# Batten v. State Farm Mutual Automobile Ins. Co.

> Oregon Supreme Court · September 17, 2021 · 368 Or. 538

URL: https://www.frixlaw.com/law-library/cases/10627447

## Case

- **Court:** Oregon Supreme Court
- **Decided:** September 17, 2021
- **Citations:** 368 Or. 538; 495 P.3d 1222
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Flynn
- **Cited by:** 13 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10627447

## How later opinions describe it (automated extraction)

- concluding that when a cyclist, a passenger in a rented car, and a pedestrian suf- fered losses that were within the scope of UM/UIM cov- erage—and each plaintiff had multiple applicable policies with UM/UIM coverage—the insurer was required to pay the plaintiffs under all of …
- explaining how the “2015 legislature changed the role of UM/UIM coverage” to address the gap between the insured’s unsatisfied damages and his or her liability limits, rather than those liability limits and the lower limits of the tortfeasor’s own insurance policy
- concluding that the insurer must pay UM/UIM benefits under all applicable policies
- describing “stacking” as concerning the limitations that other coverage policies might impose on an insured’s UM/UIM policy

## Opinion text

538

Argued and submitted January 28, certified question answered
September 17, 2021

Travis BATTEN,
Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
United States District Court for the District of Oregon
319CV01200MC
ESTATE OF JOHN WESLEY COUNTS,
Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
United States District Court for the District of Oregon
119CV01299CL
Cesar RIVERA,
Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
United States District Court for the District of Oregon
319CV01325SI
Lori CHISOLM,
Plaintiff,
v.
STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY,
Defendant.
United States District Court for the District of Oregon
319CV2027IM
(SC S067887)
Cite as 368 Or 538 (2021) 539

495 P3d 1222

In each of four consolidated cases, State Farm Mutual Automobile Insurance
Company (State Farm) had issued multiple policies of uninsured/underinsured
motorist (UM/UIM) coverage that applied to the plaintiff’s losses. But in each
case, State Farm had refused to pay more than the amount that it would have
paid under the single policy with the highest limit of liability, citing a policy term
that limited coverage in that way when an insured’s losses were covered under
multiple State Farm policies. The parties disputed whether State Farm’s “other
coverage” term violated the statutory requirement that “[e]very policy” providing
UM/UIM coverage in Oregon must provide “coverage that in each instance is no
less favorable in any respect to the insured or the beneficiary than if” the model
policy terms in ORS 742.504 “were set forth in the policy.” The court accepted a
certified question from the United State District Court for the District of Oregon
to resolve that dispute. Held: The “other coverage” term in State Farm’s policies
is unenforceable because it makes the UM/UIM coverage less favorable to State
Farm’s insureds than the coverage that would have been available under the
model coverage terms that the legislature has specified in ORS 742.504.
The certified question is answered.

En Banc
On certified question from the United State District
Court for the District of Oregon; certified order dated May 27,
2020; certification accepted June 2, 2020.
Travis Eiva, Eiva Law, Eugene, and Michael Brian,
Brian Law Firm, LLC, Medford, argued the cause and filed
the briefs for plaintiffs.
Ralph Spooner, Spooner & Much, PC, Salem, argued the
cause and filed the briefs for defendant. Also on the brief
was David E. Smith, Salem.
Lisa T. Hunt, Law Office of Lisa T. Hunt, LLC, Lake
Oswego, filed the brief for amicus curiae Oregon Trial
Lawyers Association.
FLYNN, J.
The certified question is answered.
540 Batten v. State Farm Mutual Automobile Ins. Co.

FLYNN, J.
These consolidated cases reach us on a certified
question from the United States District Court for the
District of Oregon. We are asked to determine whether
Oregon law precludes an insurer from limiting its liability
for uninsured/underinsured motorist (UM/UIM) benefits on
the basis that another policy also covers the insured’s losses.
Each plaintiff suffered injuries caused by an uninsured or
underinsured motorist, and each plaintiff incurred result-
ing damages that qualify as covered losses under multiple
motor vehicle insurance policies issued by defendant State
Farm Mutual Automobile Insurance Company (State Farm).
Each plaintiff has alleged a loss that exceeds the declared
liability limits of any single applicable policy and seeks to
recover the excess under additional applicable policies, up
to the combined total of the limits of liability. In each case,
however, State Farm has refused to cover the excess loss,
citing a term in the policies that allows State Farm to limit
its liability to the amount that it agreed to pay under the
single policy with the highest applicable limit of liability.
We conclude that that term makes State Farm’s uninsured
motorist coverage less favorable to its insureds than the
model coverage that the legislature has required and, thus,
is unenforceable.
FACTS
The pertinent facts are undisputed for purposes
of the legal question before us. Each plaintiff was insured
under multiple State Farm motor vehicle insurance poli-
cies that—as required by Oregon law—included UM/UIM
coverage.1 Each plaintiff suffered losses that are within the
scope of that UM/UIM coverage: Batten was a passenger in
a rented car when he was severely injured in a head-on col-
lision with an underinsured motorist; Counts was riding his

