RTFP (Read the Full Policy) Benefits Limited to Statutory Limits

Limited Stacking Provisions in Auto Policies Limits Recovery of UM/UIM Benefits

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Posted on August 30, 2021 by Barry Zalma

American Family Mutual Insurance Company, S.I. (“American Family”) appealed the entry of summary judgment in favor of Ms. Courtney Jones (“Jones”) on her claim for additional uninsured motorist (“UM”) benefits under two policies insuring two vehicles she was not driving at the time of her accident. In Courtney Jones v. American Family Mutual Insurance Company, S.I., No. WD84018, Court of Appeals of Missouri, Western District, Third Division (August 24, 2021) the insurer asked the Court of Appeals to limit the recovery to that required by state statute.

FACTUAL BACKGROUND

On August 4, 2017, Jones was traveling on Southwest 3rd Street in Lee’s Summit, Jackson County, Missouri, when a vehicle approaching from the opposite direction turned left in front of Jones, causing a wreck. Jones was insured under two automobile insurance policies and one motorcycle policy issued by American Family under which Jones was insured (all three policies are referred to collectively as “the policies”). The wreck was the direct and proximate result of the negligence of the other driver, who was an uninsured motorist as that term was defined in the policies. When the wreck occurred, Jones was driving the 2014 Toyota Sequoia, which was insured under the Sequoia policy.

American Family paid Jones $150,000 in UM benefits: $100, 000 under the Sequoia policy and the $25,000 Missouri Motor Vehicle Financial Responsibility Law (“MVFRL”) minimum limit under the Camry and Cycle policies.

Jones sued American Family seeking an additional $150,000 in UM benefits, for a total of $300,000 in UM coverage under the three policies. The parties stipulated that Jones’s damages from her injuries caused by the other driver’s negligence were at least $300,000.

The parties each filed motions for summary judgment and the trial court denied American Family’s motion, ranted Jones’s motion, and entered judgment in her favor and against American Family in the amount of $150, 000 on July 31, 2020.

The trial court determined that the owned-vehicle exclusion was unenforceable in all three insurance policies. The trial court concluded that the policies were: “ambiguous, when read as a whole, because the policies unequivocally and unconditionally promise $300,000 in UM coverage . . . but then, in a manner that would be confusing and ambiguous to a lay person when a policy attempts to take away coverage in the Exclusions section of the Endorsement 53 to the Uninsured Motorist Coverage-Missouri.

ANALYSIS

The parties agree that there are three policies; that the Declarations page of each policy states $100,000 UM coverage; that the Declarations page of each policy expressly notes in capitalized and bold letters – “PLEASE READ YOUR POLICY”; and that Jones is entitled to $100,000 in UM coverage under the American Family policy on the Sequoia, the vehicle involved in the accident.

American Family asserts that the trial court erred in granting summary judgment to Jones and in denying its cross-motion for summary judgment because the court misapplied the law. American Family contended that the owned-vehicle exclusion and the minimum-financial-responsibility clause, when read together with all other applicable coverage provisions of the UM policies, unambiguously limits the UM coverage under the Camry and Cycle policies to the $25,000 per person minimum required by the MVFRL. Therefore, American Family argued that stacked UM coverage is limited to a maximum total of $150,000 per person (i.e., $100,000 of UM coverage from the Sequoia Policy and $25,000 apiece from the Camry and Cycle policies).

The purpose of UM coverage is to take the place of the liability coverage the insured would have received had he or she been involved in an accident with an insured motorist. Under the MVFRL, an automobile liability insurance policy must provide UM coverage “for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom.” [§ 379.203.1.] Public policy flowing from this statutory requirement requires that multiple uninsured motorist coverages must be allowed to be stacked.

The minimum-financial-responsibility clause in each policy provides UM coverage of $25,000. Policyholders are informed that coverage will be provided up to the statutory minimum, here $25,000 per person, if the insured is injured while occupying a vehicle he or she owns but is not covered by the same policy covering the vehicle involved in the accident.

The mere presence of an exclusion does not render an insurance policy ambiguous. The appellate court is required to consider the entire policy and not just isolated provisions and it, eventually did so and ruled in favor of the insurer. The appellate court is compelled to enforce unambiguous policy language as written. Consistent with case precedent interpreting similar and even identical owned-vehicle exclusion clauses, the court concluded that the owned-vehicle exclusion is unambiguous and enforceable when considered within the context of the policy.

The insured should receive the statutory minimum UM coverage required by the MVFRL on each vehicle owned by the insured, but not involved in the accident. The Court of Appeal concluded that the trial court misapplied the law in ruling that the owned-vehicle exclusion was ambiguous and unenforceable.

The trial court’s judgment granting summary judgment to Jones was reversed, and the cause is remanded with directions that the trial court enter judgment in favor of American Family consistent with the relief sought in American Family’s motion for summary judgment and consistent with our ruling today.

ZALMA OPINION

RTFP – Read the Full Policy – is required in the interpretation of any insurance policy. The Missouri Court of Appeal did just that and was required to follow statute and precedent to apply the limits as called for by the policies, the UM/UIM statutes and state law to limit the insured to the policy limit on the vehicle she was driving at the time of the accident and the statutory – $25,000 – limit on the other vehicles whose policies she wished to stack onto the primary UM/UIM coverage.

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© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

He is available at http://www.zalma.com and zalma@zalma.com. Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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