Taylor v. Greatway Ins. Co., No. 99-1329.

CourtCourt of Appeals of Wisconsin
Writing for the CourtBefore Dykman, P.J., Eich and Roggensack, JJ.
Citation2000 WI App 64,608 N.W.2d 722,233 Wis.2d 703
PartiesTrisha A. TAYLOR, Plaintiff-Respondent, v. GREATWAY INSURANCE COMPANY and Ross H. Hermanson, Defendants, AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Appellant.
Docket NumberNo. 99-1329.
Decision Date17 February 2000

233 Wis.2d 703
2000 WI App 64
608 N.W.2d 722

Trisha A. TAYLOR, Plaintiff-Respondent,
v.
GREATWAY INSURANCE COMPANY and Ross H. Hermanson, Defendants,
AMERICAN FAMILY MUTUAL INSURANCE COMPANY, Defendant-Appellant.1

No. 99-1329.

Court of Appeals of Wisconsin.

Submitted on briefs November 18, 1999.

Decided February 17, 2000.


233 Wis.2d 706
On behalf of the defendant-appellant, the cause was submitted on the briefs of David J. Pliner of Corneille Law Group, L.L.C. of Madison

On behalf of the plaintiff-respondent, the cause was submitted on the brief of James H. Fowler, III of James H. Fowler Law Office of Janesville.

Before Dykman, P.J., Eich and Roggensack, JJ.

¶ 1. ROGGENSACK, J.

American Family Mutual Insurance Company appeals a judgment of the circuit court determining that Trisha Taylor can recover under the underinsured motorist (UIM) coverage provisions of two of its auto policies. Taylor argues, and the circuit court agreed, that the reducing clauses of both policies created illusory coverage; and therefore, her reasonable expectations mandate coverage. Because we conclude that Ross Hermanson's vehicle was not an underinsured motor vehicle as defined in the policies, each of which provides underinsured motorist benefits in an amount greater than the statutory minimum for the purchase of automobile liability

233 Wis.2d 707
insurance in Wisconsin, we reverse that portion of the judgment which awarded UIM benefits

¶ 2. American Family also claims that it was error for the circuit court to award Taylor accidental death benefits under both policies because accidental death coverage is an investment contract and WIS. STAT. § 631.43(1) (1993-94)2 requires stacking of only those contracts which promise to indemnify for the same loss. Because we conclude that accidental death provisions found in both policies are promises to indemnify the insured against the same loss, the accidental death of the insured in an auto accident, we affirm that portion of the judgment allowing recovery under both policies.

BACKGROUND

¶ 3. Paul Taylor was killed when his vehicle was struck by a vehicle driven by Ross Hermanson. Hermanson had $50,000 of liability coverage under a policy issued by Greatway Insurance Company. The damages incurred by the Taylors were stipulated to exceed $160,000. Trisha Taylor, Paul's wife, settled her claims against Hermanson and Greatway for the policy limits, and then she sued American Family under the UIM provisions of the American Family policies the Taylors had purchased.

¶ 4. The Taylors owned two auto policies issued by American Family. Both policies included UIM coverage, each with limits of $50,000. Both policies defined an underinsured motor vehicle by comparing the amount of liability coverage which had been purchased by the tortfeasor with the amount of UIM coverage

233 Wis.2d 708
purchased by the insured. Both policies defined an underinsured motor vehicle as "a motor vehicle which is insured by a liability bond or policy at the time of the accident which provides bodily injury liability limits less than the limits of liability of this Underinsured Motorists coverage." Both policies also contained a reducing clause which purported to reduce the limits of underinsured motorist coverage by "[a] payment made or amount payable by or on behalf of any person or organization which may be legally liable, or under any collectible auto liability insurance, for loss caused by an accident with an underinsured motor vehicle."

¶ 5. In denying UIM benefits, American Family contended that Hermanson was not driving an underinsured motor vehicle according to the American Family policies' definition because the limits of Hermanson's liability policy ($50,000) were not less than the limits of each American Family policy ($50,000). Taylor argued that the circuit court could look beyond the policy definition of underinsured motor vehicle, if that definition, in combination with other provisions of the policy, created illusory coverage. The circuit court agreed with Taylor and concluded that the reducing clause in the policies created illusory coverage. Therefore, it allowed Taylor to recover the policy limits of $50,000 under each policy.

¶ 6. Taylor also made a claim for accidental death benefits under both policies, each of which had a face amount of $5,000 coverage. American Family paid the $5,000 limit from one policy. However, it refused to pay the limit under the other policy, contending that coverage for accidental death benefits could not be stacked because of an "other insurance" clause in both

233 Wis.2d 709
policies.3 The circuit court concluded that the other insurance clause was not enforceable because WIS. STAT. § 631.43(1) prohibits other insurance clauses from reducing the aggregate protection of the insured when two or more policies promise to indemnify an insured against the same loss. The circuit court rejected American Family's argument that accidental death benefits are investment contracts, not promises to indemnify, and stacked the policies. American Family appeals

DISCUSSION

Standard of Review.