1
The coverage details have no bearing on our legal analysis, but we set them
out to provide factual context for the disputes. Batten was covered under three
State Farm policies, each with a “declarations page” specifying that State Farm’s
limits of liability were $250,000 per person. Counts was covered under two State
Farm policies, each with a “declarations page” specifying that State Farm’s lim-
its of liability were $250,000 per person. And Chisolm and Rivera were covered
under three State Farm policies apiece, each with a “declarations page” specify-
ing that State Farm’s limits of liability were $100,000 per person.
Cite as 368 Or 538 (2021) 541

bicycle when he was injured and later died after a collision
with an underinsured motorist; Chisholm was a pedestrian
when she was struck and severely injured by an under-
insured motorist; and Rivera was a pedestrian when he was
struck and severely injured by an uninsured motorist.2
Each plaintiff has alleged that the collision caused
the insured to suffer covered losses in an amount that
greatly exceeds the maximum payment available under
any single applicable policy, and each plaintiff sought pay-
ment for the additional covered losses under the additional
applicable State Farm policies.3 But each applicable State
Farm policy contains a term that limits State Farm’s lia-
bility for its insured’s UM/UIM losses, in the event that the
losses are covered under “Other Uninsured Motor Vehicle
Coverage,” to the amount that State Farm would have paid
if the insured’s losses were covered only under the single pol-
icy with the highest liability limit.4 Citing that term of the
policies, State Farm paid each plaintiff an amount equal to
the limit of one applicable policy—$250,000 each to Batten
and Counts, $100,000 each to Chisolm and Rivera—and has
refused to pay more.
The plaintiffs filed separate actions contending that
Oregon law precludes State Farm from limiting its UM/
UIM coverage in that way and seeking to recover the unsat-
isfied loss under the other applicable policies. State Farm
removed all four actions to the United States District Court

2
UM/UIM coverage is “coverage for bodily injury or death if the amount of
liability insurance recovered is less than the sums that the insured or the heirs
or legal representative of the insured is legally entitled to recover as damages for
bodily injury or death that is caused by accident and that arises out of owning,
maintaining or using an uninsured vehicle.” ORS 742.502(5).
3
Batten’s complaint alleges damages of almost $5 million, Counts’s com-
plaint alleges damages of more than $500,000, Chisolm’s complaint alleges dam-
ages of more than $3 million, and Rivera’s complaint alleges damages of more
than $600,000.
4
In the parties’ briefing, State Farm refers to the term as an “anti-stacking”
provision, and plaintiffs refer to it as a “negation provision.” Although both
labels suggest that the challenged term serves to limit the payments to which
the insured would otherwise be entitled under the applicable UM/UIM policies,
neither label quite captures that concept. We refer to the term, instead, as an
“other coverage” limitation or, simply, an “other coverage” term because it limits
the payments that State Farm will make under one of its UM/UIM policies based
on the existence of “other coverage” that applies to the insured’s loss.
542 Batten v. State Farm Mutual Automobile Ins. Co.

for the District of Oregon and filed counterclaims seeking
a declaration that the “other coverage” term in its policies
is valid and enforceable. The parties in each case then filed
competing motions for summary judgment asking the court
to resolve the legal question presented by State Farm’s
counterclaim, and, before those motions were resolved, the
district court certified the legal question to this court. We
accepted the certified question and consolidated the cases
for briefing and argument.
DISCUSSION
In Oregon, insurance coverage for loss caused by an
uninsured or underinsured motor vehicle is almost entirely
a creature of statute. The legislature has required that
“[e]very motor vehicle liability policy” must provide “unin-
sured motorist coverage,” which includes “underinsurance
coverage.” ORS 742.502(1), (3). In general, UM/UIM cover-
age is insurance against the loss that arises when an insured
suffers “bodily injury or death” related to a motor vehicle
accident for which another person is at fault and the at-fault
person either has no motor vehicle liability insurance or
insufficient liability insurance to pay the damages that the
injured person or heirs of the injured person would have
been “legally entitled to recover” in a civil action against the
at-fault person. ORS 742.502(5); ORS 742.504(2). The legis-
lature has set out in ORS 742.504 “a comprehensive model”
policy of UM/UIM coverage. Vega v. Farmers Ins. Co., 323
Or 291, 302, 918 P2d 95 (1996). The statute specifies that
“[e]very policy” providing the mandated UM/UIM cover-
age must provide “coverage that in each instance is no less
favorable in any respect to the insured or the beneficiary
than if” those model policy terms “were set forth in the pol-
icy.” ORS 742.504(1). As we explained in Vega, the legisla-
ture intended that the terms of an actual policy of UM/UIM
coverage could vary from the terms of the statutory model
policy “only in the sense that terms that disfavor insureds
may be excluded or softened and extraneous terms that are
neutral or that favor insureds may be added.” 323 Or at 302.
Any added term that causes the UM/UIM coverage under
a policy to be less favorable to the insured than the model
policy is “unenforceable.” Erickson v. Farmers Ins. Co., 331
Or 681, 685, 21 P3d 90 (2001).
Cite as 368 Or 538 (2021) 543

The disputed term that appears in each State Farm
policy that covers the loss of each insured provides:
“If Other Uninsured Motor Vehicle Coverage
of Any Kind Applies
“1. If Uninsured Motor Vehicle Bodily Injury and
Property Damage Coverage provided by this policy and
Uninsured Motor Vehicle Coverage of any kind provided
by one or more other vehicle policies issued to you or any
resident relative by the State Farm Companies apply to the
same bodily injury or property damage, then:
“a. such Uninsured Motor Vehicle Coverage limits of
such policies will not be added together to determine the
most that may be paid; and
“b. the maximum amount that may be paid from all
such policies combined is the single highest applicable limit
provided by any one of the policies. We may choose one or
more policies from which to make payment.”

