Oklahoma requires every auto policy to include uninsured motorist (UM) coverage; underinsured motorist (UIM) coverage applies when the at-fault driver’s liability limits are less than the value of the claim. Both are governed by 36 O.S. Section 3636, which sets the substitution, stacking, and rejection-form rules that control how these claims are handled.
UM vs. UIM: Coverage Trigger Quick Reference
| Coverage Type | When It Applies | Statutory Trigger |
|---|---|---|
| Uninsured Motorist (UM). | Tortfeasor has no liability insurance; tortfeasor’s insurer is insolvent within 1 year of the accident; tortfeasor is unidentified (hit-and-run). | 36 O.S. § 3636(C)(1): vehicle whose liability insurer is insolvent; unidentified vehicle per § 3636(C). |
| Underinsured Motorist (UIM). | Tortfeasor has liability insurance, but the liability limits are less than the amount of your client’s claim. | 36 O.S. § 3636(C)(2): “insured motor vehicle, the liability limits of which are less than the amount of the claim of the person or persons making such claim, regardless of the amount of coverage of either of the parties in relation to each other.” |
The UIM trigger is claim-to-limits, not coverage-to-coverage: the statute compares the tortfeasor’s liability limits to the claim amount, not to the insured’s own UM/UIM limits, so a substantial liability policy does not preclude UIM coverage once the claim value exceeds it. Uptegraft v. Home Ins. Co., 662 P.2d 681 (Okla. 1983); Keel v. MFA Ins. Co., 553 P.2d 153 (Okla. 1976).
Screen every new file for whether the other driver carried no insurance or not enough of it before ruling out a client’s own UM/UIM claim; the trigger analysis above applies regardless of how the underlying tort case is postured.
36 O.S. § 3636: Subsection-by-Subsection Reference
| Subsection | Subject | Key Rule |
|---|---|---|
| § 3636(A). | Mandatory Coverage. | No auto liability policy may be issued in Oklahoma unless it includes UM coverage for vehicles registered or principally garaged in-state; every auto policy must offer UM coverage. |
| § 3636(B). | Limits, Stacking, Arbitration. | Coverage must meet Oklahoma’s compulsory minimum liability limits; higher limits must be offered; stacking prohibited for policies issued after November 1, 2014, unless expressly provided; insured may demand arbitration; insured may sue tortfeasor if no arbitration agreement within 3 months. |
| § 3636(C). | UM/UIM Triggers. | Defines “uninsured motor vehicle” to include: (1) vehicle whose liability insurer is insolvent; (2) vehicle whose liability limits are less than the amount of the claim. |
| § 3636(D). | Insolvency Coverage Window. | Insolvency protection under subsection (C)(1) applies only if the tortfeasor’s liability insurer becomes insolvent within 1 year after the accident. |
| § 3636(E). | Exclusion for Uninsured Owned Vehicles. | No UM coverage while the insured occupies an uninsured vehicle owned by, furnished to, or available for the regular use of the named insured, resident spouse, or resident relative. |
| § 3636(F). | Subrogation and Substitution. | UM insurer is subrogated to the insured’s recovery rights; when a tentative tort settlement for liability limits has been reached, insurer has 60 days from proper written notice to substitute its payment; failure to pay within 60 days forfeits all subrogation rights. |
| § 3636(G). | Rejection of UM Coverage. | Named insured may reject UM in writing; rejection is valid for the life of the policy and is not re-triggered by renewal, reinstatement, or amendment unless the named insured requests reinstatement. |
| § 3636(H). | Mandatory Offer Form (eff. April 1, 2005). | Prescribes required offer language; insurer must present four options: same limits as bodily injury coverage, minimum limits ($25,000 per person/$50,000 per occurrence), an amount in between, or rejection of UM coverage. |
The Substitution Doctrine: 36 O.S. § 3636(F)
The § 3636(F) substitution mechanism is where most UM/UIM practitioners run into trouble. Once the tortfeasor offers policy limits, the UM carrier must choose: waive subrogation and let the settlement proceed, or substitute its own payment for the tortfeasor’s settlement and step into the insured’s recovery rights. A carrier that misses the 60-day window after proper written notice forfeits all subrogation rights on amounts paid under the UM policy.
