Indiana Lumbermens Mut. Ins. Co. v. Vincel

• Decision Date: 15 August 1983
• Docket Number: No. 2-682A190,2-682A190
• Citation: 452 N.E.2d 418
• Parties: INDIANA LUMBERMENS MUTUAL INSURANCE COMPANY, Appellant (Plaintiff Below), v. Arthur F. VINCEL, And Joseph Vincel, Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 418

452 N.E.2d 418

INDIANA LUMBERMENS MUTUAL INSURANCE COMPANY, Appellant (Plaintiff Below), v. Arthur F. VINCEL, And Joseph Vincel, Appellees (Defendants Below).

No. 2-682A190.

Court of Appeals of Indiana Second District.

Aug. 15, 1983.

John A. Perrin, Auberry, Stanek & Perrin, Indianapolis, for appellant.

John F. Townsend, Jr., Townsend, Hovde, Townsend & Montross, Indianapolis, for appellees.

BUCHANAN, Chief Judge.

CASE SUMMARY

Plaintiff-Appellant Indiana Lumbermens Mutual Insurance Company (Lumbermens) appeals from a Declaratory Judgment in favor of Defendants-Appellees Arthur and Joseph Vincel (Vincels), claiming the trial court erred in extending the uninsured motorist provisions of Lumbermens's automobile insurance policy to include Joseph, a resident relative of the named insured Arthur, who owned his own uninsured private automobile and was a pedestrian when injured.

We reverse.

FACTS

The undisputed facts reveal that Joseph Vincel (Joseph), the son of Arthur F. Vincel (Arthur), sustained injuries when, as a pedestrian, he was struck and injured by a car driven by an uninsured motorist. At the time of the accident, April 26, 1980, Joseph was living with his father, Arthur. On that date, Joseph owned his own car, but it was uninsured. However, Arthur had an automobile insurance policy, issued by Lumbermens, covering two cars owned by him. As Joseph lacked insurance, he filed a claim under Arthur's policy with Lumbermens for uninsured motorist benefits for his injuries and damages incurred in the accident.

The policy provided, in Part I, for protection against, among other things, liability and uninsured motorists. It also defined "Persons Insured" in Part I:

"Persons Insured. Under the Liability and Medical Expense Coverages, the following are insureds:

(a) with respect to an owned automobile,

(1) the named insured,

(2) any other person using such automobile with the permission of the named insured ...

(3) any other person or organization but only with respect to his or its liability because of acts or omissions of an insured under (a) (1) or (2) above (b) with respect to a non-owned automobile,

(1) the named insured,

(2) a relative, but only with respect to a private passenger automobile or utility trailer,

provided his actual operation or (if he is not operating) the other actual use thereof is with the permission, or reasonably believed to be with the permission, of the owner and is within the scope of such permission, and

(3) any other person or organization not owning or hiring the automobile, but only with respect to his or its liability because of acts or omissions of an insured under (b)(1) or (2) above.

* * *

Under the Uninsured Motorists Coverage, the following are insureds:

(a) the named insured and any relative,

(b) any other person while occupying an insured automobile,

(c) any person, with respect to damages he is entitled to recover because of bodily injury to which this coverage applies sustained by an insured under (a) or (b) above."

Record at 16 (emphasis supplied). The policy then defined "relative" as follows:

"Definitions. When used with respect to Part I:

* * *

'relative ' means a person related to the named insured by blood, marriage or adoption who is a resident of the same household, provided neither such relative nor his spouse owns a private passenger automobile."

Record at 17 (emphasis supplied) [hereinafter cited as the relative definition clause].

The policy also contained an endorsement executed by Arthur which provided in pertinent part as follows:

"EXCLUSION OF NAMED DRIVER

It is agreed that the insurance afforded by

this policy shall not apply with any respect to

any claim arising from accidents which occur

while any automobile is being operated by

Joseph Vincel [hand printed]

----------------------------

Acknowledged by x A.F. Vincel [signed]

------------------------

(Named Insured)

Effective 10-13-70 [hand printed]."

Record at 15.

Lumbermens initiated a declaratory judgment action against the Vincels to determine coverage under the policy. Upon Lumbermens's motion for summary judgment, the trial court held a hearing and subsequently entered a judgment in favor of Joseph, and against Lumbermens, which judgment provided in part as follows:

"CONCLUSION[S] OF LAW

1. The defendant Joseph Vincel is an 'insured' within the meaning of the provisions of the policy issued by the plaintiff to defendant Arthur F. Vincel relating to uninsured motorists coverage.

