Pierce v. Allstate Ins. Co.

• Decision Date: 08 April 1993
• Docket Number: L-1
• Citation: Pierce v. Allstate Ins. Co., 316 Or. 31, 848 P.2d 1197 (Or. 1993)
• Parties: Linda Diane PIERCE, Respondent on Review, v. ALLSTATE INSURANCE COMPANY, Petitioner on Review. CC 90-1515-; CA A67513; SC S39392.
• Court: Oregon Supreme Court

Page 1197

848 P.2d 1197

316 Or. 31

Linda Diane PIERCE, Respondent on Review, v.ALLSTATE INSURANCE COMPANY, Petitioner on Review.

CC 90-1515-L-1; CA A67513; SC S39392.

Supreme Court of Oregon In Banc.

Argued and Submitted Jan. 8, 1993.

Decided April 8, 1993.

Craig D. Bachman, of Lane Powell Spears Lubersky, Portland, argued the cause for petitioner on review.With him on the petition was Thomas W. Sondag.

Kelly L. Andersen, of Richardson & Andersen, P.C., Central Point, argued the cause for respondent on review and filed a response.

GRABER, Justice.

ORS 742.502 provides for the issuance of uninsured and underinsured motorist liability coverage:

"(1) Every motor vehicle liability policy insuring against loss suffered by any natural person resulting from liability imposed by law for bodily injury or death arising out of the ownership, maintenance or use of a motor vehicle shall provide uninsured motorist coverage therein or by indorsement thereon when such policy is either:

"(a) Issued for delivery in this state; or

"(b) Issued or delivered by an insurer doing business in this state with respect to any motor vehicle then principally used or principally garaged in this state.

"(2) The insurer issuing such policy shall offer one or more options of uninsured motorist coverage larger than the amounts prescribed to meet the requirements of ORS 806.070[, set out in note 1, infra, ] up to the limits provided under the policy for motor vehicle bodily injury liability insurance.Offers of uninsured motorist coverage larger than the amounts required by ORS 806.070 shall include underinsurance coverage * * *.Underinsurance benefits shall be equal to uninsured motorist coverage benefits less the amount recovered from other automobile liability insurance policies."

The issue in this case is whether ORS 742.502(2) required defendant insurance company to offer plaintiff"options of uninsured motorist coverage * * * up to the limits provided under the policy for motor vehicle bodily injury liability insurance" every time that plaintiff added vehicles to her automobile liability insurance policy, deleted vehicles, or replaced vehicles named in the policy with other vehicles.The trial court held that ORS 742.502(2) did not require such offers and granted summary judgment for defendant.Plaintiff appealed; the Court of Appeals reversed.Pierce v. Allstate Insurance Co., 112 Or.App. 530, 829 P.2d 1032(1992).We reverse the decision of the Court of Appeals and reinstate the judgment of the trial court.

The material facts are not in dispute.Plaintiff purchased an automobile liability insurance policy from defendant in 1985.The policy covered a 1981 Datsun and a 1985 Ford.When plaintiff obtained the policy in 1985, defendant offered plaintiff"optional" uninsured motorist liability coverage in an amount up to $100,000, the amount of bodily injury liability coverage provided in the policy.That offer complied with the requirements of ORS 742.502.Plaintiff did not accept the offer.As a result, the policy issued to her included uninsured motorist coverage in the amount of $25,000 per person, the minimum amount required by ORS 742.502(1), 806.060(1), and 806.070(2)(a). ¹ In May 1986, plaintiff deleted the Ford from the policy.In September 1986, she added a 1965 Chevrolet.In January 1987, she deleted the Datsun and added a 1986 Isuzu.As issued by defendant, plaintiff's policy permitted those additions, deletions, and replacements as modifications to the existing policy.²Defendant did not offer optional uninsured motorist coverage to plaintiff on any of those occasions.

In March 1988, while standing on her front porch, plaintiff was severely injured by a car driven by an underinsured motorist.The underinsured motorist's insurer paid plaintiff $50,000, which was less than her total damages.Plaintiff brought a declaratory judgment action against defendant, seeking to determine her rights under ORS 742.502 and the insurance policy.She asserts that ORS 742.502(2) required defendant to have offered her optional uninsured motorist liability coverage in the amount of $100,000, the bodily injury liability limit under her policy, each time she deleted automobiles from, replaced, or added automobiles to her policy and that, because defendant had not done so, she is entitled to coverage in the amount of $100,000.

