Allstate Ins. Co. v. Dicke, 92-SC-442-DG

• Decision Date: 30 September 1993
• Docket Number: No. 92-SC-442-DG,92-SC-442-DG
• Parties: ALLSTATE INSURANCE COMPANY, Appellant, v. Janet DICKE, Individually, and Janet Dicke, Administratrix of the Dwayne A. Dicke Estate, Appellee.
• Court: United States State Supreme Court — District of Kentucky

Page 327

862 S.W.2d 327

ALLSTATE INSURANCE COMPANY, Appellant, v. Janet DICKE, Individually, and Janet Dicke, Administratrix

of the Dwayne A. Dicke Estate, Appellee.

No. 92-SC-442-DG.

Supreme Court of Kentucky.

Sept. 30, 1993.

Steven C. Jackson, Jackson & Jaggers, Paducah, for appellant.

Charles W. Brien, Prince & Brien, P.S.C., Benton, for appellee.

Michael E. Krauser, Henry V. Sanders, Patricia A. Abell, Louisville, Richard Hay, Somerset, for amici curiae.

LAMBERT, Justice.

In Hamilton v. Allstate Ins. Co., Ky., 789 S.W.2d 751 (1990), this Court held that an anti-stacking policy provision identical to the one at issue here was void with respect to uninsured motorist coverage. We elaborated on this holding in Chaffin v. Kentucky Farm Bureau Ins. Co., Ky., 789 S.W.2d 754 (1990), and disclosed our reliance upon the personal nature of uninsured motorist coverage, the reasonable expectation that payment of separate premiums results in separate coverages, and the public policy against deprivation of purchased coverage, particularly when the offer of such is required by statute. Here, we must determine whether a similar result shall obtain with respect to underinsured motorist coverage, or whether statutory and public policy differences between the coverages permits enforcement of the anti-stacking policy provision.

Appellee's decedent died in an automobile accident in which he was riding as a guest passenger in a motor vehicle owned and operated by another. The decedent's estate incurred damages in excess of available liability insurance limits rendering the estate entitled to underinsured motorist benefits. Appellant had issued a single automobile liability policy by which it provided two items of underinsured motorist coverage for which separate and equal premiums had been paid. Appellee sought recovery of $50,000, this being the sum of the identified coverages, but appellant, relying upon its anti-stacking clause, paid under only one such coverage in the sum of $25,000. This litigation resulted.

The trial court granted appellee's motion for summary judgment and determined that the coverages should be aggregated to a limit of $50,000. The Court of Appeals, relying on Hamilton and its predecessor decisions, affirmed the trial court. It found no significance in the statutory framework by which uninsured motorist coverage and underinsured motorist coverage are originated. See KRS 304.20-020(1) and KRS 304.39-320(2).

It is wholly unnecessary to reiterate our resolution of the issues addressed in Hamilton and Chaffin. It is sufficient to say that these decisions are recent, fully considered and appear to be controlling of the comprehensive question presented here. Therefore, we will confine our discussion to those points raised by appellant by which it seeks to distinguish this case.

Appellant contends that the difference in the statutory structure between uninsured motorist coverage and underinsured motorist coverage renders the latter nonmandatory. It contrasts the language of the uninsured statute, KRS 304.20-020(1), which provides that the coverage shall be provided unless rejected, with the language of the underinsured statute, KRS 304.39-320(2), which provides that the coverage shall be provided if requested.

The key distinction between these two statutes is clear. The uninsured motorist coverage statute absolutely requires such coverage to be present in every Kentucky automobile insurance policy, unless the insured specifically rejects that coverage in writing. On the other hand, the underinsured motorist coverage statute does not require such coverage to be present in any Kentucky automobile insurance policy, unless the insured specifically requests that coverage.

Appellant's brief, p. 8. From this, appellant concludes that legislative policy differs mandating a different result by this Court.

Reliance is placed upon Flowers v. Wells, Ky.App., 602 S.W.2d 179 (1980), which characterized underinsured motorist coverage as "optional and not mandatory" by virtue of the manner in which the coverage is obtained. Similar language is found in Mullins v. Commonwealth Life Ins. Co., Ky., 839 S.W.2d 245, 247 (1992). We regard such characterizations as only half true in that the option rests exclusively with the insured. Under the statute, the insurer has no option to deny the coverage once the request for it is made. While the uninsured and underinsured statutes differ somewhat in the means by which the coverage arises, once the coverage is written, it is statutory by virtue of the requirement that it be made available on request. KRS 304.39-320(2).

In substance, we believe the distinction between the uninsured and underinsured statutes is more illusory than real. Under the former, the insured must get the coverage unless it is rejected and under the latter, the insured must get the coverage if it is requested. While the statutory framework required appellee's decedent to take an affirmative step to obtain the coverage he wanted, that step was taken and he thus became a mandatory insured. As such, the public policy with respect to statutory coverage described in Hamilton is as applicable here as there.

Appellant further contends that the phrase "... subject to the terms and conditions of such coverage not inconsistent with this section ..." found in KRS 304.39-320(2) grants it greater freedom of contract and amounts to a diminution of relevant public policy. The answer to this contention lies in the requirement that such terms and conditions not be inconsistent with the section of the statute. A prohibition of the type at issue here which results in elimination of one of the items of coverage purchased by the insured is manifestly inconsistent with the statute and beyond the permissible scope of any right to set terms and conditions.

The parties have addressed a number of subsidiary questions which include a renewal of the debate over the doctrine of reasonable expectations, the significance of actuarial data not contained in the policy, and the public policy underlying the statutory requirement that underinsured motorist coverage be made available. We believe all such issues have been sufficiently addressed in our previous decisions and need not be reconsidered here.

The public policy of this jurisdiction with respect to stacking was first enunciated in Meridian Mutual Ins. Co. v. Siddons, Ky., 451 S.W.2d 831 (1970), and followed in various cases thereafter which include Ohio Casualty Ins. Co. v. Stanfield, Ky., 581 S.W.2d 555 (1979), Hamilton v. Allstate Ins. Co., supra, and Chaffin v. Farm Bureau Ins. Co., supra. We have consistently held that when separate items of "personal" insurance are bought and paid for, there is a reasonable expectation that the coverage will be provided. As such, we have held that it is contrary to public policy for it to be denied. While the distinctions between the statutes which govern uninsured and underinsured motorist coverage have been duly considered, none of such distinctions is sufficiently meaningful to permit a different result.

As such, we affirm the courts below.

COMBS, LEIBSON, REYNOLDS and WINTERSHEIMER, JJ., concur.

STEPHENS, C.J., dissents by separate opinion.

SPAIN, J., dissents by separate opinion in which STEPHENS, C.J., joins.

STEPHENS, Chief Justice, dissenting.

Respectfully, I dissent for the reasons stated in Hamilton v. Allstate Ins. Co., 789 S.W.2d 751 (1990).

SPAIN, Justice, dissenting.

Respectfully, I dissent. The Majority and the courts below apparently view the decision to be reached in...