Fairbanks v. American Family Mut. Ins. Co.

• Decision Date: 11 January 1994
• Docket Number: No. 93-1388,93-1388
• Citation: 512 N.W.2d 230,181 Wis.2d 838
• Parties: Ruth FAIRBANKS and Paul Fairbanks, Plaintiffs-Respondents, United Wisconsin Proservices, Inc., Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Appellant, d Allstate Insurance Company and Christine Crogan, Defendants.
• Court: Wisconsin Court of Appeals

Page 230

512 N.W.2d 230

181 Wis.2d 838

Ruth FAIRBANKS and Paul Fairbanks, Plaintiffs-Respondents United Wisconsin Proservices, Inc., Plaintiff, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY Defendant-Appellant, ^d Allstate Insurance Company and Christine Crogan, Defendants.

No. 93-1388.

Court of Appeals of Wisconsin.

Submitted on Briefs Nov. 8, 1993.

Opinion Released Jan. 11, 1994.

Opinion Filed Jan. 11, 1994.

Before CANE, P.J., and LaROCQUE and MYSE, JJ.

LaROCQUE, Judge.

American Family Mutual Insurance Company appeals a summary judgment declaring its insureds, Ruth and Paul Fairbanks, entitled to underinsured motorist (UIM) benefits by virtue of their right to stack the $100,000 UIM coverage for several family vehicles for which separate UIM premiums were paid. ¹ Ruth Fairbanks was injured in a collision between her vehicle and another driven by Christine Crogan. The parties to this appeal stipulated that Ruth's damages exceeded the $100,000 liability limits paid by Crogan's insurer, Allstate Insurance Company. American Family consented to entry of judgment for $100,000 pending resolution of its appeal. American Family argues that there is no stacking issue because its reducing clause eliminates any coverage in the first instance, citing Krech v. Hanson, 164 Wis.2d 170, 473 N.W.2d 600 (Ct.App.1991). Because Krech is readily distinguishable, and because American Family's reducing clause cannot be used to avoid stacking according to the holding in West Bend Mut. Ins. Co. v. Playman, 171 Wis.2d 37, 489 N.W.2d 915 (1992), we affirm.

American Family provided auto insurance for three vehicles, each declaring $100,000 coverage, and setting forth its terms in the UIM endorsement. As is demonstrated by its terms set forth later, this endorsement promises to cover damages to an insured arising out of the use of an underinsured motor vehicle, defined as follows: "Underinsured motor vehicle means a motor vehicle which is insured by a liability bond or policy at the time of the accident which provides bodily injury liability limits less than the damages an insured person is legally entitled to recover." (Emphasis added

We determined there was no coverage in Krech where the definition of underinsured motor vehicle provided: "Coverage under this provision only applies when the owner or driver of the other vehicle maintains a policy with a lower coverage than the insured." Id. at 174, 473 N.W.2d at 602 (emphasis added).

While the insurer in Krech as is the case with American Family maintained UIM coverage equal to the liability coverage of the tortfeasor, American Family defines an underinsured motorist differently from the insurer in Krech. Thus, in the words of the American Family policy, the tortfeasor, Crogan, is an underinsured motorist because she was "insured by a liability ... policy ... which provides ... liability limits [$100,000] less than the damages [over $100,000] an insured person [Ruth Fairbanks] is legally entitled to recover." (Emphasis added On the other hand, the tortfeasor in Krech was not an underinsured motorist because he did not maintain a "policy with a lower coverage than the insured." Id. at 174, 473 N.W.2d at 602. Rather, the stated coverage for both the insured and the tortfeasor was equal ($100,000). Id. at 176, 473 N.W.2d at 603.

Wisconsin's stacking statute, § 631.43(1), STATS., provides in part:

When 2 or more policies promise to indemnify an insured against the same loss, no "other insurance" provisions of the policy may reduce the aggregate protection of the insured below the lesser of the actual insured loss suffered by the insured or the total indemnification promised by the policies if there were no "other insurance" provisions. ²

Our task, therefore, is to identify American Family's "promise to indemnify" as it relates to the insured's loss. This promise is unequivocally set forth in the American Family UIM endorsement in the following language:

You have this coverage if Underinsured Motorists Coverage is shown in the declarations.

We will pay compensatory damages for bodily injury which an insured person is legally entitled to recover from the owner or operator of an underinsured motor vehicle.

Because the policy defined an underinsured motorist as earlier described, this endorsement constitutes a promise to indemnify for the loss caused by Crogan and to which the stacking statute applies.

American Family concedes that Krech went no further than this same analysis and repudiated coverage according to the definition of an underinsured motorist. It argues, however, that policies may incorporate "alternative provisions" by which UIM coverage is determined, that is, either by definition, or by...