Plaintiffs contend that the “other coverage” limita-
tion in State Farm’s policy is an added term that causes the
coverage to be less favorable to the insured than the cov-
erage that the legislature has required. Depending on how
State Farm implements the “other coverage” limitation in
a particular case, State Farm either treats the additional
policies as irrelevant—as providing no source of payment
toward the sum that the insured would be “legally entitled
to recover as damages” from the uninsured or underinsured
motorist—or it treats the payments under each applicable
policy as capped at a fraction of the amount that the pol-
icy declares to be State Farm’s “limit of liability.” Plaintiffs
contend that no provision of the “model” policy authorizes
that result and, consequently, that State Farm’s “other cov-
erage” limitation is unenforceable. Plaintiffs bolster their
construction of ORS 742.504 by emphasizing that, in 2015,
the legislature removed from the statutory “model” policy a
provision that previously authorized insurers to include the
kind of “other coverage” limitation that State Farm’s policies
still contain.
State Farm does not dispute that its insurance
policies must include UM/UIM coverage that is at least as
544 Batten v. State Farm Mutual Automobile Ins. Co.

favorable to its insureds as the coverage that ORS 742.504
specifies. And State Farm agrees that ORS 742.504 no lon-
ger contains any model term that is comparable to the “other
coverage” limitation in the State Farm policies. But State
Farm contends that, in 2015, the legislature intended only
to preclude a different type of “other coverage” limitation
and did not intend to prevent insurers from continuing to
include the kind of limitation that is at issue here. According
to State Farm, the remaining model terms of ORS 742.504
and the remaining provisions of the other statutes govern-
ing UM/UIM coverage continue to permit an insurer to
limit its liability if additional policies afford identical UM/
UIM coverage to the insured.

The dispute in this case thus turns on whether the
UM/UIM coverage that the legislature has required “every
policy” to provide continues to accommodate the kind of
“other coverage” limitation that State Farm has continued
to include in its polices. As with all questions of statutory
construction, our responsibility is to “pursue the intention
of the legislature if possible,” ORS 174.020(1)(a), and we
pursue that goal through the analytical framework that we
described in State v. Gaines, 346 Or 160, 171-72, 206 P3d
1042 (2009). Under that framework, we primarily consider
the text and context of a statute because “there is no more
persuasive evidence of the intent of the legislature than the
words by which the legislature undertook to give expres-
sion to its wishes,” but we also consider legislative history
“where that legislative history appears useful to the court’s
analysis.” Id. (internal quotation marks omitted).

Both ORS 742.502 and ORS 742.504 have been the
subject of extensive prior analysis by this court, and those
prior decisions significantly inform our analysis in this case.
See Farmers Ins. Co. v. Mowry, 350 Or 686, 697-98, 261 P3d 1
(2011) (explaining that court follows its prior constructions
of a statute as a matter of stare decisis and assumes that
issues considered in those cases were correctly decided).
Among the most significant of our prior decisions is Vega,
in which this court construed “ORS 742.504(1) to (12) as set-
ting out a comprehensive model UM/UIM policy that may be
varied only in the sense that terms that disfavor insureds
Cite as 368 Or 538 (2021) 545

may be excluded or softened and extraneous terms that are
neutral or that favor insureds may be added.” 323 Or at 302.
As State Farm recognizes, there is no longer any particular
provision in ORS 742.504 that addresses how UM/UIM cov-
erage will be affected if multiple policies apply to the same
injury. So there is no specific provision to which State Farm’s
“other coverage” limit can be compared. We explained in
Vega, however, that “the validity of a challenged UIM pro-
vision must be tested, not by a direct comparison between
the challenged provision with an individual statutory provi-
sion but, instead, by a comparison between coverage offered
by the policy containing the challenged provision and the
coverage offered by a hypothetical policy containing the
provisions set out at ORS 742.504(1) to (12).” 323 Or at 299
(emphases in original). Given that requirement, it is helpful
to consider what coverage would be available to plaintiffs
under the legislature’s “model” policy.
The starting point for that inquiry is the first model
term—the promise that
“the insurer will pay all sums that the insured or the heirs
or legal representative of the insured is legally entitled
to recover as damages from the owner or operator of an
uninsured vehicle because of bodily injury sustained by the
insured caused by accident and arising out of the owner-
ship, maintenance or use of the uninsured vehicle.”
ORS 742.504(1)(a).
The legislature has further illuminated that
requirement through a statutory definition of “sums that
the insured * * * is legally entitled to recover as damages.”
In general, the concept is defined to mean the amount of
damages that the “claimant could have recovered in a civil
action from the owner or operator at the time of the injury
after determination of fault or comparative fault and reso-
lution of any applicable defenses.” ORS 742.504(2)(j)(A). But
the legislature has also defined the concept in a way that
incorporates by cross-reference several important limits set
out in a later subsection of the statute: ORS 742.504(2)(j)(C)
provides that “ ‘sums that the insured * * * is legally entitled
to recover as damages’ means the amount of damages that,”
among other things, “[a]re no larger than benefits payable
546 Batten v. State Farm Mutual Automobile Ins. Co.

