Employers' Fire Ins. Co. v. Baker

Decision Date02 March 1978
Docket NumberNo. 76-156-A,76-156-A
Citation119 R.I. 734,383 A.2d 1005
PartiesThe EMPLOYERS' FIRE INSURANCE COMPANY et al. v. Lori E. BAKER et al. ppeal.
CourtRhode Island Supreme Court
OPINION

PAOLINO, Justice.

This is an appeal by the plaintiffs, The Employers' Fire Insurance Company (Employers) and American Employers' Insurance Company (American) and the defendant York Insurance Company (York), from a judgment entered in the Superior Court. This judgment denied motions for summary judgment made by the plaintiffs and York in a declaratory judgment action and granted the motion for summary judgment made by the defendant Lori E. Baker in the same action.

The facts in this case are uncontested. On June 15, 1974, defendant Baker, while operating a motorcycle owned by and registered to her, was injured by a van operated by an uninsured motorist. Sometime prior to the accident, defendant York had issued to Ms. Baker a "Special Package Automobile Policy," effective June 1, 1974, in which a Ford Mustang was listed as the only insured vehicle. She brought suit against York, claiming that she was entitled to damages under the uninsured motorist coverage of her policy. 1 York has denied coverage asserting that exclusion (p) of its policy is applicable under the circumstances of this case. That portion of the policy reads as follows:

"Exclusions: This policy does not apply:

"Under the Uninsured Motorists Coverage,

(p) to bodily injury to an insured while occupying a highway vehicle (other than an insured automobile) owned by the named insured or by any person resident in the same household who is related to the named insured by blood, marriage or adoption, or through being struck by such a vehicle."

Under the York policy a "highway vehicle" is defined as "a land motor vehicle or trailer."

Additionally, Baker alleges that on the date of the accident she was a resident of the same household as her father. As of June 15, 1974, two policies issued to her father were in full force and effect, a family combination automobile policy issued by plaintiff Employers and an automobile liability and physical damage policy issued by plaintiff American. Baker has brought suit against both Employers and American under the uninsured motorist coverage of their respective policies. 2 American and Employers do not deny coverage 3 but assert that the York policy is primary in this case and that their policies should be construed as excess coverage over that provided by York. They rely on the "other insurance" clauses in their respective policies.

The Employers clause is located in Part IV, entitled Protection Against Uninsured Motorists, and provides as follows:

"Other Insurance: With respect to bodily injury to an insured while occupying an automobile not owned by the named insured, the insurance under Part IV shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance."

The American clause is located in paragraph 7, entitled Conditions, applicable to uninsured motorist coverage, and provides as follows:

"7. Other Insurance: With respect to bodily injury to an insured while occupying an automobile not owned by the principal named insured, the insurance under this endorsement shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such automobile as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance."

On May 6, 1975, plaintiffs filed a complaint for declaratory judgment requesting the Superior Court to declare that the York policy was the primary policy applicable to Baker's accident and in addition to declare that plaintiffs' policies issued to her father should only be construed as excess insurance over the $20,000 limit of the uninsured motorist coverage of the York policy.

The plaintiffs, defendant York, and defendant Baker each moved for summary judgment. The trial justice who heard the motions reserved decision pending the filing of memoranda by the parties. In their memoranda plaintiffs renewed their argument that the policies they issued to Baker's father should be considered merely as excess coverage over the limitation of the York policy. The defendant York urged that exclusion (p) of its policy was applicable to the claim and that, therefore, there was no coverage for Baker under its policy. Finally, defendant Baker argued that exclusion (p) was invalid as contrary to the provisions of G.L.1956 (1968 Reenactment) § 27-7-2.1 and further that the coverage issued by plaintiffs was concurrent with (that is, in addition to) and not excess insurance over the York policy limit.

The trial justice held that exclusion (p) of the York policy and the "other insurance" clauses in plaintiffs' policies were void as contrary to the public policy of this state as expressed in § 27-7-2.1. She also held that both plaintiffs and defendant York should be liable for a proportionate part of Baker's loss. Accordingly, she granted Baker's motion for summary judgment and denied those of plaintiffs and defendant York. The plaintiffs and defendant York each appealed from the judgment entered pursuant to the trial justice's decision.

I

This appeal raises two questions. The first is whether an exclusion in the uninsured motorist coverage of an automobile liability policy which precludes coverage for the insured if he or she is injured while occupying an uninsured vehicle owned by the named insured is invalid as repugnant to the public policy expressed in § 27-7-2.1.

Section 27-7-2.1 mandates that all motor vehicle insurance policies contain uninsured motorist coverage unless the insured specifically rejects such coverage. It reads as follows:

"Uninsured motorist coverage. No 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 delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in § 31-31-7 as amended, under provisions approved by the insurance commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom, provided that the named insured shall have the right to reject such coverage."

There is no question here that the insured was injured while operating a highway vehicle owned by her and that that vehicle was not insured under the York policy under which she seeks to recover. Exclusion (p) of York's policy clearly and unambiguously excludes uninsured motorist coverage in the factual context presented.

"Under § 27-7-2.1 an insured is entitled to uninsured motorist coverage, unless he rejects it * * * so long as he has general motor vehicle liability coverage under a policy issued to him." Murray v. Remuck, 108 R.I. 179, 184, 273 A.2d 491, 494 (1971).

The exclusionary clause discussed in Murray applied to "all insurance coverage to an insured under the policy while employed or engaged in an automobile business." Id. In finding that exclusionary clause not repugnant to the public policy of § 27-7-2.1, we held that the contract of insurance between the parties was such that, since the entire policy was voided when the insured engaged in the named activity, the question of uninsured motorist coverage was not reached. York's exclusionary clause, however, does not effect the policy in all its aspects but only that portion concerning uninsured motorist coverage.

This distinction leaves us with a question of first impression in this state: is § 27-7-2.1 to be interpreted as a form of personal protection for an insured, or does it allow for the vehicle related interpretation urged by York?

There is a split of authority among the courts which have considered this issue. The majority view, which holds such exclusions invalid, reasons that the intent of uninsured motorist legislation is to protect persons from accidents which may not be compensable because of financially irresponsible drivers and that exclusions which restrict that coverage are violative of public policy unless specifically authorized by statute. The trend in those jurisdictions is to provide uninsured motorist coverage to all of the insured within the terms of the policy regardless of the particular vehicle occupied at the time of the injury. State Farm Automobile Insurance Co. v. Reaves, 292 Ala. 218, 292 So.2d 95 (1974); Nygaard v. State Farm Mutual Automobile Insurance Co., 301 Minn. 10, 221 N.W.2d 151 (1974). 4 The minority position, which defendant York asks us to follow, is that the uninsured motorist legislation was never intended to force insurance companies to provide uninsured motorist coverage to all vehicles owned by the insured as long as one vehicle was properly covered by the initial policy. Chambers v. Owens, 22 Ariz.App. 175, 525 P.2d 306 (1974). See also Holcomb v. Farmers Insurance Exchange, 254 Ark. 514, 495 S.W.2d 155 (1973); Owens v. Allied Mutual Insurance Co., 15 Ariz.App. 181, 487 P.2d 402 (1971). The defendant York argues in substance that § 27-7-2.1 was not...

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