The 60-Day Notice Procedure
| Step | Action | Requirement |
|---|---|---|
| 1. | Tortfeasor offers policy limits. | Substitution does not come into play until there is a full policy limits offer; do not send the § 3636(F) notice prematurely. |
| 2. | Send a written notice to the UM carrier by certified mail. | Notice must include: (a) written documentation of pecuniary losses, including copies of all medical bills; (b) written authorization or a court order to obtain reports from all employers and medical providers. |
| 3. | UM carrier has 60 days to respond. | Within 60 days, the carrier may substitute its payment to the insured for the tentative settlement amount; if it does, it receives the insured’s right of recovery against the tortfeasor to the extent of the substituted payment. |
| 4. | Carrier misses the 60-day window. | The carrier “has no right to the proceeds of any settlement or judgment, as provided herein, for any amount paid under the uninsured motorist coverage.” This is a complete forfeiture of subrogation rights. |
Once the limits offer is on the table, send the § 3636(F) notice immediately by certified mail; the 60-day clock is a hard deadline, and if notice is defective (missing medical bills or authorizations) the clock may not start. Calendar both the deadline and a day-45 follow-up.
Pre-Payment of Benefits Does Not Buy Subrogation
Section 3636(F) is the exclusive mechanism for a UM carrier to acquire subrogation rights: substitution of payment within 60 days of proper written notice after a policy-limits offer. A carrier that pays UM benefits before the tortfeasor offers policy limits has not “purchased” subrogation rights outside this process, and the plain text of § 3636(F) gives it no alternative path through early payment. The statute conditions subrogation on the substitution procedure, not the timing of benefit payments.
Burch v. Allstate: No Need to Wait for the Tortfeasor’s Offer
Under Burch v. Allstate Insurance Company, 1998 OK 129, 977 P.2d 1057, the UM carrier is directly and primarily liable to the insured for the entire loss up to policy limits. Once your client’s claim value exceeds the tortfeasor’s policy limits, the UIM carrier must pay up to the UIM limits without waiting for a policy-limits offer; you do not have to exhaust the tort case first when damages clearly exceed available liability coverage. Structuring the policy-limits demand letter to document that gap early strengthens the Burch argument if the UIM carrier resists.
Raymond v. Taylor: UM Subrogation Limited to Primary Insurer
In Raymond v. Taylor, 412 P.3d 1141 (Okla. 2017), the Oklahoma Supreme Court held that under § 3636(F), a UM carrier’s subrogation rights reach only proceeds from the tortfeasor’s primary liability insurer, not the tortfeasor’s excess policy. This keeps the insurer from clawing back UM payments out of your client’s recovery against excess coverage in high-limit cases.
Stacking Rules
For policies issued or renewed after November 1, 2014, § 3636(B) prohibits stacking UM/UIM limits across multiple vehicles or multiple policies unless the policy expressly provides for aggregation; recovery caps at the single highest applicable limit. For policies issued before that date, pre-amendment stacking arguments remain viable. Confirm the policy’s original issuance date, not just the current policy period; renewal of a pre-2014 policy may not reset that date for stacking purposes.
UM Rejection Form Defects
A defective UM rejection form can restore full UM coverage even when the insured signed it; the § 3636(G) and § 3636(H) requirements are technical and track the disclosure the Oklahoma Insurance Department’s consumer auto insurance brochure describes. Scrutinize the form on every case where UM coverage was purportedly waived:
| Issue to Check | Legal Consequence if Defective |
|---|---|
| Did the form use the mandatory § 3636(H) offer language in effect at the time of issuance? | Non-compliant form may render rejection invalid; § 3636(H) mandatory offer form required for policies issued after April 1, 2005. |
| Did the form present all four required options (same-as-BI limits, minimum limits, intermediate amount, and rejection)? | Failure to present all options may void the rejection. |
| Was the rejection signed by the named insured specifically? | Signature by an authorized agent or spouse may not satisfy § 3636(G) for the named insured’s coverage. |
| For policies issued before April 1, 2005: Does the form meet the then-current statutory requirements? | Pre-§ 3636(H) rejections are governed by the pre-amendment form requirements; verify against the version of § 3636 in effect at the time of issuance. |
The requirements are precise, and rejection forms must comply exactly. Insurers presenting technically defective forms have acknowledged coverage owed once confronted with the deficiency. Review the actual signed form, not just the declarations page.
Hospital Liens and UM Proceeds: The Kratz Rule
Hospital liens filed under 42 O.S. § 43 attach only to a plaintiff’s recovery from the tortfeasor’s liability coverage, not to UM/UIM proceeds. This is the holding of Kratz v. Kratz, 1995 OK 63, 905 P.2d 753, where the Oklahoma Supreme Court unequivocally ruled that § 43 liens do not reach uninsured motorist proceeds, expressly overruling prior contrary authority.
When your client has both a tort recovery and a UM/UIM recovery, the hospital lien attaches only to the tortfeasor’s liability proceeds; structure settlements accordingly, and cite Kratz directly if collection counsel argues otherwise. See how Oklahoma ranks competing liens against a settlement when more than one lienholder is at the table.
Separately, 31 O.S. § 1(A)(21) exempts a personal injury or wrongful death claim, including UM/UIM proceeds, from execution up to $50,000 net; amounts above that figure remain reachable by creditors in bankruptcy, so confirm the net figure before advising a client who is in or near bankruptcy.