under the terms of the policy as provided in subsection (7) of
this section.”5
Most significantly, that cross-reference to “subsec-
tion (7)” incorporates into the definition of “sums” that the
insurer must pay a requirement that those sums will never
exceed “[t]he limit[s] of liability stated in the declarations”
for the policy.6 ORS 742.504(7)(a). The cross-reference also
incorporates certain authorized reductions for payments
that the insurer receives or has a right to receive from spec-
ified other sources—essentially, a deduction for workers’
compensation, disability benefits, or similar benefits and a
deduction for amounts that the insured failed to collect from
the underinsured motorist’s insurance carrier (the “unreal-
ized portion” of the underinsured motorist’s liability limits).
ORS 742.504(7)(b), (c).7
5
ORS 742.504(2)(j) specifies that “ ‘sums that the insured * * * is legally enti-
tled to recover as damages’ ” means the amount of damages that:
“(A) A claimant could have recovered in a civil action from the owner or
operator at the time of the injury after determination of fault or comparative
fault and resolution of any applicable defenses;
“(B) Are calculated without regard to the tort claims limitations of ORS
30.260 to 30.300; and
“(C) Are no larger than benefits payable under the terms of the policy as
provided in subsection (7) of this section.”
6
The term “declarations” is not defined in the statute, but “in common par-
lance,” it refers to “the first page of an insurance policy and summarizes the
terms of that policy, including, among other things, setting out the insurer’s limit
on liability.” Bergmann v. Hutton, 337 Or 596, 606, 101 P3d 353 (2004).
7
ORS 742.504(7) provides, in full:
“(a) The limit of liability stated in the declarations as applicable to ‘each
person’ is the limit of the insurer’s liability for all damages because of bodily
injury sustained by one person as the result of any one accident and, subject
to the above provision respecting each person, the limit of liability stated in
the declarations as applicable to ‘each accident’ is the total limit of the com-
pany’s liability for all damages because of bodily injury sustained by two or
more persons as the result of any one accident.
“(b) Any amount payable under the terms of this coverage because of
bodily injury sustained in an accident by a person who is an insured under
this coverage shall be reduced by the amount paid and the present value of
all amounts payable on account of the bodily injury under any workers’ com-
pensation law, disability benefits law or any similar law.
“(c) Any amount payable under the terms of this coverage because of
bodily injury sustained in an accident by a person who is an insured under
this coverage shall be reduced by the credit given to the insurer pursuant to
subsection (4)(d)(C) or (D) of this section [which provides that, if an insured
settles with a liable underinsured motorist for less than the limits of the
Cite as 368 Or 538 (2021) 547

Thus, the starting point for determining what “the
insurer will pay”—“sums that the insured * * * is legally enti-
tled to recover as damages”—requires application of a basic
formula: The amount that the insured “could have recovered
in a civil action from” the uninsured/underinsured motorist
is determined, the amount of any authorized deduction is sub-
tracted, and the remainder is compared to the “limit of liabil-
ity stated in the declarations.” ORS 742.504(1)(a), (2)(j), (7).
The insurer then pays whichever amount is lower.
In the consolidated cases before us, State Farm
does not contend that any of the authorized reductions in
ORS 742.504(7)(b) is applicable, and it does not claim a right
to a credit for any “unrealized portion” of the liability lim-
its of any policy insuring the underinsured motorists. State
Farm also does not dispute that each plaintiff may be able
to prove that the “sums that the insured * * * is legally enti-
tled to recover as damages” exceed the amount stated in
the declarations of any one applicable policy as State Farm’s
limit of liability. Thus, if each plaintiff were insured under
only one UM/UIM policy, then the statutory formula would
direct State Farm to pay the amount stated in the declara-
tions for that one policy as the limits of State Farm’s liabil-
ity. That appears to be the formula that State Farm applied
when determining that it would pay each plaintiff the limits
stated in one of the applicable policies.
The problem, plaintiffs insist, is that the legislature
has required “[e]very motor vehicle liability policy” to pro-
vide UM/UIM coverage that is paid according to the for-
mula specified in ORS 742.504. ORS 742.502(1), (4) (empha-
sis added). Yet State Farm’s “other coverage” term creates an
exception to that formula, allowing State Farm to pay only
what it would pay under the UM/UIM coverage of a single

motorist’s liability insurance, then the insured must credit to the UM/UIM
insurer the ‘unrealized portion’ of the liability limits].
“(d) The amount payable under the terms of this coverage may not be
reduced by the amount of liability proceeds offered, described in subsection
(4)(d)(B) or (D) of this section, that has not been paid to the injured person. If
liability proceeds have been offered and not paid, the amount payable under
the terms of the coverage shall include the amount of liability limits offered
but not accepted due to the insurer’s refusal to consent. The insured shall
cooperate so as to permit the insurer to proceed by subrogation or assignment
to prosecute the claim against the uninsured motorist.”
548 Batten v. State Farm Mutual Automobile Ins. Co.

policy even though each plaintiff has at least one additional
policy that provides the same coverage.
State Farm proposes several alternative paths to its
conclusion that the formula does not apply if another UM/
UIM policy covers the same loss.8 It proposes that the defi-
nition of “sums” that the insurer must pay accommodates
limitations like that accomplished by State Farm’s “other
coverage” term, it proposes that a legislative intent to allow
such limitations can be discerned from text that the legisla-
ture failed to add in amending the law in 2015, and it pro-
poses that another statute authorizes the “other coverage”
policy term under the circumstances of the cases before us.
With respect to the statutory definition of “sums”
that the insurer must pay to the insured, State Farm sug-
gests two ways that the definition could be construed to
accommodate its “other coverage” limitation. First, State
Farm emphasizes the portion of ORS 742.504(2)(j) that
provides:
“ ‘Sums that the insured * * * is legally entitled to recover
as damages’ means the amount of damages that:
“* * * * *
“(C) Are no larger than benefits payable under the
terms of the policy * * *.”
State Farm points out that its “other coverage” limitation
is one of the “terms of the policy” and that it addresses the
amount of “benefits payable.” Accordingly, State Farm con-
cludes, its “other coverage” limitation must be authorized by
the definition of “sums that the insured * * * is legally enti-
tled to recover as damages.”
We reject State Farm’s proposed construction of
ORS 742.504(2)(j), however, because it fails a fundamental
rule of statutory construction:
“In the construction of a statute, the office of the judge
is simply to ascertain and declare what is, in terms or in
substance, contained therein, not to insert what has been

