Johnson v. Farmers Ins. Co. of Washington
| Decision Date | 17 October 1991 |
| Docket Number | No. 57416-2,57416-2 |
| Citation | 817 P.2d 841,117 Wn.2d 558 |
| Parties | Barbara JOHNSON, as guardian of the person and Estate of Teresa Johnson, Respondent, v. FARMERS INSURANCE COMPANY OF WASHINGTON, a domestic corporation, Appellant. |
| Court | Washington Supreme Court |
Helsell, Fetterman, Martin, Todd & Hokanson, Pauline V. Smetka and Paul E. Murray, Seattle, for appellant.
Mullavey, Prout, Grenley, Foe, Lawless & Dahl, Henry W. Grenley, Seattle, for respondent.
Farmers Insurance Company of Washington appeals a trial court denial of summary judgment to Farmers Insurance and the trial court's grant of summary judgment to Barbara Johnson as guardian for her daughter, Teresa Johnson. Farmers Insurance ("Farmers") assigns error to the trial court's ruling that under RCW 48.22.030, a previously valid waiver of underinsured motorist ("UIM") coverage by one spouse terminates when the spouses later separate and the other spouse becomes the new named insured on the policy.
This case involves a dispute as to the amount of UIM coverage to which Barbara Johnson is entitled under her Farmers automobile insurance policy. Mrs. Johnson claims she is owed a total of $100,000 in UIM coverage, while Farmers contends her UIM coverage totaled $50,000.
Barbara Johnson, who commenced this action, is the mother of Teresa Johnson. Teresa Johnson was seriously injured on June 20, 1986, while a passenger on a motorcycle which crashed into a roadside tree or pole. 1 She was 17 years old at the time of the accident. No other vehicles were involved in the collision, and the driver of the motorcycle, Jeffrey Daneluk, had no insurance.
Motorists who completely lack auto insurance to cover property damage or injuries stemming from their accidents are generally referred to as uninsured motorists. Those who have auto insurance in coverage limits inadequate to cover such damage or injury are called underinsured motorists. In Washington, UIM coverage is auto insurance coverage designated to protect policyholders when they and/or their property are injured by persons who are either uninsured or underinsured.
Because of Jeffrey Daneluk's lack of coverage, Barbara Johnson made a claim for her daughter's injuries under the UIM coverage Mrs. Johnson carried on her automobile insurance policy with Farmers, policy 79-2910-73-85. Barbara Johnson's third party liability coverage under this policy was $100,000, and a demand was made upon Farmers for payment under the UIM coverage in this same amount. Farmers agreed that Teresa's injuries came under UIM coverage, but only to a coverage limit of $50,000.
A background in the statutory requirements for waiver of UIM coverage, and then a review of the steps taken by Farmers automobile policy 79-2910-73-85 was first issued to Larry Johnson in 1963. Barbara and Larry Johnson, Teresa's parents, were married in 1968. On February 24, 1983, Larry Johnson made changes in the coverage limits under this policy, which at the time insured a 1977 Thunderbird. He increased the policy's bodily injury and property damage coverage. He also declined the option of having the policy's UIM coverage match the bodily injury limits. Thus, as of February 24, 1983, the policy limits on protection for bodily injury were $100,000 per person/$300,000 per occurrence, with UIM coverage limited to $50,000 per person/$100,000 per occurrence. In order to effectuate this change, Larry Johnson signed a form titled "Agreement Deleting Underinsured Motorist Coverage" and checked a box next to the statement: Barbara johnson On May 5, 1985, Barbara and Larry Johnson were legally separated, and on August 8 of that year they filed for divorce. Barbara traded in the 1977 Thunderbird and bought a 1985 Toyota Corolla in August 1985. She telephoned David Seaquist, the Johnsons' insurance agent during their marriage, to arrange coverage for the new Toyota. Barbara Johnson told David Seaquist that she and Larry were separated, and that she had a new address and a different car. On August 28, 1985, she signed an "Application for Change" on policy 79-2910-73-85. The policy changes she desired were indicated by check marks in the appropriate places on the form. These changes included: (1) replacement of the auto insured; (2) change of the "named insured" from her husband, Larry, to herself ; (3) change in the address of the insured to her new address; and (4) change of her insurance agent.
