“Hereunder” is Hereinafter Banned Herein–Naeger v. Farmers Insurance Co.

One of the practice pointers I received while practicing on Wall Street is that one should review with skepticism use in contracts of “herein” and like expressions.  Though it’s often clear what’s “here”–sometimes it’s not (whether an entire agreement or a section or something else.  So, for the past decade or so, in teaching either Contracts or the law of Corporate Finance (generally involving construction of corporate financing instruments), I’ve shared concern with that phrasing with students.

I’m not always sure they’ve been convinced.  Behold–a brief quoting a dictionary to define “hereunder”.  Naeger v. Farmers Insurance Co., Inc., 2014 WL 462945 (Mo. Ct. App., W.D.).

The plaintiff/victim was evidently a passenger in a vehicle that was struck by a car being allegedly operated negligently by another.  The victim’s brief recites receipt of $190,000 from underinsured motorist insurance obtained by the operator of the car she had been in, and $50,000 from the insurer of the other driver.  The victim’s brief recites the victim’s policy identifies relevant policy limits of $250,000 for the following coverage  (emphasis removed):

We will pay all sums which an insured person is legally entitled to recover as damages from the owner or operator of an UNDERinsured motor vehicle because of bodily injury sustained by an insured person. The bodily injury must be caused by an accident, and arise out of the ownership, maintenance or use of the UNDERinsured motor vehicle.

According to the brief, there are a variety of limits on this coverage, one of which, as reported by the brief, is this:

 We will not provide insurance for a vehicle other than your insured car or your insured motorcycle, unless the owner of that vehicle has no other insurance applicable hereunder.

So here we have one of those cryptic usages of “herein”, “hereunder”, etc.  Who knows what the sentence means.

Another exclusion recited by the brief is:

This coverage does not apply to bodily injury sustained by a person:
***
3. If the injured person was occupying a vehicle you do not own which is insured for this coverage under another policy.

The victim’s counsel, relying on some out-of-State authority, makes a thoughtful argument–it surely would be an awkward state of affairs if coverage by other insurers aggregating less than the policy limit under the plaintiff’s own underinsured motorist coverage would operate to eliminate coverage under the plaintiff’s own underinsured motorist coverage.  Victim’s counsel seems to categorize the victim’s insurer as taking that position.  Perhaps the insurer/defendant will clarify–there is a cryptic reference in the brief to the $190,000 having been “settled”, although not in reference to policy limits, unlike the $50,000 from the other driver’s insurer.