8
Although State Farm’s “other coverage” term is limited to other policies
that it has issued to members of the same household, that limitation plays no role
in the rule that State Farm proposes or in its arguments in support of the rule.
Cite as 368 Or 538 (2021) 549

omitted, or to omit what has been inserted; and where there
are several provisions or particulars such construction is, if
possible, to be adopted as will give effect to all.”
ORS 174.010. State Farm’s argument would require us to
read ORS 742.504(2)(j) as if the legislature had omitted a key
limiting clause—as if the statute provided only that “sums
that the insured * * * is legally entitled to recover” are “no
larger than benefits payable under the terms of the policy
as provided in subsection (7) of this section.” (Strikethrough
added.) Moreover, State Farm’s selective reading of ORS
742.504(2)(j)(C), which is untethered from the limits and
reductions that the legislature has expressly authorized in
“subsection (7),” would convert the provision to one that effec-
tively allows “benefits payable” to mean whatever amount
the “terms of the policy” say is payable. Had the legislature
intended to allow the terms of a UM/UIM policy to dictate
what benefits are payable, however, there would have been
no reason for the legislature to set out specific model terms
in ORS 742.504 and no meaning to the requirement that
UM/UIM coverage must be “no less favorable in any respect
to the insured or the beneficiary than if [those] provisions
were set forth in the policy.” ORS 742.504. We decline to
adopt a construction of ORS 742.504(2)(j)(C) that effectively
nullifies the entire point of the statute.
Second, State Farm insists that, by limiting “the
insurer’s liability for all damages” to the “limit of liability
stated in the declarations,” ORS 742.504(7)(a) reflects that
the legislature “necessarily contemplated” that the insur-
er’s liability under the model coverage could be limited to
the highest amount stated in the declarations of any appli-
cable policy. The same obstacle confronts this proposal as
well. The legislature did specify that an insurer’s payment
under the formula set out in ORS 742.504 includes a limita-
tion based on the amount specified in the declarations of the
policy. But the legislature also specified that “[e]very motor
vehicle liability policy” must provide for payment according
to that formula. ORS 742.502(1) (emphasis added). Thus,
the UM/UIM coverage under every policy must provide for
payment of “sums that the insured * * * is legally entitled
to recover as damages” up to the declared limit of liability.
ORS 742.502(5); ORS 742.504(1)(a), (2)(j), (7). The effect of
550 Batten v. State Farm Mutual Automobile Ins. Co.

State Farm’s “other coverage” limitation, however, is that
only one of the applicable policies provides for payment of
“sums that the insured * * * is legally entitled to recover as
damages” up to the declared limit of liability. Nothing in the
definition of “sums” that an insurer must pay contemplates
the exception that State Farm has imposed.
There is one provision of ORS 742.504 that addresses
how the coverage under a UM/UIM policy is affected when
other similar coverage applies to the same loss, but it, too,
is an obstacle to State Farm’s “other coverage” limitation.9
Currently, ORS 742.504(9) specifies an order of priority
between policies when other coverage “that is similar to this
coverage” is available to the insured:
“(9)(a) With respect to bodily injury to an insured:
“(A) While occupying a vehicle owned by a named
insured under this coverage, the insurance under this cov-
erage is primary.
“(B) While occupying a vehicle not owned by a named
insured under this coverage, the insurance under this cov-
erage shall apply only as excess insurance over any pri-
mary insurance available to the occupant that is similar
to this coverage, and this excess insurance coverage shall
then apply only to the sums that the insured or the heirs
or legal representative of the insured is legally entitled to
recover as damages for bodily injury or death that is caused
by accident and that arises out of owning, maintaining or
using an uninsured vehicle.
“(b) With respect to bodily injury to an insured while
occupying any motor vehicle used as a public or livery con-
veyance, the insurance under this coverage shall apply only
as excess insurance over any other insurance available to
9
There are other provisions of ORS 742.504 that create exceptions to the
requirement of ORS 742.504(1)(a) that the UM/UIM insurer must pay the “sums
that the insured * * * is legally entitled to recover as damages.” For example,
insurers may specify, subject to exceptions, that UM/UIM “coverage does not
apply” if the insured has settled with any liable party without obtaining the
insurer’s written consent, if the insured or a relative in the same household
owned the uninsured vehicle, or if the insured failed to exhaust the limits of
applicable liability insurance. ORS 742.504(4). But State Farm does not contend
that any of those coverage exceptions applies to the cases before us or that any
model term authorizes a limitation on payments that is analogous to the limita-
tion created by State Farm’s “other coverage” limitation.
Cite as 368 Or 538 (2021) 551

