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Ohio BMV’s Financial Responsibility Random Verification Program Eliminated

The program that has been administered by the Ohio Bureau of Motor Vehicles since 1998 to randomly check to ensure that Ohioans are complying with the state’s financial responsibility laws has been eliminated.

In a somewhat expected move, language to eliminate the program was inserted by the Senate Transportation Committee to the state transportation budget to eliminate the verification program. This program has been a target for elimination by some legislators for years as it has become increasingly ineffective at catching uninsured drivers, and thus is viewed by some as burdening responsible drivers who comply with the law. The program screens approximately 280,000 drivers per year via mail and approximately 4 percent of the letters sent each year catch uninsured motorists (this equates to 11,200 people per year). It costs $550,000 per year or roughly $46,000 per month.

OIA is the only organization that weighed in on the elimination of this program. In our testimony, we emphasized that the last Financial Responsibility Study Committee Report issued in 2014 recommended REPLACING the BMV’s random selection program – not simply eliminating it. Furthermore, we made clear that we do have concerns about not replacing this program with a more robust auto insurance verification system that capitalizes on the technological advances that have become available in the last several years. To date, an effort to do so has yet to get underway, yet more than half of the states have passed laws and begun to develop and implement online auto insurance verification systems to identify uninsured motorists. Read OIA’s testimony. 

When Does the Program End?

The language initially added to the transportation budget bill sought to end the program at the beginning of 2020, however, this language was further modified to eliminate the program on the effective date of the transportation budget bill which is July 1st. 

What Checks Remain?

With the elimination of this program, the checks that remain for financial responsibility include traffic stops and individuals affirming that they have proper financial responsibility when they apply for a permit/license or they register a vehicle.

Questions or comments?

Contact Carolyn Mangas, OIA’s Government Affairs Manager, at carolyn@ohioinsuranceagents.com.

Also see

Financial Responsibility Study Committee Report

OIA Transportation Budget Senate Testimony


Ohio Midterm Election Results

Yesterday’s election generated great interest among voters, with voter turnout at 54.3%, the highest for a gubernatorial election year since 1994. 


Statewide Offices

The public polls were once again wrong leading into yesterday’s election. Many anticipated that the Democrats could pick up some statewide offices, including that of governor. Instead, Republicans swept all the statewide executive offices.


Governor
Mike DeWine (R) defeated Richard Cordray (D) 50.66% - 46.45%       


Attorney General
Dave Yost (R) defeated Steve Dettelbach (D) 52.42% - 47.58%            


Auditor of State
Keith Faber (R) defeated Zach Space (D) 49.93% - 46.06%                  


Secretary of State
Frank LaRose (R) defeated Kathleen Clyde (D) 50.92% - 46.73%


Treasurer of State*
Robert Sprague (R) defeated Rob Richardson (D) 53.53% - 46.47%    

What this means for OIA: The next leaders of the Ohio Department of Insurance and the Ohio Bureau of Workers’ Compensation will be picked by the DeWine/Husted team. This team’s business-friendly approach should result in sound picks for both state agencies.


Also of note is that DeWine, Faber and LaRose will play key roles following the 2020 census when Ohio draws new maps for Congressional and Statehouse districts that will last for a decade. While Ohio recently passed redistricting reform, the governor, secretary of state and auditor will still sit on the redistricting commission that draws the Statehouse districts and also may engage in the Congressional mapping if needed.


Ohio Supreme Court

Judge Melody Stewart defeated Justice Mary DeGenaro 53-47% and Judge Michael Donnelly beat Judge Craig Baldwin 61-39%. Unfortunately, DeGenaro and Baldwin failed to benefit from the momentum the Republicans had, as voter drop off in these races was high, with more than 900,000 Ohioans skipping these races. The makeup of the court beginning in January will be 5-2, which will quite possibly result in more split decisions and could impact which cases the Court chooses to accept and which cases it rejects. Furthermore, with two seats lost this election, the 2020 election takes on increased importance as two seats will be up for election on the Court, and should Justices French and Kennedy fail to retain their seats, the philosophical makeup of the Court could be dramatically altered to be more activist in nature.   


Ohio House of Representatives

All 99 seats for the Ohio House were on the ballot.  At this point, it looks like the Democrats likely picked up four seats. This would reduce the Republican majority in the House to 62-37. Of significance here is that the House Republicans supermajority (which carries with it veto override authority) remains intact.


Ohio Senate

The Senate Republicans likely picked up another seat, further strengthening their veto proof supermajority. Heading into next year, the Republicans will control 25 of the states 33 senate districts.


OIA PAC Results

This year, OIA PAC contributed just under $57,000 to candidates, with a significant amount of this going to statewide candidates (just under $30,000). Overall, OIA PAC supported 37 candidates this year. Of these candidates, 30 won their races and seven lost. 


With the election now over, legislators will be getting back to work in what is anticipated to be an extremely busy lame duck session.  Look for more information to come on legislative activity that is likely to take place in the coming weeks as the year winds down.


Questions?

As always, don’t hesitate to contact me with any questions!


Ohio Supreme Court case questions coverage for faulty workmanship

Gavel and scales image

The Ohio Supreme Court heard oral arguments earlier this month in a case regarding the duty of insurers with respect to property damage caused by the defective work of subcontractors.

In Ohio Northern University v. Charles Construction Services, Inc. v. KCL Framing, LLC., et al., the court will decide whether an insurer has a duty to defend and indemnify general contractors against claims that owners suffered property damage due to the defective workmanship of the general contractor’s subcontractors.

Round one: Cincinnati Insurance Company

The trial court in this case granted summary judgment for the insurer, Cincinnati Insurance Company.

