Neumann v. Standard Fire Ins. Co. of Hartford, Conn.

• Decision Date: 26 April 1985
• Docket Number: No. 15544,15544
• Parties: Jeffrey C. NEUMANN, Charles F. Neumann and Helen J. Neumann, Appellants, v. The STANDARD FIRE INSURANCE COMPANY OF HARTFORD, CONNECTICUT, Respondent.
• Court: Nevada Supreme Court

Page 101

699 P.2d 101

101 Nev. 206

Jeffrey C. NEUMANN, Charles F. Neumann and Helen J. Neumann Appellants, v. The STANDARD FIRE INSURANCE COMPANY OF HARTFORD CONNECTICUT, Respondent.

No. 15544.

Supreme Court of Nevada.

April 26, 1985.

Durney & Brennan, Reno, for appellants.

Hibbs, Roberts, Lemons & Grundy, Reno, for respondents.

Galatz, Earl & Catalano and Daniel F. Polsenberg, Las Vegas, for amicus curiae.

OPINION

PER CURIAM:

This is an appeal from a summary judgment in favor of Standard Fire Insurance of Hartford, Connecticut (Standard Fire), finding it had complied with NRS 687B.145(1), thereby preventing the stacking of uninsured motorist coverages. Our examination of the insurance policy in question and the record persuades us that the trial court erred in its determination.

Appellant's two automobiles are insured by Standard Fire under the same policy. Appellant Jeffrey C. Neumann was a resident and family member in the home of appellants Charles F. and Helen J. Neumann. During the policy period, Jeffrey was seriously injured in an automobile accident when the vehicle in which he was riding as a passenger was struck by an uninsured motorist.

Standard Fire has paid the sum of $40,000.00 under the subject policy. According to Standard Fire, that amount represents the maximum amount owed to appellants. Appellants, on the other hand, contend they are entitled to stack their uninsured motorist coverages since two vehicles are insured under the policy. The parties agree that the additional $40,000.00 is warranted if this appeal is decided against Standard Fire.

Prior to the passage of NRS 687B.145(1), ¹ this Court repeatedly held that "anti-stacking" provisions contained within automobile policies were void. See Allstate Ins. Co. v. Maglish, 94 Nev. 699, 586 P.2d 313 (1978). With the passage of the above-mentioned statute, however, the Nevada Legislature provided a means whereby an insurance company could prevent the stacking of uninsured motorist coverages. Nevertheless, certain criteria had to be satisfied by an insurer in order to avoid the stacking of coverages.

Under NRS 687B.145(1) there are three prerequisites to the validity of an anti-stacking provision. First, the limiting provision must be expressed in clear language. Second, the provision must be prominently displayed in the policy, binder or endorsement. Finally, the insured must not have purchased separate coverage on the same risk nor paid a premium calculated for full reimbursement under that coverage. Thus, non-compliance with either of the first two prerequisites or payment of a double premium, notwithstanding compliance with the first two prerequisites, will render the limiting provision void.

In an effort to include the anti-stacking provisions of NRS 687B.145 within the original policy, Standard Fire sent appellants an amendment to the policy. The Amendment reads, in pertinent part, as follows:

PART C--UNINSURED MOTORISTS COVERAGE

* * *

* * *

LIMIT OF LIABILITY

* * *

* * *

C. The applicable limit of liability under paragraph A. or B. above is the most we will pay regardless of the number of:

1. Covered persons;

2. Claims made;

3. Vehicles or premiums shown in the Declaration; or 4. Vehicles involved in the auto accident.

Standard Fire contends that the above-quoted endorsement clearly fixes the limit of liability regardless of the number of vehicles or premiums shown in the Declarations. We disagree.

While the amendatory language may appear clear on its face, this case involves the use of an amendment to an original policy as opposed to that of a single integrated document. Thus, in order to determine the actual clarity of the amendment and its language, a comparison of the original policy with the amendment is necessary. This Court has a well-established policy of construing ambiguities in insurance contracts against the drafter. Yosemite Ins. Co. v. State Farm, 98 Nev. 460, 653 P.2d 149 (1982). Moreover, the ambiguity must be viewed from the standpoint of a layman, rather than a lawyer. See 2 Couch on Insurance 2d, § 15.84 (1984).

The amendment prefaces the changes, relevant to this appeal, by labeling the area of concern as "PART C. UNINSURED MOTORISTS COVERAGE." The original policy, to which the amendment supposedly applies, has neither a Part C nor such a caption. The original policy has only a section titled "Protection Against Uninsured Motorists." Continuing, while there is a "Limits of Liability" section in the original policy, there is no paragraph "C.," but only a paragraph "(c)." Also, the original policy does not contain paragraphs "A." and "B.," but only paragraphs "(a)" and "(b)." In fact, the only capital letters in the original policy appear on the Declarations page and are not references to paragraphs. ²

The amendment resulted in confusion rather than clarification. The amendment mislabeled and mislettered those portions of the amendment intended to correspond with the original policy. While appellants, through an exercise of deduction and elimination, may have been able to divine the result intended by Standard Fire, such a task was certainly not required nor should be expected of them. Indeed, given the consistent misdirections of the amendment, an insured could reasonably conclude the amendment did not apply to his policy.

The original policy, coupled with the amendment, did not produce a clear provision preventing the stacking of uninsured motorist coverages. Any ambiguity must necessarily be construed against Standard Fire. To be "clear" the provision should be neither ambiguous nor difficult to understand. The procedure set forth in NRS 687B.145 was not followed.

NRS 687B.145(1) also requires that the anti-stacking provision be prominently displayed in the policy. The purpose of this requirement is to "make more apparent to a policy holder those provisions which may have an adverse effect on a claim under the policy, and to give him notice of his true coverage." 36 A.L.R.3d 464, 469. It is generally held that when a policy provision violates a statute requiring exceptions to be printed with prominence, the provision will be rendered meaningless and the contract will be read as if the exception were not there. 36 A.L.R.3d 464, 474.

It is Standard Fire's position that the bold print, large type, and double spacing of their amendment prominently displayed the anti-stacking language. Under the facts of this case, we hold to the contrary.

In LaDuke v. State Farm Mutual Automobile Ins. Co., Civil LV-82-464-RDF (D.Nev. Aug. 23, 1983), Judge Foley held:

NRS 687B.145(1) clearly requires that the "anti-stacking" provisions must be printed in a manner such that the provision is more readily visible to the policy holder than the main body of the...