the insured that is similar to this coverage, and this excess
insurance coverage shall then apply only to the amount
by which the applicable limit of liability of this coverage
exceeds the sum of the applicable limits of liability of all
other insurance.”
In other words, except for injuries to an insured “while
occupying any motor vehicle used as a public or livery con-
veyance,” one UM/UIM policy is designated “primary,” and
the other policy must pay to the extent that “the sums that
the insured * * * is legally entitled to recover as damages”
exceeds the primary payment. ORS 742.504(9).
But State Farm’s “other coverage” limitation is not
an attempt to model the primary-excess structure specified
in ORS 742.504(9). The model term requires each policy
that has been designated “excess” to pay any outstanding
“sums that the insured * * * is legally entitled to recover as
damages,” up to the limit of liability specified in the pol-
icy, which—as explained above—would mean in this case
that each applicable policy would provide payment up to the
limit of liability specified in the policy. ORS 742.504(2)(j)(C),
(7)(a), (9). State Farm’s “other coverage” term, to the con-
trary, denies any payment of excess damages that remain
after State Farm has paid an amount equal to the limit
specified in a single policy. Thus, to the extent that the legis-
lature’s model term addresses an insurer’s obligation when
there is other applicable UM/UIM coverage, the approach
required by the model term is more favorable to insureds
than is State Farm’s approach to other applicable cover-
age. See Erickson, 331 Or at 685-86 (concluding that policy
terms that denied UM/UIM coverage in the event of appli-
cable “other insurance” were less favorable to the insured
than model “other insurance” terms in the version of ORS
742.504(9) then in effect, which would have limited—but not
denied—coverage under the circumstances presented).
State Farm does not contend otherwise. Instead,
it emphasizes that ORS 742.504(9) currently does not
expressly apply to the accident scenarios of the cases before
us—because three of the insureds were not occupying any
vehicle and the fourth was occupying a rental car with no
“primary insurance available.” State Farm argues that the
omission is the product of an intentional legislative choice to
552 Batten v. State Farm Mutual Automobile Ins. Co.

allow “other coverage” limitations under other accident sce-
narios. Although we accept State Farm’s premise that the
terms of ORS 742.504(9) fail to address the “other coverage”
scenarios presented in the cases before us, we do not discern
from that omission an intent to allow the kind of “other cover-
age” limitation that State Farm seeks to enforce in the cases
before us. We emphasized in Vega that “the legislature did
not intend to leave insurers free to structure their policies as
they pleased outside the subject matter represented by the
provisions at subsections (1) to (12).” 323 Or at 301 (empha-
sis in original). Instead, we concluded “that the contrary is
true.” Id. We explained that “the legislature intended to pro-
vide insurers with some measure of freedom” with respect
to how they structure policy terms within “the subject mat-
ter represented by the provisions” of ORS 742.504, but that
freedom is limited; the “comprehensive model” policy “may
be varied only in the sense that terms that disfavor insureds
may be excluded or softened and extraneous terms that are
neutral or that favor insureds may be added.” Vega, 323 Or
at 301-02.
Moreover, under the comparison framework that we
described in Vega, a challenged provision in a UM/UIM pol-
icy is not tested “by a direct comparison between the chal-
lenged provision [and] an individual statutory provision but,
instead, by a comparison between coverage offered by the
policy containing the challenged provision and the coverage
offered by a hypothetical policy containing the provisions
set out at ORS 742.504(1) to (12).” 323 Or at 299 (emphases
in original). Even if State Farm’s “other coverage” limitation
is not expressly inconsistent with a term that the legisla-
ture has specified for its model coverage, the term is still
unenforceable because it causes State Farm’s coverage to
be less favorable to its insureds than “the coverage offered
by a hypothetical policy containing the provisions set out at
ORS 742.504(1) to (12).” See Vega, 323 Or at 299 (emphasis
in original).
State Farm nevertheless points to the legislative
history surrounding the legislature’s 2015 adoption of the
current version of ORS 742.504(9) and attempts to discern
a legislative intent to leave insurers free to add the kind
of “other coverage” limitation to coverage that State Farm
Cite as 368 Or 538 (2021) 553

has added to its policies. State Farm’s argument revolves
around a statutory amendment that plaintiffs cite as evi-
dence of precisely the opposite legislative intent.
As all parties emphasize, prior to 2015, ORS
742.504(9) had set out a model “other coverage” term that had
precisely the same effect on coverage as the term in State
Farm’s policies. The relevant provisions of ORS 742.504(9)
previously had specified that,
“[w]hile occupying a vehicle not owned by a named insured
under this coverage, the insurance under this coverage
shall apply only as excess insurance over any primary
insurance available to the occupant that is similar to this
coverage, and this excess insurance shall then apply only in
the amount by which the applicable limit of liability of this
excess coverage exceeds the sum of the applicable limits of
liability of all primary insurance available to the occupant.”
ORS 742.504(9)(a)(B) (2013), amended by Or Laws 2015,
ch 5, § 3 (emphasis added). And subsection (9)(b) previously
specified that,
“[i]f an insured is an insured under other primary or excess
insurance available to the insured that is similar to this
coverage, then the insured’s damages are deemed not to
exceed the higher of the applicable limits of liability of this
insurance or the additional primary or excess insurance
available to the insured.”
ORS 742.504(9)(b) (2013) (emphasis added). There is no dis-
pute that, had the italicized portions remained in the stat-
ute, State Farm’s “other coverage” limitation would have
been enforceable, because ORS 742.504(9)(b) (2013) provided
the same exception for the model coverage. See Mid-Century
Ins. Co. v. Perkins, 344 Or 196, 216, 179 P3d 633, modified
on recons, 345 Or 373, 195 P3d 59 (2008) (explaining that
the version of ORS 742.504(9)(b) then in effect “require[d]
the insurer to determine its liability by comparing its own
policy limit to the limits of the other policies in order to set
a cap on the insured’s damages”).
But Senate Bill (SB) 411 (2015) removed those pro-
visions. Understandably, then, plaintiffs point to the 2015
change as an additional indication that the legislature
intended to reject that approach to “other coverage” for
554 Batten v. State Farm Mutual Automobile Ins. Co.