2. The attempted exclusion of defendant Joseph Vincel based on his ownership of a private passenger automobile is void in that it contravenes the requirements and meaning of I.D. [sic] 27-7-6-2 and is an unreasonable restriction.

3. That the 'exclusion endorsement' is not applicable, because Joseph Vincel was not operating an automobile when the accident in question occurred."

Record at 45 (emphasis supplied). From this adverse judgment, Lumbermens appeals.

ISSUE

The several interrelated issues presented by the parties may be consolidated into one dispositive issue:

Is an automobile insurance policy provision that excludes from liability and uninsured motorist coverage relatives residing with the insured who own automobiles, an unreasonable restriction of uninsured motorist coverage under the Indiana Uninsured Motorist Statute ^*? ¹

PARTIES' CONTENTIONS--Lumbermens claims that the trial court erred in concluding (1) that Joseph was an insured within the meaning of the policy, (2) that the exclusion based on Joseph's ownership of an automobile contravenes Ind.Code 27-7-6-2 (1976), and (3) that the exclusion constituted an unreasonable restriction on uninsured motorist coverage. Lumbermens maintains that its policy fulfills all the statutory requirements and that Joseph is not a person insured under the policy because he is not a relative as that term is defined in the policy. Finally, Lumbermens emphatically contends IC 27-7-6-2 has nothing to do with this case.

The Vincels argue that IC 27-7-6-2 establishes the minimum category of persons who must be insured under automobile policies in Indiana. They argue that Lumbermens's restrictive definition of "relative"--which excludes from coverage resident relatives owning automobiles--contravenes IC 27-7-6-2, as the trial court found, and that Joseph was an insured for purposes of uninsured motorist coverage because he was an insured within the legally permissible definition of that term as established by IC 27-7-6-2, i.e. like father, like son.

DECISION

CONCLUSION--Joseph was not an "insured" because he was not a relative as that term is defined in the policy and such an exclusion from uninsured motorist coverage was not an unreasonable restriction under the Statute.

This case is reminiscent of United Farm Bureau Mutual Ins. Co. v. Hanley, (1977) 172 Ind.App. 329, 360 N.E.2d 247, in which we held a household exclusion clause was not an invalid restriction on uninsured motorist coverage. An insurer may use exclusions to protect itself from suspect inter-family collusive claims of liability.

In this case, the definition of an insured excluded from both liability and uninsured motorist coverages a resident relative who owns an automobile. For some of the same reasons recounted in Hanley, the limited definition of a relative as an insured does not appear to be an undue restriction on the Statute, which in relevant part provided:

"No automobile liability or motor vehicle liability policy or insurance 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 principly 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 uninsured 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 (in writing) ...."

IC 27-7-5-1 (emphasis supplied).

In interpreting the Statute in Hanley, however, we were not confronted with the bearing of another statute which the Vincels and the trial court view as being violated by the relative definition clause. They point to IC 27-7-6-2 as establishing a minimum class of persons who must be insured. Neither the court nor the Vincels supply us with any authority in support of that conclusion.

IC 27-7-6-2 provides in pertinent part:

"Automobile insurance policy means a policy delivered or issued for delivery in this state or covering a motor vehicle required to be registered in this state providing coverage for bodily injury and property damage liability, medical payments, and uninsured motorists or any combination thereof and insuring as the named insured a natural person or more than one natural persons related to each other resident of the same household ...."

(Emphasis supplied). Vincels assert the emphasized portions of this section constitute the statutory definition of "insured" which includes relatives of the same household as the named insured without qualification. Thus, Lumbermens's definition of "relative," which excludes resident relatives who own cars, is void.

A careful reading of the chapter of which IC 27-7-6-2 is a part, and the few cases construing the chapter, dictates otherwise. Entitled "Cancellation of Automobile Insurance Policies," ² Title 27, Article 7, Chapter 6 concerns the duties of insurance companies regarding the cancellation and renewal of automobile insurance policies. Its primary purpose is to protect policy holders against termination of coverage except in a manner authorized by the Chapter. American Family Ins. Group v. Ford, (1973) 155 Ind.App. 573, 293 N.E.2d 524, trans. denied....