Hein v. American Family Mut. Ins. Co.

• Citation: 166 N.W.2d 363
• Decision Date: 11 February 1969
• Docket Number: No. 53206,53206
• Court: Iowa Supreme Court
• Parties: Vern F. HEIN, as Father and next friend of Richard Allen Hein, a minor, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Appellee.

Page 363

166 N.W.2d 363

Vern F. HEIN, as Father and next friend of Richard Allen Hein, a minor, Appellant, v. AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Appellee.

No. 53206.

Supreme Court of Iowa.

Feb. 11, 1969.

Mosier, Mosier, Thomas, Beatty & Dutton, Waterloo, for appellant.

Beecher, Buckmaster, Beecher, Holmes & Lindeman, Waterloo, for appellee.

MOORE, Justice.

Plaintiff, Vern F. Hein, as father and next friend, brought this action at law against defendant company for medical expenses resulting from injury of his minor son, Richard Hein, in an automobile accident September 5, 1963. Richard was riding in a car driven by a schoolmate, Willard P. Dunfee, when injured.

The facts are undisputed. Defendant does not deny it had issued both plaintiff and his son separate automobile insurance policies which were in force and effect at the time of the accident. The company, however, denied liability on the grounds certain policy provisions relieved it of any liability under the facts.

On January 15, 1965 plaintiff amended his previously filed petition in response to a motion to make more specific. To division I he attached exhibit A, the policy issued by defendant to Richard and to division II attached exhibit B, the policy issued by defendant to himself. He further set out hospital, ambulance and doctor expenses he had incurred within one year from the date of the accident in the sum of $323.45. Additionally he added paragraph V wherein he itemized and claimed $1250 anticipated medical expenses.

The trial court sustained defendant's motion to strike paragraph V concluding 'the expenses claimed therein are not expenses incurred within one (1) year from the time of the accident' which condition was precedent to recovery under the medical payment provision of each policy. The court also struck division I in its entirety on the ground only the policy providing the higher medical expense coverage was applicable, which policy was set out in division II.

On trial to the court for a determination of whether plaintiff was entitled to recover the sum of $323.45, under the medical payments provision of the policy issued to Vern Hein, the court entered judgment for defendant and plaintiff has appealed.

Plaintiff asserts the trial court erred in (1) ruling as a matter of law the two policies were mutually exclusive, (2) ruling as a matter of law claimed expenses above $323.45 were not 'incurred' within one year within the meaning of the policy terms, and (3) holding plaintiff's claim was excluded under the facts as applied to the 'other insurance' provisions in Vern Hein's policy.

I. Plaintiff's action seeks recovery of medical expenses due under the medical services clauses of the automobile liability policies issued to him and his son. This type of coverage is frequently available under today's automobile liability policies, and typically under such protection the insurer assumes liability up to a specific amount for reasonable expenses of medical services rendered to or for the insured, relative or member of his household as a result of an automobile accident. 8 Appleman, Insurance Law and Practice, section 4896, page 349.

Such protection is not dependent upon the negligence of the insured and is actually a type of third-party beneficiary health insurance contract for which the insurer charges a separate portion of the total premium. See Nagy v. Lumbermens Mutual Casualty Co., R.I., 219 A.2d 396, 398; Severson v. Milwaukee Auto Ins. Co., 265 Wis. 488, 61 N.W.2d 872, 874. On these well recognized principles the parties seem to be in agreement.

II. Plaintiff argues the trial court erred in striking that portion of his petition which sought recovery under the medical expense provisions of the policy issued to Richard Hein.

The material portions thereof provided: 'Medical Expense Coverage. To pay all reasonable medical expense incurred within one year from the date of the accident: 1. To or for the named insured and each relative who sustains bodily injury caused by accident, a. while occupying an automobile.'

The medical expense coverage under Richard's policy was limited to a $500 maximum.

The policy issued to Vern Hein afforded coverage in almost identical language except the maximum coverage therein was fixed at $2000.

Defendant admits an isolated reading of the language quoted above would indicate plaintiff was entitled to recover under both policies. It urges, however, these provisions cannot be read in isolation since that would result in an interpretation contrary to the manifest intent of the contracts when read in their entirety. In disclaiming any liability under the medical expense provision of Richard's policy, defendant relies on the language of paragraph 5 in Vern Hein's policy. Paragraph 5 provides: '5. TWO OR MORE POLICIES. When insurance applicable to a temporary substitute or non-owned automobile is provided by two or more policies issued by this company, as respects such insurance, the liability of this company under all of such policies shall be limited to (1) the greatest applicable limit of liability as stated in the Declarations of any one of such policies in which the person claiming coverage is designated as the named insured, or (2) if not so designated, to the greatest applicable limit of liability as stated in the Declaration of any one of all of such policies.'