The question before us is whether the deletion, replacement, or addition of a vehicle is an event requiring an offer of optional uninsured motorist coverage under ORS 742.502(2).In interpreting a statute, our task is to discern the intent of the legislature.ORS 174.020;State ex rel Juv. Dept. v. Ashley, 312 Or. 169, 174, 818 P.2d 1270(1991).We begin with the text and context of the statute; other provisions of the same statute are part of that context.ORS 174.010;Sanders v. Oregon Pacific States Ins. Co., 314 Or. 521, 840 P.2d 87(1992).

ORS 742.502(1), set out on page 316 Or. at 33, 848 P.2d at 1198, states that a motor vehicle liability policy insuring against loss from liability for bodily injury must provide a minimum amount of uninsured motorist coverage when the policy is "[i]ssued."ORS 742.502(2) states that the insurer must also offer "options of uninsured motorist coverage larger than" that minimum, up to the limits of the liability policy; however, it does not state when that offer must be made.Construing ORS 742.502(1) and (2) together, we conclude that ORS 742.502(2) requires that an insurer offer optional uninsured motorist coverage at the time the policy is "issued."

We then reach the question whether the addition of a vehicle to a policy, the deletion of a vehicle, or the replacement of one insured vehicle with another under the same policy constitutes "issuance" of a policy within the meaning of ORS 742.502(2).³ Several sections of the Insurance Code demonstrate that the answer is "no."

The Insurance Code does not contain an explicit definition of "issuance.""Policy" is defined, however, in ORS 731.122:

" 'Policy' means the written contract or written agreement for or effecting insurance, by whatever name called, and includes all clauses, riders, indorsements and papers which are a part thereof and annuities."(Emphasis added.)

That definition implies that a single "policy" may include multiple riders and indorsements, which often are incorporated after the issuance of the policy.See alsoORS 742.458(with respect to motor vehicle liability insurance policy, "[t]he policy, the written application therefor, if any, and any rider or indorsement * * * shall constitute the entire contract").

Other statutes suggest that a "policy" generally is "issued" only once, in response to an application by the prospective insured.Under ORS 742.013, the insured's statements in an application for an insurance policy are "deemed to be representations."Misrepresentations, omissions, concealments of fact, and incorrect statements prevent recovery under "the policy" only if they are "contained in a written application for the insurance policy, and a copy of the application is indorsed upon or attached to the insurance policy when issued."Ibid.(emphasis added).ORS 742.046 requires that every policy "be mailed or delivered to the insured or to the person entitled thereto within a reasonable period of time after its issuance except where a condition required by the insurer has not been met by the insured."(Emphasis added.)See alsoORS 742.026(two or more insurers may jointly "issue" certain underwriters' and combination policies).

The statutory scheme also makes clear that the renewal of a motor vehicle liability policy for an additional period does not constitute the issuance of a new policy.ORS 742.560(2), which relates to cancellation and nonrenewal of automobile liability insurance policies, provides in part:

" 'Renewal' or 'to renew' means to continue coverage for an additional policy period upon expiration of the current policy period of a policy."(Emphasis added.)

Unless "a policy" is canceled or nonrenewed by the statutorily required method, it continues.ORS 742.560 to 742.570.More generally, and to similar effect, ORS 742.051 provides:

"Any insurance policy terminating by its terms at a specified expiration date and not otherwise renewable, may be renewed or extended at the option of the insurer, if renewed or extended upon a currently authorized policy form at the premium rate then required therefor, for a specific additional period or periods by certificate or by indorsement of the policy, without requiring the issuance of a new policy."(Emphasis added.)

That is, any insurance policy may be renewed or extended "without requiring the issuance of a new policy."

Finally, and most directly relevant to plaintiff's specific claim here, ORS 742.504(2)(b) defines the term "insured vehicle" in the context of uninsured and underinsured motorist coverage as follows:

"As used in [an uninsured motorist liability] policy:

" * * * * *

"(b)'Insured vehicle,' * * * means:

"(A) The vehicle described in the policy or a newly acquired * * * vehicle, * * * insured under the * * * provisions of the policy [.]"(Emphasis added.)

We interpret the text of ORS 742.504(2)(b)(A) to mean that the addition of a vehicle to a policy, the deletion of a described vehicle, or the replacement of one vehicle by another under the same policy does not constitute issuance of a policy in the context of uninsured and underinsured motorist coverage.That is, the statute contemplates that vehicles may be added, deleted, or replaced as modifications to an existing, ongoing insurance policy.

Reading the relevant provisions of the uninsured motorist statute and Insurance Code together, ⁴we conclude that, when plaintiff added vehicles to the motor vehicle liability insurance policy issued to her by defendant, deleted vehicles, or replaced vehicles insured under that policy with other vehicles, defen...