WC Subrogation and UM/UIM: The Interaction
The workers’ compensation carrier’s subrogation right is derivative of the tort claim: it reaches proceeds from the tortfeasor’s liability coverage, not your client’s own UM/UIM coverage, which the client paid the premiums for. Reject any WC carrier argument to the contrary.
Sequencing is the critical issue. Resolving the district court tort case before the WC joint petition risks letting the comp carrier claim a credit for the entire net recovery against future benefits, potentially eliminating future PPD and medical entitlement; a settlement-sequencing framework for workers’ compensation subrogation helps avoid that trap.
| Scenario | Risk | Recommended Approach |
|---|---|---|
| Resolve the district court (tort and UM) before the WC joint petition. | WC carrier may claim credit for the entire net recovery against future benefits, potentially eliminating future PPD and medical entitlement. | Avoid unless WC carrier agrees in writing to waive subrogation, reimbursement rights, and future offset claims; get the WC subrogation figure liquidated before any district court distribution. |
| Resolve the WC joint petition first. | Lower risk if the settlement language is drafted correctly. | Settlement language must waive both subrogation rights AND the right to reimbursement of all third-party recovery; “waiving subrogation” alone is not enough. |
| Concurrent resolution. | Requires active coordination between WC counsel and district court counsel; all parties must agree to amounts and no future offsets. | Have WC carrier’s counsel present at settlement conference; get agreement in writing before distributing any funds. |
Under Frank’s Tong Service v. Lara, 2013 OK CIV APP 22, the settlement document must waive both the subrogation right and the right to reimbursement of third-party recovery; a waiver covering only subrogation leaves the reimbursement right intact, so draft both expressly.
36 O.S. § 6092 separately bars an auto insurer from subrogating or setting off against a named insured or resident relative for benefits paid under the medical-services-coverage portion of the policy. Verify against the client’s declarations page whether that medical-services coverage is UM-linked before relying on § 6092 to block a specific subrogation demand.
Bad Faith in the UM/UIM Context
UM/UIM claims are first-party claims: the insurer owes your client a duty of good faith, including a reasonable investigation and paying the claim without subordinating the insured’s interests to its own. Remedies can include punitive damages.
Common bad faith issues to watch for in UM/UIM cases:
| Issue | Bad Faith Theory |
|---|---|
| Use of defense-retained IME doctors to evaluate first-party UM claims. | Deploying a physician whose standard role is adverse to plaintiffs to evaluate your client’s own first-party claim raises bad faith questions about the reasonableness and independence of the adjustment; this is the same doctor the carrier uses to deny third-party claims, now being used against its own insured. |
| Unreasonable delay in investigating or paying UM benefits. | Standard first-party bad faith under Oklahoma law: insurer may not subordinate the interests of its insured to its own financial interests. |
| Inadequate investigation before denying or reducing the claim. | Obligation to conduct a full, reasonable investigation before reducing or denying benefits; failure to investigate constitutes independent grounds for bad faith. |
When the carrier used a retained defense expert in the adjustment, pursue financial discovery against that expert from the outset; Oklahoma courts have ordered defense examiners to produce billing and financial records showing the full extent of their relationship with the carrier. In at least one Oklahoma case the examiner refused and opposing counsel withdrew the expert rather than comply, so subpoenaing those records forces a choice between disclosure and losing the witness.
The UIM “Gap” Problem: Settling for Less Than Liability Limits
The UIM trigger under § 3636(C)(2) turns on the “amount of the claim” against the tortfeasor’s liability limits, not the settlement amount. Oklahoma law does not clearly resolve what happens when your client settles the tort case for less than the available limits.
The statutory text supports a claim-value trigger, not a settlement-proceeds trigger, but § 3636 does not expressly address the settlement-below-limits scenario, and the tension between the two readings creates genuine litigation risk.
Practical guidance:
- Before settling for less than available liability limits, analyze and document the impact on the UIM claim in the file.
- If the claim value clearly exceeds the liability limits, the UIM carrier’s Burch obligation arises from the claim value, not the settlement amount; build that record before settling.
- Phillips v. New Hampshire Insurance Co., 263 F.3d 1215 (10th Cir. 2001), analyzing § 3636 as a “speedy payment mechanism,” supports a claim-value interpretation of the trigger.
- Porter v. MFA Mutual Ins. Co., 643 P.2d 302 (Okla. 1982) addressed the gap analysis in an earlier statutory context; Brooks v. Philadelphia Indemnity Insurance Co., 2022 WL 402386 (10th Cir. 2022) provides a more recent federal analysis.
Hasbrook & Hasbrook maintains this Section 3636 reference as Oklahoma’s appellate and federal courts continue to interpret the substitution, stacking, and gap-claim issues above.