policies issued after 2015. State Farm’s argument to the
contrary assumes that the meaning of the statute can be
discerned from comments that were not made and changes
that were not adopted as SB 411 moved through committee.
State Farm first emphasizes that the original ver-
sion of SB 411 proposed to amend ORS 742.504(9)(b) (2013)
in a way that—in State Farm’s view—clearly would have
precluded the kind of “other coverage” limitation that State
Farm now seeks to enforce. By the time the bill passed out of
committee, however, it had been amended to entirely delete
ORS 742.504(9)(b) (2013), rather than to delete only parts
of it. State Farm contends that the committee’s amendment
reflects a “clear and unambiguous” decision that UM/UIM
coverage would continue to include the “other coverage” lim-
itation that ORS 742.504(9) (2013) had expressly authorized.
We reject the premise on which that argument
rests. As we already have explained, the validity of a chal-
lenged provision in a UM/UIM policy must be tested, “not
by a direct comparison between the challenged provision”
and a statutory provision addressing the same subject, “but,
instead, by a comparison between coverage offered by the
policy containing the challenged provision and the cover-
age offered by a hypothetical policy containing the provi-
sions set out at ORS 742.504(1) to (12).” Vega, 323 Or at 299
(emphases in original). And to the extent the insurer adds a
term that falls outside of “the subject matter represented by
the provisions” of ORS 742.504, the extraneous term is valid
only if the term is neutral or favors insureds. Vega, 323 Or at
301-02. Thus, the legislature’s removal of a model term that
previously authorized an exception to coverage can be just as
significant as an amendment to expressly prohibit the excep-
tion. We presume that the legislature was aware of how ORS
742.504 operates and, as a result, was aware that entirely
removing ORS 742.504(9)(b) (2013) from the authorized
terms could effect the same change to the model coverage
as the initially proposed amendment to ORS 742.504(9)(b)
(2013). See Mastriano v. Board of Parole, 342 Or 684, 693,
159 P3d 1151 (2007) (“[W]e generally presume that the leg-
islature enacts statutes in light of existing judicial decisions
that have a bearing on those statutes.”). What matters is
that there no longer is any provision in the model policy that
Cite as 368 Or 538 (2021) 555

would produce the coverage result that State Farm seeks to
achieve with its “other coverage” limitation.
State Farm, nevertheless, insists that the legisla-
ture did not intend that the removal of the “other coverage”
limitation from the model coverage would have the effect
of precluding insurers from enforcing such an exception in
their terms of coverage. State Farm bases that conclusion on
silence in the legislative history regarding the change to ORS
742.504(9). According to State Farm, “[p]laintiffs are unable
to cite to anything contained in the legislative record that
indicates that the legislature even contemplated” changing
how UM/UIM payments would be calculated when similar
coverage is available under more than one policy.
That argument requires some context. The amend-
ments to ORS 742.504(9) (2013) were only one of multiple
changes that SB 411 made to half a dozen statutes that
govern UM/UIM and other mandated coverage for Oregon
motor vehicle insurance policies. Or Laws 2015, ch 5. Among
those was a significant change to the meaning of the UIM
portion of that coverage, which received a great deal of
attention in the legislative testimony. We turn briefly to that
change.
Prior to 2015, the wording of ORS 742.502 and ORS
742.504 had left room for debate regarding the role of UIM
coverage—coverage for damages caused by a motorist with
insufficient liability insurance. See Vogelin v. American
Family Mutual Ins. Co., 346 Or 490, 492-93, 213 P3d 1216
(2009) (describing the competing statutory interpretations).
The plaintiff in Vogelin had argued that UIM coverage
essentially served as an additional layer of insurance to
cover the insured’s unsatisfied damages up to the liability
limits stated in the policy. Id. at 492. But this court agreed
with the defendant that the legislature had intended UIM
coverage only to address the gap between the liability limits
specified in the insured’s own policy and lower limits avail-
able from the negligent driver’s liability insurance policy.
Id. at 492, 506 (concluding that, although the insured’s unsat-
isfied damages were well in excess of the $100,000 limits
of liability for the insured’s UIM coverage, the insurer was
obligated to pay only the difference between the coverage
556 Batten v. State Farm Mutual Automobile Ins. Co.

limits and the amount of damages that had been satis-
fied by the negligent driver’s liability insurance). The 2015
Legislative Assembly changed the role of UM/UIM coverage
to align with the role proposed by the plaintiff in Vogelin,
through amendments to ORS 742.502 and ORS 742.504(7)
that now make UIM coverage a layer of protection for the
insured’s unsatisfied damages. Or Laws 2015, ch 5, §§ 2-3.
According to State Farm, the committee discussion demon-
strates that those changes to the role of UM/UIM cover-
age were intended, but the lack of discussion regarding the
changes to ORS 742.504(9) suggests that the legislature did
not intend to change the exception for “other coverage.”
Plaintiffs do not dispute that the changes to the
role of UIM coverage appear to have been “the primary
rule targeted” by the sponsors of SB 411. But plaintiffs
reject State Farm’s conclusion that the legislature did not
intend to change the role of other available coverage when
it changed how ORS 742.504(9) treats other available cov-
erage. We reject State Farm’s conclusion as well. We cannot
disregard the legislature’s decision to omit from the “com-
prehensive model policy” a term that would have authorized
State Farm’s approach to “other coverage.” See ORS 174.010
(in construing statutes, court must not “insert what has
been omitted”). We have previously cautioned against ignor-
ing the textual changes that the legislature has adopted in
favor of statements made in committee proceedings, because
“[o]nly the text of a statute receives the consideration and
approval of a majority of the members of the legislature, as
required to have the effect of law.” Gaines, 346 Or at 171
(citing Or Const, Art IV, § 25). That principle carries even
greater weight when we are urged to ignore textual changes
on the basis of an inference drawn from silence in the records
of committee proceedings. See Wyers v. American Medical
Response Northwest, Inc., 360 Or 211, 226-27, 377 P3d 570
(2016) (cautioning that silence in the legislative history can
have a variety of explanations beyond suggesting that the
legislature did not intend the effect that the text appears
to direct: “for example, a proposed legislative change to the
status quo might not prompt comment precisely because
everyone understands that the law will have that effect or
because supporters do not wish to draw attention to it”);
Cite as 368 Or 538 (2021) 557

