v. Patel, 2007 OK 16, 157 P.3d 117
39. 36 O.S. ‘ 3636 (F)
40. 36 O.S. ‘ 3636(G)(H) & (I)
41. 36 O.S. ‘ 6092
42. OBA Ethic Opinion No. 306
43. Brennen v. Aston Jr., 2003 OK 91, 84 P.3d 99
44. DTS Tank Service, Inc. v. Vanderveen, 1984 OK 49, 683 P.2d 1345
45. 36 O.S. ‘ 1250.8
46. Smith, Oklahoma Automobile Insurance Law and Practice, (Redbud Publishing Co., Inc. 1996)
47. www.travislawoffice.com/cleindex.html

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