Hornick v. Owners Ins. Co.

• Decision Date: 22 December 1993
• Docket Number: No. 92-2017,92-2017
• Citation: 511 N.W.2d 370
• Parties: Estella L. HORNICK and Merrill David Hornick, Appellees, v. OWNERS INSURANCE COMPANY, Appellant, Milwaukee Guardian Insurance, Inc., Defendant-Appellee, Esther Stephens, Defendant.
• Court: Iowa Supreme Court

Page 370

511 N.W.2d 370

Estella L. HORNICK and Merrill David Hornick, Appellees, v. OWNERS INSURANCE COMPANY, Appellant Milwaukee Guardian Insurance, Inc., Defendant-Appellee Esther Stephens, Defendant.

No. 92-2017.

Supreme Court of Iowa.

Dec. 22, 1993.

Randall C. Stravers, Pothoven, Blomgren & Stravers, Oskaloosa, for appellant.

J. Terrence Denefe, Kiple, Kiple, Denefe, Beaver & Gardner, Ottumwa, for appellees.

Allen A. Anderson, Spayde, White & Anderson, Oskaloosa, for defendant-appellee.

Considered by HARRIS, P.J., and LAVORATO, NEUMAN, SNELL, and ANDREASEN, JJ.

ANDREASEN, Justice.

Here we must decide if a pedestrian, who was struck and injured by an underinsured negligent motorist, is entitled to underinsured motorist benefits under her husband's automobile liability insurance policy. The district court concluded the injured pedestrian was an insured under the policy and entitled to underinsured motorist coverage. We reverse and remand based on a policy exclusion.

I. Background.

On May 4, 1990, Estella Hornick was injured when struck by a vehicle driven by Esther Stephens while she was walking in a parking lot. Stephens was insured under an automobile liability policy. At the time of the accident, Estella was the named insured under an automobile policy issued by Milwaukee Guardian Insurance Company (Milwaukee) covering a 1982 Chrysler auto she owned jointly with her husband, Merrill David Hornick. The policy included underinsured motorist coverage of $100,000 per person, per occurrence. Merrill was the named insured under a policy issued by Owners Insurance Company (Owners) covering four vehicles he owned jointly with his wife. This policy provided underinsured motorist coverage of $300,000 per person, per occurrence.

Estella and Merrill filed suit against Stephens claiming damages for personal injury and loss of consortium. They also named as defendants their insurance carriers, Owners and Milwaukee. Milwaukee admitted it provided underinsured motorist coverage to Estella. Owners denied Estella had underinsured motorist coverage under the policy issued to Merrill.

Before trial, Owners filed a motion for summary judgment claiming Estella was not an insured entitled to underinsured motorist coverage because of the terms and exclusions in the policy. District Judge Dan F. Morrison denied Owners' motion.

Later, the case was tried to a jury. The defendants admitted Stephens' negligence and stipulated the existence of Stephens' insurance in the maximum amount of $25,000. The jury awarded Estella bodily injury damages of $39,248.56 and Merrill consortium damages of $1,500.

Hornicks' motion for judgment on the verdicts, which was resisted by Owners, was granted by Judge Phillip R. Collett. The court entered judgment against Stephens for the verdict amount and then, after deducting $25,000, apportioned the underinsured amount between Owners and Milwaukee based upon the limits of underinsured motorist coverage provided by the carriers. Both carriers had "other insurance" clauses which provided for proportional sharing of the loss. This apportionment resulted in a judgment of $11,811.42 plus interest against Owners and a judgment of $3,937.14 plus interest against Milwaukee. Owners appealed from this judgment and from other rulings made by the court.

II. Review.

Our scope of review is for correction of errors at law. Iowa R.App.P. 4. The basic issue presented in this appeal involves the construction and interpretation of terms of an automobile insurance policy.

Construction of an insurance policy--the process of determining its legal effect--is a question of law for the court. Interpretation--the process of determining the meaning of words used--is also a question of law for the court unless it depends on extrinsic evidence or a choice among reasonable inferences to be drawn.

A.Y. McDonald Indus. v. INA, 475 N.W.2d 607, 618 (Iowa 1991).

When construing the uninsured and underinsured provisions of an insurance policy it is necessary for us to carefully review both the language of the insurance policy and the provisions of chapter 516A.

Iowa Code chapter 516A authorizes automobile insurance coverage for protection against injuries caused by underinsured motorists and uninsured motorists or hit-and-run vehicles. It is mandatory that such coverage be provided by a motor vehicle liability insurance policy unless such coverage is rejected by the insured.

