Britton v. Safeco Ins. Co. of America

• Decision Date: 03 October 1985
• Docket Number: No. 51129-2,51129-2
• Citation: 104 Wn.2d 518,707 P.2d 125
• Parties: Edward F. BRITTON, Respondent, v. SAFECO INSURANCE COMPANY OF AMERICA, Appellant.
• Court: Washington Supreme Court

Page 518

104 Wn.2d 518

707 P.2d 125

Edward F. BRITTON, Respondent, v. SAFECO INSURANCE COMPANY OF AMERICA, Appellant.

No. 51129-2.

Supreme Court of Washington En Banc.

Oct. 3, 1985.

Randall & Danskin, Michael J. Myers, Spokane, for appellant

Golden & Knowlton, John O. Knowlton, Walla Walla, for respondent.

Bryan P. Harnetiaux, Delay, Curran, Thompson & Pontarolo, Michael J. Pontarolo, Spokane, for amicus curiae Washington Trial Lawyers Assn ANDERSEN, Justice.

FACTS OF CASE

The appellant insurance company (insurer) issued an automobile policy to Columbia County; respondent was the sheriff of that County. Respondent, acting within the scope of his duties, was injured when the County automobile he was driving was struck by another automobile on November 24, 1980, a critical date in our analysis. Since respondent was within the coverage of the policy, he will be referred to as the "insured".

Claiming disability from his injuries, the insured retired in December of 1982 thereby being eligible for and receiving benefits under RCW 41.26, the Washington Law Enforcement Officers' and Fire Fighters' Retirement System Act (LEOFF).

The insured then brought a declaratory judgment action against the insurer seeking to establish a right to compensation for his injuries under the uninsured/underinsured motorist endorsement on the Columbia County policy. That endorsement provided that the amount payable thereunder would be reduced by:

All sums paid or payable under any workers' compensation, disability benefits or similar law, ...

Both sides moved for summary judgment. The insured's motion was granted on the basis that (1) the setoff clause was against public policy; and (2) LEOFF benefits were a collateral source not to be utilized for offset.

We remand for the determination of additional facts which will be dispositive under our analysis.

One ultimate issue is presented.

ISSUE

It is permissible for an uninsured/underinsured motorist endorsement to provide a setoff of LEOFF disability benefits from compensation that the insured would otherwise be entitled to receive under his uninsured/underinsured motorist endorsement?

DECISION

CONCLUSION. The answer to the question posed by this issue depends upon certain critical dates described hereafter. The record before us is unclear thereon, indeed silent, so the cause is remanded to the trier of fact with the following instructions:

First, to determine as a fact if the motorist who ran into the insured's automobile was uninsured. If he was, then the disability benefits setoff clause in the endorsement is not valid. Under both the pre-1980 uninsured motorist statute, and its 1980 successor (which also applies to uninsured motorists), such a reduction in the statutorily mandated uninsured motorist coverage is against the policy of these statutes and is not permissible; therefore, the disability benefits setoff clause is void.

Second, and if the motorist who ran into the insured's automobile had some liability insurance at the time but was underinsured, to determine as a fact whether the underinsured motorist endorsement was issued or renewed after the September 1, 1980 effective date of the 1980 underinsured motorist act and before the November 24, 1980 accident. (a) If it was not, then the underinsured motorist endorsement is not controlled by the statutory policy but by the language of the insurance contract, and the disability benefits setoff clause is valid and enforceable. (b) If it was, then the 1980 act is applicable and the disability benefits setoff clause in the endorsement is against the statutorily mandated policy of the underinsured motorist statute and void.

To analyze and decide the issue, we examine the uninsured/underinsured motorist coverage which has evolved through four major stages in this state.

The first stage occurred in the mid-1950's when the insurance industry responded to the problem of the financially irresponsible motorist, the stolen car and hit and run accident, by voluntarily offering uninsured motorist coverage to the public. In construing such coverage this court has applied principles of insurance contract law against the backdrop of public policy. ¹

The second stage was the enactment of uninsured motorist statutes, here and elsewhere, requiring automobile liability insurers to offer uninsured motorist coverage as a supplement to every automobile liability policy. All states now have an uninsured motorist statute of some type. Our uninsured motorist statute was enacted in 1967. This statute, contained in a single paragraph, was the precursor of our present statute on the subject. ²

Since 1967, we have developed a body of law about this uninsured motorist statute. Shortly before the 1980 Legislature changed the statute, this court summarized the case law:

We have previously held [the uninsured motorist statute] is to be liberally construed in order to provide broad protection against financially irresponsible motorists. Touchette v. Northwestern Mut. Ins. Co., 80 Wn.2d 327, 494 P.2d 479 (1972). The purpose of the statute is to allow an injured party to recover those damages which would have been received had the responsible party maintained liability insurance. Touchette v. Northwestern Mut. Ins. Co., supra.