Barbara Johnson and her spouse, Larry Johnson, regarding such coverage both before and after their separation, is helpful. RCW 48.22.030, first enacted in 1967 and amended in 1980, 1981, 1983, and 1985, requires insurance companies to make UIM coverage available in all Washington automobile insurance policies. 2 See Laws of [817 P.2d 843] 1967,
ch. 150, § 27; Laws of 1980, ch. 117, § 1; Laws of 1981, ch. 150, § 1; Laws of 1983, ch. 182, § 1; Laws of 1985, ch. 328, § 1. The statute requires that this coverage be offered initially in the same amount as the prospective insured's third party liability or bodily injury coverage. Once UIM coverage is offered as part of the new policy, the insured has the option of contracting for complete, partial, or no UIM coverage at all. The insurer must initially include UIM coverage in the insured's policy and cannot eliminate the option without an express written request on the part of the insured to decline all or part of the coverage. Once the insured declines to contract for all or part of the full UIM coverage, the insurer is not obligated to provide UIM coverage at the same levels as the bodily injury or third party liability limits unless the insured subsequently makes a written request to reinstate such coverage
had not discussed these coverage changes in the policy with her husband and was not aware of his decision to make changes. Larry Johnson was the named insured on this policy with coverage extending to Barbara as well. Barbara Johnson usually paid the premiums on the policy and handled the invoices
Barbara Johnson did not, in August 1985, request changes in any of the coverage limits under the policy. Thus, the UIM limit remained at the $50,000 per person/$100,000 per occurrence limit established by Larry in February 1983. Farmers made the changes indicated on the form and placed the coverage that had been on the 1977 Thunderbird onto the 1985 Toyota Corolla.
DID YOU KNOW THAT YOU MAY NOW HAVE UNDERINSURED MOTORIST COVERAGE IN AMOUNTS UP TO YOUR BODILY INJURY LIABILITY AND/OR PROPERTY DAMAGE LIMITS. IF INTERESTED, CONTACT YOUR AGENT.
This notice also listed the current limits on Barbara Johnson's bodily injury and UIM coverage. On May 28, 1986, a decree of divorce was entered dissolving the marriage of Barbara and Larry Johnson. On June 20, 1986, the motorcycle accident occurred in which Teresa Johnson was seriously injured.
In July 1987 Barbara Johnson filed suit against Farmers seeking a declaration that the UIM coverage under her policy was $100,000, and also seeking prejudgment interest on the amount Farmers had admitted to owing, but had not paid due to the dispute. (This second claim has been settled and is not before this court.)
In October 1989, Farmers moved for summary judgment; this motion was denied. Barbara Johnson later moved for summary judgment, and this motion was granted. The trial court ruled that under RCW 48.22.030, a partial waiver of UIM coverage on the same policy number (from a limit of $100,000 down to a limit of $50,000) signed by Larry Johnson during the couple's marriage was no longer binding on Barbara after that marriage ended. Thus, she was entitled to the pre-waiver limit of UIM coverage; that is, the same level of UIM coverage as third Farmers argues that Larry Johnson's waiver of full UIM coverage during the marriage was valid and binding on Barbara Johnson through and after the couple's separation and divorce. Farmers contends that since RCW 48.22.030 makes it incumbent on the insured to request full UIM coverage if the insured wants such coverage reinstated after a valid waiver, and since neither Barbara nor Larry Johnson ever made a request for either a new policy or reinstatement of full UIM coverage, the waiver remained in effect at the time of Teresa Johnson's accident. Barbara Johnson argues that she personally never waived full UIM coverage, and that even if her husband's waiver was effective against her during the marriage, once the couple separated and she made herself the new named insured on the policy, Larry Johnson's waiver was no longer binding on her. Furthermore, Barbara Johnson submits that since the changes she requested in August 1985 were so extensive as to create in effect a new policy, then under RCW 48.22.030 full UIM coverage should have been provided on a new policy until Farmers received an express waiver from Barbara Johnson.
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