Tri-State Ins. Co. of Minnesota v. DeGooyer, 379 N.W.2d 16, 18 (Iowa 1985). We recognize:

A statute that authorizes a contract of insurance has application beyond merely permitting or requiring such a policy. The statute itself forms a basic part of the policy and is treated as if it had actually been written into the policy. The terms of the policy are to be construed in light of the purposes and intent of the applicable statute.

Id. at 17 (citations omitted); see also Veach v. Farmers Ins. Co., 460 N.W.2d 845, 847 (Iowa 1990).

III. Scope of Underinsurance Coverage.

Iowa Code chapter 516A provides mandatory protection against uninsured, underinsured, or hit-and-run motorists. We first consider whether the statute requires an insurer to offer insurance protection to an insured person who, as a pedestrian, is injured when struck by an uninsured or underinsured motor vehicle.

The language of chapter 516A makes it clear that the statute was intended to protect persons insured under a liability policy. Protection extends to persons

who are legally entitled to recover damages from the owner or operator of an uninsured ... or an underinsured motor vehicle because of bodily injury ... including death resulting therefrom, caused by accident and arising out of the ownership, maintenance, or use of such uninsured or underinsured motor vehicle....

Iowa Code § 516A.1 (1989). We have construed this section so that uninsured and underinsured coverages are complementary. American States Ins. Co. v. Estate of Tollari, 362 N.W.2d 519, 522 (Iowa 1985). "They protect against essentially one peril: loss caused by a tortfeasor who is not financially responsible." Id.

To provide protection against this peril, the coverage must be personal and portable. See Bradley v. Mid-Century Ins. Co., 409 Mich. 1, 294 N.W.2d 141, 152 (1980) (Insureds are protected "when injured in an owned vehicle named in the policy, in an owned vehicle not named in the policy, in an unowned vehicle, on a motorcycle, on a bicycle, whether afoot or on horseback or even on a pogo stick."). Uninsured and underinsured coverage protects and follows the person, not the vehicle.

Although we have not directly addressed the applicability of chapter 516A to pedestrians, we find ample support for this conclusion. In Westerhausen v. Allied Mutual Insurance Co., 258 Iowa 969, 971-72, 140 N.W.2d 719, 721 (1966), we recognized "[t]he parties seem to agree that, had the insured been struck by the [uninsured] vehicle while walking or riding a bicycle, he would have been covered under [the uninsured motorist provision]...." The Minnesota Supreme Court, citing Westerhausen, concluded an insured was covered as a pedestrian under the uninsured motorist provisions because "uninsured motorist protection is not coverage for vehicles but for persons...." Northland Ins. Co. v. West, 294 Minn. 368, 201 N.W.2d 133, 135 (1972); see also Niemann v. Badger Mut. Ins. Co., 143 Wis.2d 73, 420 N.W.2d 378, 381 (Wis.App.1988) (once uninsured motorist coverage is purchased, those insured for liability purposes have uninsured motorist protection under all circumstances); 1 Alan I. Widiss, Uninsured and Underinsured Motorist Insurance § 4.2, at 60-61 (2d ed. 1992) [hereinafter Widiss] ("Persons who are either named insureds or family members who reside with named insureds are afforded relatively comprehensive protection under the uninsured motorist coverage." As insureds they "are protected when they are operating or are passengers in a motor vehicle, as well as when they are engaged in any other activity such as walking, riding a bicycle, driving a hay wagon, or even sitting on a front porch.").

Owners' policy provides "we will pay bodily injury damages which you are legally entitled to recover from the owner or driver of any uninsured motor vehicle." Under the underinsured motorist endorsement, Owners agrees:

Uninsured Motorist Coverage is extended to bodily injury arising out of the:

1. ownership;

2. maintenance;

3. operation; or

4. use;

of a motor vehicle or motorcycle to which a bodily injury liability policy applies at the time of the accident but which provides limits of liability insufficient to satisfy damages the person is legally entitled to recover.... All other terms and conditions which apply to Uninsured Motorist Coverage also apply to this coverage.

Thus, under both section 516A.1 and under the terms of Owners' policy, an insured has underinsured protection as a pedestrian.

IV. Persons Insured.

Section 516A.1 protects "persons insured under such policy." The statutory requirement applies to all motor vehicle liability insurance policies delivered or issued for delivery in this state. Iowa Code § 516A.1. Approximately three-quarters of the states have language similar to the Iowa statute. See Widiss, § 2.8, at 38 & n. 3. Under these statutory provisions courts have concluded persons who must be insured by the underinsured motorist insurance are those who are protected by the liability coverage. Id. at 38 & n. 4; § 4.23, at 169. See, e.g., Rau v. Liberty Mut. Ins. Co., 21 Wash.App. 326, 585 P.2d 157, 159 (1978). We...