Simpson v. KFB Ins. Co.

• Decision Date: 10 June 1972
• Docket Number: No. 46418,46418
• Citation: 209 Kan. 620,498 P.2d 71
• Parties: Richard C. SIMPSON and Margaret Simpson, his Wife, Jointly and Individually as Parents and Next Friends of Sammy Simpson, a Minor, Appellants, v. KFB INSURANCE COMPANY, Inc., et al., Appellees.
• Court: Kansas Supreme Court

Page 71

498 P.2d 71

209 Kan. 620

Richard C. SIMPSON and Margaret Simpson, his Wife, Jointly

and Individually as Parents and Next Friends of

Sammy Simpson, a Minor, Appellants, v. KFB INSURANCE COMPANY, Inc., et al., Appellees.

No. 46418.

Supreme Court of Kansas.

June 10, 1972.

Rehearing Denied June 23, 1972.

Syllabus by the Court

1. Although ambiguities in the wording of an insurance contract are to be construed in favor of the insured, such rule has no application to language which is clear in its meaning.

2. Where a contract of insurance is unambiguous it must be enforced according to its terms.

3. In an action to recover medical payments, under the provisions of three automobile liability policies of insurance, the insuring agreements providing such coverage and the exclusions relating thereto are examined and it is held: (1) The trial court did not err in its construction of the policies and the application thereof to the undisputed facts of the case; (2) there is no forfeiture of premiums shown; (3) provisions for supplemental coverages do not violate the provisions of K.S.A. 1971 Supp. 40-1110; and (4) a letter written by an agent of the insurer to plaintiffs' attorney did not constitute an agreement to pay medical payments to plaintiffs under the three policies involved.

Walter B. Patterson, Fort Scott, argued the cause and was on the brief for appellants.

Douglas G. Hudson, Fort Scott, argued the cause, and Douglas Hudson and David Mullies, Fort Scott, were with him on the brief for appellees.

KAUL, Justice:

This action involves the 'Medical Payments' coverage of four automobile insurance policies issued to plaintiffs-appellants by the defendant insurance companies. The appeal comes before us on an agreed statement of facts.

Sammy Simpson suffered serious injuries in an accident on October 25, 1969, while driving a 1966 Chevelle automobile registered in his name and that of his father, Richard C. Simpson. The Chevelle was covered by an automobile policy issued by defendant Farm Bureau Insurance Company, Inc., hereafter referred to as KFB, which provided for medical payments in the amount of $500.00.

At the time of the accident, Sammy's parents owned three other vehicles. Each was insured under a separate policy issued by defendant Farm Bureau Mutual Insurance Company, Inc., hereafter referred to as Farm Bureau. Each of the three Farm Bureau policies provides medical payment coverage in the amount of $2,500.00.

According to the agreed statement of the parties, Sammy was eighteen years of age at the time of the accident, the son of plaintiffs, Richard C. and Margaret Simpson, and a resident of their household. It was further stipulated that Sammy's medical expenses totaled $2,468.50.

After pleadings and admissions were filed, the matter was presented to the trial court on plaintiffs' motion for partial summary judgment and defendants' motion for summary judgment. In their motion for summary judgment defendants asked that judgment in the sum of $500.00 and costs be allowed against KFB and that judgment against Farm Burean and Joe Boyer be denied. Judgment was entered for defendants in accord with their motion and this appeal followed.

In their brief on appeal plaintiffs state the issues in this fashion:

'The sole and only issues are the construction of the medical pay provisions identical in each policy, and whether the letter from Joe Boyer, Branch Claims Manager for Farm Bureau, to plaintiffs' attorney was an unqualified promise to pay by Boyer and Farm Bureau as to said expenses, KFB Insurance Company is not a party to this appeal.'

The principal controversy centers around the 'Medical Payments' coverage and a certain exclusion related thereto which appears in identical form in the three Farm Bureau policies.

The policies are made up in booklet form consisting of eighteen pages with the declaration as to parties, automobiles, insured, etc., affixed to a back cover page. The policies are divided into three principal sections according to subject matters. They are respectively; 'Insuring Agreements'; 'Exclusions'; and 'Conditions.' A second contract or endorsement providing coverage for damages caused by an uninsured automobile appears in the last four pages of the policy booklet.

The heading of each section of the policies is set out in bold print in caps and each is printed in the same size type. The subject caption of each subsection appears in bold-faced type. We are concerned here with certain provisions appearing under the sections titled 'Insuring Agreements' and 'Exclusions.'