see also State v. McNally, 361 Or 314, 332-33, 392 P3d 721
(2017) (“[T]he fact that the legislature had a specific concern
in mind in enacting legislation does not mean that the leg-
islature necessarily intended the legislation to address only
that concern[.]”). We are persuaded that the model coverage
set out in ORS 742.504 no longer allows an exception when
other similar coverage also applies to the loss. As a result,
State Farm’s coverage is less favorable than that set out in
ORS 742.504. Under the rule that we articulated in Vega,
that conclusion should end the inquiry and render State
Farm’s “other coverage” provision unenforceable.
State Farm, however, proposes a final argument
that looks beyond the model coverage of ORS 742.504 to
another statute, ORS 742.506, which addresses the “alloca-
tion of responsibility between insurers” in cases of multiple,
potentially applicable policies. Under the terms of that stat-
ute, “if all policies potentially involved expressly allocate
responsibility between insurers, or self-insurers, without
repugnancy, then the terms of the policies shall control,” but
otherwise “the provisions of ORS 742.504(9) shall control
allocation of responsibility between insurers.”10 According
to State Farm, the “other coverage” term in its policies “allo-
cate[s] responsibility between insurers,” does so “without
repugnancy” among the policies (because each contains
the identical term), and, therefore “shall control.” Both the
initial premise and the conclusion of that argument are
flawed.
State Farm’s initial premise is flawed because it
requires us to assign a meaning to “allocate responsibil-
ity” that is contrary to the standard usage of those terms.
As used elsewhere in the Oregon insurance code, the term
“responsibility” refers to accountability for damages. ORS
801.280 (describing Oregon’s “[f]inancial responsibility
requirements” as meaning “the ability to respond in dam-
ages for liability, on account of accidents arising out of the
ownership, operation, maintenance or use of a motor vehi-
cle” up to the minimum amounts required by ORS 806.060);
10
ORS 742.506 is not expressly limited to the allocation of responsibility
between multiple policies of UM/UIM coverage, but that limitation is suggested
by the fact it incorporates “the provisions of ORS 742.504(9),” which address pri-
ority among multiple policies that provide applicable UM/UIM coverage.
558 Batten v. State Farm Mutual Automobile Ins. Co.

see also Black’s Law Dictionary 1569 (11th ed 2019) (defin-
ing “responsibility” as “[t]he quality, state, or condition of
being duty-bound, answerable, or accountable; liability”).
And an “allocation” refers to “[t]he amount or share of some-
thing that has been set aside or designated for a particular
purpose” or “[a] designation or apportionment for a specific
purpose.” Black’s at 94. Thus, ORS 742.506 would appear
to refer to the method of determining which portion of an
insured’s damages each insurer will pay. For example, if
an insured’s total outstanding losses were $150,000, and
two applicable policies each provided coverage with limits
of $100,000, an allocation of responsibility would determine
what portion of the $150,000 each insurer must pay. See
ZRZ Realty v. Beneficial Fire and Casualty Ins., 349 Or 117,
126 n 8, 241 P3d 710 (2010), adh’d to as modified on recons,
349 Or 657, 249 P3d 111 (2011) (explaining that trial court
had “allocated responsibility” for future cost to insured of
remediating contaminated soil by assigning one insurer
90 percent of the total insured potential loss and the other
the remaining 10 percent).
That meaning is further suggested by the fact that
ORS 752.506 makes the default method for “allocation of
responsibility between insurers” the method that is speci-
fied in ORS 742.504(9)—a method that designates one pol-
icy as “primary” and one as “excess” when multiple poli-
cies insure against the loss. Using the example above, the
allocation of responsibility under ORS 742.504(9) would be
$100,000 to the primary policy and the remaining $50,000
to the “excess” policy. Under ORS 742.506, however, if the
two applicable policies both specify that liability will be
apportioned differently—say 50 percent  - 50 percent—then
that agreement would be enforceable, and each policy would
pay $75,000. But State Farm’s “other coverage” term does
not purport to specify which policy will pay which portion of
the insured’s loss; instead, it specifies a maximum sum that
all policies combined will pay, no matter how large the loss.
We are unwilling to assign that strained construction to the
terms of ORS 742.506, particularly when doing so leads to
an equally flawed conclusion.
State’s Farm’s conclusion that ORS 742.506 allows
its “other coverage” limitation to control what it must pay to
Cite as 368 Or 538 (2021) 559

its insured is flawed because it contradicts the primary com-
mand of ORS 742.504, that the UM/UIM coverage in every
policy must be “no less favorable in any respect to the insured
or the beneficiary than” coverage under the terms specified
in that statute. To accept State Farm’s conclusion that its
added “other coverage” term controls what it must pay would
require us to accept that a term that causes an insurer’s
UM/UIM coverage to be less favorable to the insured than
the coverage under ORS 742.504 is, nevertheless, enforce-
able under ORS 742.506. In other words, to accept State
Farm’s conclusion that ORS 742.506 authorizes a coverage
limitation beyond those authorized by ORS 742.504 we also
would have to accept a conclusion that the “comprehensive
model” coverage in ORS 742.504 is not actually comprehen-
sive. We cannot accept that conclusion. Accordingly, State
Farm’s “other coverage” limitation is unenforceable.
The certified question is answered.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10627447. Public record. Not legal advice.