The insurance carrier which issued the policy stands, therefore, in the shoes of the uninsured motorist to the extent of the carrier's policy limits.

State Farm Mut. Auto. Ins. Co. v. Bafus, 77 Wn.2d 720, 724, 466 P.2d 159 (1970).

The statute was designed to protect innocent victims of uninsured negligent motorists, not to protect vehicles. Cammel v. State Farm Mut. Auto. Ins. Co., 86 Wn.2d 264, 543 P.2d 634 (1975). Where an insurance policy does not provide the protection mandated by [the uninsured motorist statute], the offending portion of the policy is void and unenforceable. Touchette v. Northwestern Mut. Ins. Co., supra; Federated Am. Ins. Co. v. Raynes, 88 Wn.2d 439, 563 P.2d 815 (1977); Grange Ins. Ass'n v. Great Am. Ins. Co., 89 Wn.2d 710, 575 P.2d 235 (1978).

The statute does not contemplate a piecemeal whittling away of liability for injuries caused by uninsured motorists. First Nat'l Ins. Co. of America v. Devine, 211 So.2d 587, 589 (Fla.Dist.Ct.App.1968); Touchette v. Northwestern Mut. Ins. Co., supra.

Finney v. Farmers Ins. Co., 92 Wash.2d 748, 751-52, 600 P.2d 1272 (1979).

The third stage was when insurers voluntarily began offering underinsured motorist coverage to protect motorists not only against uninsured motorists but also against underinsured motorists. The ultimate meaning of "underinsured" is not before us.

The fourth and present stage of development was the enactment of legislation requiring insurers to offer underinsured motorist coverage as well as uninsured motorist coverage. Our statute is from an amendment to the original uninsured motorist statute; it lumped both uninsured and underinsured coverage requirements together. Our 1980 uninsured/underinsured motorist statute, as it existed at the time of the insured's accident, read as follows:

(1) "Underinsured motor vehicle" means a motor vehicle with respect to the ownership, maintenance, or use of which either no bodily injury liability bond or insurance policy applies at the time of an accident, or with respect to which the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable to a covered person after an accident is less than the damages which the covered person is legally entitled to recover.

(2) No new policy or renewal of an existing policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance, or use of a motor vehicle shall be issued with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of underinsured motor vehicles and hit-and-run motor vehicles because of bodily injury or death, resulting therefrom, except while operating or occupying a motorcycle or motor-driven cycle, and except while operating or occupying a motor vehicle owned or available for the regular use by the named insured or any family member, and which is not insured under the liability coverage of the policy.

(3) Coverage required under subsection (2) of this section shall be in the same amount as the insured's third party liability coverage unless the insured rejects all or part of the coverage as provided in subsection (4) of this section.

(4) The insured may reject underinsured coverage and the requirements of subsections (2) and (3) of this section shall not apply. If the insured has rejected underinsured coverage, such coverage shall not be included in any supplemental or renewal policy unless the insured subsequently requests such coverage in writing.

(5) The limit of liability under the policy coverage may be defined as the maximum limits of liability for all damages resulting from any one accident regardless of the number of covered persons, claims made, or vehicles or premiums shown on the policy, or premiums paid, or vehicles involved in an accident.

(6) The policy may provide that if an injured person has other similar insurance available to him under other policies, the total limits of liability of all coverages shall not exceed the higher of the applicable limits of the respective coverages.

Laws of 1980, ch. 117, § 1, p. 361 (RCW 48.22.030).

Under this 1980 enactment, both uninsured and underinsured motorist coverages are together termed "underinsured" motorist coverage and come within the same statute RCW 48.22.030. For the purposes of this opinion, however, the distinction between uninsured motorist coverage and underinsured motorist coverage will be maintained in the interest of...