The medical payments coverage appears on page one in the 'coverage' subsection of 'Insuring Agreements' as follows:

'Coverage C-Medical payments. To pay reasonable expenses of necessary medical, dental, surgical, ambulance, hospital, professional nursing, funeral services and prosthetic devices, all incurred within one year from date of accident to or for;

'(C-1) each person who sustains bodily injury, sickness or disease caused by accident while in or upon, entering into or alighting from;

'(a) the automobile described in the declarations, if the injury arises out of the use thereof by the named insured or spouse if a resident of the same household, or with the permission of either.

'(C-2) each insured who sustains bodily injury, sickness or disease caused by accident, while in or upon, or while entering into or alighting from, or through being struck, by an automobile.'

It is readily apparent that C-1 coverage is limited to injuries connected with the automobile described in the policy, while C-2 extends broad coverage to injuries connected with any automobile.

Subsection III of 'Insuring Agreements' titled 'Definition of Insured,' appearing on pages two and three of the policy form, defines the word 'insured as related to medical payments' in this fashion:

'(b) with respect to Coverage C-Medical Payments, the unqualified word 'insured' includes the named insured, if an individual, his spouse or relatives of either while residents of the same household.'

The real issue is whether Sammy is limited to the $500.00 maximum medical provided under C-1 of the KFB policy on the Chevelle in which he is a named insured or is he also entitled to recover up to an additional $2,500.00 under the C-2 coverage of each of the three Farm Bureau policies on the three separate vehicles owned by his parents.

The 'exclusions' appear on pages six and seven, headed by the title, which is followed by the phrase, 'this policy does not apply.' The specific exclusions are alphabetically labeled running from (a) through (s). The reference to the particular coverage to which the specific exclusion applies appears in bold-faced type. The exclusions pertaining to coverage C-2 appear as (i) and (j) as follows:

'(i) under Coverage C-2, to bodily injury to or sickness, disease or death of an insured sustained while in or upon, or while entering into or alighting from an automobile owned by any insured as defined in Insuring Agreement III, subparagraph (b);

'(j) under Coverage C-2, to bodily injury, sickness, disease or death to which coverage C-1 applies.'

We are not concerned with exclusion (j) which merely provides that if an injured person is covered by C-1 he cannot collect again under coverage C-2. For example, if an insured is injured in the vehicle named in the policy, he is covered under C-1, but excluded from collecting again under C-2. It is conceded that exclusion (j) has no application to the case at bar.

Plaintiffs contend there is ambiguity and confusion created by the application of exclusion (i) to coverage C-2 so as to make the policies subject to two or more constructions-one allowing coverage and one disallowing coverage and that the construction permitting recovery must be given.

The policies are prepared in a form which has become generally accepted in the insurance industry as the simplest and clearest way to define the coverage provided by the 'Insuring Agreements' of a policy, i. e., first, to grant the coverage in broad terms and then to except therefrom or to carve out of the coverage certain specific risks which are not covered and which are specifically excluded from coverage in clearly defined 'exclusions' in the policies. This is the plan followed here- broad coverage to any insured injured in any automobile is extended under C-2. Exclusion (i) operates to exclude from C-2 coverage, any insured who is an insured in an automobile owned by an insured.

As a relative and resident of the same household of R. C. Simpson, the insured under the Farm Bureau policies, Sammy is an insured under the definition of 'insured' set out in subsection (b). Since Sammy was injured while in an automobile, it clearly appears that he would be covered under C-2. However, exclusion (i) is equally definite. It simply excludes coverage C-2 to bodily injury of an insured (Sammy) while in or upon an automobile owned by an insured as likewise defined in subparagraph (b).

The purpose of the insurer is readily apparent. It is willing to make medical payments when an insured is injured while occupying a vehicle which is insured under the policy and when an insured under the policy is injured while occupying a vehicle owned by a third party. It is unwilling, however, to make medical payments to an insured who is injured in another vehicle owned by an insured but not insured under the policy.

Sammy was in the Chevelle. It was owned by Sammy and his father, both were insured under the Farm Bureau policies sued upon. Sammy, as an insured occupying an automobile owned by an insured, is excluded from coverage C-2.

The exclusion being definite must apply unless there is some ambiguity which brings into play the rule that uncertainties are determined strictly against the insurer. We fail to find such an ambiguity. It is true, as in the case of any policy of insurance, a somewhat careful reading of the entire policy is required...