Relying on this provision the trial court ruled plaintiff was not entitled to recover under the medical expense clause of Richard's policy as the two policies were clearly mutually exclusive with respect to medical expenses, the policy having the higher limits being the only one applicable.

Plaintiff urges this liability limiting provision is not applicable as (1) the clear and explicit language of the insurance contracts reveals the clause is inapplicable to Richard, or (2) if ambiguous, its interpretation must be given a reasonable construction and construed against the insurer. The clear and unambiguous language of paragraph 5 is fatal to plaintiff's claim under either theory.

Rule 344(f), par. 14, Rules of Civil Procedure provides: 'In the construction of written contracts, the cardinal principle is that the intent of the parties must control; and except in cases of ambiguity, this is determined by what the contract itself says.'

It is so well settled as to need no citation of authority that an insurance policy prepared by the insurer must be liberally construed in favor of the insured and if any relevant provision is ambiguous it is to be weighed in favor of the latter. This rule of course is applicable only in case of ambiguity.

This rule does not warrant an arbitrary judicial construction of the terms of the instrument. The court must give effect to exceptions and limitations in a policy as they are written and unless it may be said there is ambiguity in the words found in the policy, there is no occasion for the exercise of choice of interpretation. Hiatt v. Travelers Ins. Co., 197 Iowa 153, 156, 197 N.W. 3, 4, 33 A.L.R. 655; Field v. Southern Sur. Co., 211 Iowa 1239, 1242, 1243, 235 N.W. 571, 573; Wenthe v. Hospital Service, Inc., 251 Iowa 765, 768, 100 N.W.2d 903, 905.

A policy is a written contract and its terms are to be given reasonable construction. Ambiguity created by giving a strained or unnatural meaning to words or phrases or by mere casuistry does not constitute genuine doubt. Youngwirth v. State Farm Mut. Auto Ins., 258 Iowa 974, 977, 140 N.W.2d 881, 883.

An insurance policy should not be so construed as to give it a meaning that either extends or restricts the coverage beyond that actually provided. It should be construed as a whole, and the clear and unambiguous language must be given its plain meaning. Iowa National Mutual Ins. Co. v. Fidelity & Cas. Co., 256 Iowa 723, 725, 128 N.W.2d 891, 893; Youngwirth v. State Farm Mut. Auto Ins., supra; Wooddale, Inc. v. Fidelity and Deposit Co. of Maryland, 8 Cir., 378 F.2d 627 (1967).

It is undisputed Richard Hein was occupying a 'non-owned automobile' within the meaning of the policy when the accident occurred and also that defendant had issued two policies which provided coverage for him while occupying a non-owned automobile. Both these factors operate to bring plaintiff's claim squarely within the contemplated scope of paragraph 5. Its clearly expressed purpose in such a case is to limit plaintiff's claim to the medical payments provision of the policy under which the higher limits are provided.

III. Plaintiff asserts the trial court erred in ruling as a matter of law that the claimed medical expenses in excess of $323.45 were 'not incurred within one year' within the meaning of the policy terms.

As pointed out, supra, the insurer obligated itself under both policies 'to pay all reasonable medical expenses incurred within one year from the date of the accident.'

Plaintiff's petition as amended asked in division II for total medical expenses of $1573.45. Plaintiff alleged actual medical service of $323.45 had been furnished Richard within one year after the accident. It further alleged an additional medical expense of $1250 was anticipated for two future operations.

Plaintiff argues the anticipated medical expense was 'incurred' within one year because they would be incurred as a result of the accident. Defendant contends that to so read the language of the medical expense provision is to misconstrue its clear meaning and extend coverage beyond that which was obviously intended. Counsel have not cited, nor has our research disclosed any case in which we have considered this precise question, although in Flanagan v. Baltimore & Ohio R.R. Co., 83 Iowa 639, 643, 644, 50 N.W. 60, 61, we briefly considered the meaning of the word 'incurred' in another context and indicate it means 'paid out' or 'became liable for.'

'Incur means to become liable or subject to; to render or become liable or subject to through one's own action or to bring upon...