Cincinnati argued that their policies do not provide the coverage requested by Charles, specifically for defective workmanship and misrepresentation.

Their argument was based on a 2012 decision in Westfield Ins. Co. v. Custom Agri Systems in which the Ohio Supreme Court ruled that a claim of defective construction or workmanship isn’t a claim for ‘property damage’ caused by an ‘occurrence’ as defined by an industry-standard CGL.

Ultimately, the trial court agreed and found that Cincinnati owed no duty to defend or indemnify Charles against claims of defective workmanship under the CGL policy.

The language in the contract states that the policy kicks in and Cincinnati will pay damages because of property damage which is caused by an occurrence.

The court stated that the CGL does not provide coverage for defective workmanship because that does not constitute an occurrence.

Round two: Reversal

Upon appeal, the Third District Court of Appeals reversed the lower court decision.

They held that the policy is ambiguous as to whether property damage caused by a subcontractor’s faulty workmanship constitutes an occurrence, and if not, whether it was covered under exceptions in the policy.

The court found coverage for “defective workmanship by a subcontractor” under the products-completed clause of the contract.

Impact of the decision

The Ohio Supreme Court is expected to answer the question of whether (and to what extent) an insurer is expected to defend and indemnify a general contractor under a CGL policy for property damage due to defective workmanship by a subcontractor.

It is important to note that the vast majority of states and federal jurisdictions have found that an insurer does have a duty to defend and indemnify a general contractor for property damage claims that arise out of the defective workmanship of a subcontractor.

The makeup of the Ohio Supreme Court is much different than it was six years ago when the 6-1 decision was issued in favor of the insurer in Westfield Ins. Co. v. Custom Agri Systems.

Only two justices who ruled in the majority on that case still sit on the court today: Chief Justice Maureen O’Connor and Justice Terrence O’Donnell.

With this in mind, it will be interesting to see how the current members of the court view this issue and ultimately rule in this latest case to answer the question of whether or not coverage exists for faulty workmanship.

OIA will update you when a decision is issued in this case.


Supreme Court of Ohio Clarifies Statute of Limitations in Agency Negligence Claims

Lady Justice holding scales image

The Supreme Court of Ohio recently issued an opinion on the LGR Realty, Inc. v. Frank & London Insurance Agency case that clarifies the statute of limitations on agency negligence.

LGR Realty brought this action alleging that they received an unsatisfactory insurance policy from Frank and London Insurance Agency.

The question that the court answered in this case was when the statute of limitations should begin in an insurance agency negligence claim.

The day the cause of action accrues is the day the statute of limitations begins to run.

The Ruling

In this case, the court decided that the cause of action began on the date the policy was issued, not when the party suffered an injury. Therefore, the case was time-barred.

The Supreme Court of Ohio specifically stated that:

“the delayed-damage rule does not apply to cause of action alleging negligent procurement of professional-liability insurance policy or negligent misrepresentation of the terms of the policy when the policy at issue contains a provision specifically excluding the type of claim the insured alleges it believed was covered by the policy.”

Frank and London Insurance argued that the statute of limitations clock began to run on the date the policy was issued, however, LGR Realty argued that the “delayed-damages” rule applies and the statute of limitations began when Continental Casualty Company, the commercial policy carrier, refused to defend and indemnify.

Under the delayed-damages rule, a cause of action does not accrue until a party suffers an injury, which would have extended the period for LGR Realty to bring this action.  

The Supreme Court ruled that the delayed-damages provision does not apply and sided with the trial court to rule in favor of Frank & London Insurance Agency.

Want more information about the case? Check out this video from The Ohio Channel.

CITATION: LGR Realty, Inc. v. Frank & London Ins. Agency, Slip Opinion No. 2018-Ohio-334

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Kasich Appoints Mary DeGenaro to Ohio Supreme Court

Justice Mary DeGenaroGov. Kasich recently appointed Mary DeGenaro to fill the remaining time of Bill O’Neill’s term on the Ohio Supreme Court.

While O’Neill’s term does not expire until January of 2019, he resigned his seat on the Court to run for governor. He would not have been eligible to run for another term on the court due to age restrictions.

Prior to being appointed to the Ohio Supreme Court, Justice DeGenaro served nearly 17 years as a judge on the Seventh District Court of Appeals in Youngstown.
 

Upcoming Ohio Supreme Court Race

Justice DeGenaro has already announced that she will be running as a candidate for the upcoming six-year term for the seat in the November election.

With the Court races often coming down to the candidate with the best sounding name winning (usually the most Irish), Justice DeGenaro’s appointment will be beneficial in helping her to gain some name recognition with voters ahead of the November election. She has also received the endorsement by the Ohio Republican Party.

A second vacancy will be created on the Court later this year as a result of Justice Terrence O’Donnell also being ineligible to run for another term. Judge Craig Baldwin has already announced that he will be running for this seat. He has also been endorsed by the Ohio Republican Party.

Both Justice Mary DeGenaro and Judge Craig Baldwin visited OIA last summer. 

In January, Michael Donnelly, a Cuyahoga County Common Pleas Court judge, and Eighth District Court of Appeals Judge Melody Stewart of Cleveland, announced that they will also run for election to the Ohio Supreme Court.
 

The Court and Ohio's Insurance Marketplace

As the third branch of government, the Court’s decisions play a critical role in determining whether Ohio consumers, businesses and independent agents will have a stable, predictable and competitive insurance marketplace to do business.

If you weren’t in the insurance industry in the 1990s and missed the era of an extremely activist Ohio Supreme Court, take a look at my blog about some of the crazy decisions that created havoc in the insurance industry and why the Court races really do matter.

OIA will keep you informed on these races as they get closer.

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