[1, 2]

¶ 7. The resolution of whether Hermanson's vehicle was an underinsured motor vehicle under the policies requires us to interpret the language of the policies. The interpretation of an insurance policy is a question of law which we decide de novo. See Filing v. Commercial Union Midwest Ins. Co., 217 Wis. 2d 640, 644, 579 N.W.2d 65, 66 (Ct. App. 1998). Whether the accidental death benefit provision set forth in the policies promises to indemnify an insured against the same loss under WIS. STAT. § 631.43(1) is a question of statutory interpretation which we also review de novo. See State v. Beiersdorf, 208 Wis. 2d 492, 504, 561 N.W.2d 749, 755 (Ct. App. 1997).

233 Wis.2d 710
Underinsured Motorist Coverage

[3-5]

¶ 8. We interpret an insurance policy's ambiguities in favor of coverage, while coverage exclusion clauses are narrowly construed against the insurer. See Guenther v. City of Onalaska, 223 Wis. 2d 206, 210-11, 588 N.W.2d 375, 377 (Ct. App. 1998), review denied, 230 Wis. 2d 272, 604 N.W.2d 571. "Words or phrases are ambiguous when they are susceptible to more than one reasonable construction." Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d 808, 811, 456 N.W.2d 597, 598-99 (1990). When the terms of an insurance policy are unambiguous, we will not rewrite the policy by construction. See id. However, when an ambiguity is present, we attempt to determine what a reasonable person in the position of the insured would have understood the words of the policy to mean. See Kaun v. Industrial Fire & Cas. Ins. Co., 148 Wis. 2d 662, 669, 436 N.W.2d 321, 324 (1989); Engstrom v. MSI Ins. Co., 198 Wis. 2d 195, 200, 542 N.W.2d 481, 483 (Ct. App. 1995). The supreme court has also directed that the interpretation of UIM provisions should be consistent with the purpose of UIM coverage, which it has stated "is effective where there is a tortfeasor with liability coverage inadequate in amount for the injuries caused." Kaun, 148 Wis. 2d at 668, 436 N.W.2d at 323 (citing Schwochert v. American Family Mut. Ins. Co., 139 Wis. 2d 335, 346, 407 N.W.2d 525, 530 (1987)).

¶ 9. American Family contends that Taylor may not recover based on the holdings of Smith and Krech v. Hanson, 164 Wis. 2d 170, 473 N.W.2d 600 (Ct. App. 1991), because one must first determine whether the tortfeasor meets the definition of an underinsured motorist before examining whether other clauses in the

233 Wis.2d 711
policies affect UIM coverage. See Smith, 155 Wis. 2d at 814, 456 N.W.2d at 600. Taylor argues that under Wood v. American Family Mutual Insurance Co., 148 Wis. 2d 639, 436 N.W.2d 594 (1989), overruled on other grounds, Matthiesen v. Continental Casualty Co., 193 Wis. 2d 192, 532 N.W.2d 729 (1995), Hoglund v. Secura Insurance Co., 176 Wis. 2d 265, 500 N.W.2d 354 (Ct. App. 1993) and Allstate Insurance Co. v. Gifford, 178 Wis. 2d 341, 504 N.W.2d 370 (Ct. App. 1993), we may look beyond the policy definition of an underinsured motor vehicle. Taylor contends we may do so when the UIM coverage afforded under the terms of the policy does not meet the reasonable expectations of the insured.

¶ 10. In Wood, the supreme court construed UIM coverage under a policy that attempted to reduce its payout by amounts payable by the tortfeasor. In concluding that there was UIM coverage, the court reasoned, "we believe that a reasonable insured expects to be protected against a loss caused by another that is not covered by the underinsured driver's liability coverage." Wood, 148 Wis. 2d at 654, 436 N.W.2d at 600. In so doing, the court defined UIM coverage by comparing the insured's damages to the liability coverage afforded by the tortfeasor. It did so to avoid illusory coverage: "If the [insurer] is allowed to offset its $100,000 liability to the [insured] under each policy by the $25,000 paid by the tortfeasor's insurance carrier, the [insurer] will not be providing the $100,000 of UIM benefits it indicated it would pay on the declarations page of each policy." Id. at 653, 436 N.W.2d at 600. Otherwise, the court stated, "an underinsured liability limit is an illusion because an insured will never be entitled to recover up to that limit." Id. (citation omitted).

233 Wis.2d 712
¶ 11. In Smith, decided one year after Wood, the supreme court again addressed UIM coverage. There, after Smith recovered the policy limit of $50,000 from the tortfeasor's insurer, she sought to recover UIM benefits under her own policy, which also had a $50,000 UIM policy limit. Smith's policy defined underinsured motor vehicle as a vehicle "to which a bodily injury liability bond or policy applies at the time of the accident but its limit for bodily injury liability is less than the limit of liability for this coverage." Smith, 155 Wis. 2d at 811, 456 N.W.2d at 599. That definition was the major focus for the court's reasoning, which led it to...

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8 practice notes
  • Hunt v. N.C. Logistics, Inc., No. CIV 15-0233 JB/GJF
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • June 23, 2016
    ...promises to indemnify against the insured's accidental death. See Reply at 8 (citing Taylor v. Greatway Ins. Co., 2000 WI App 64, ¶ 22, 233 Wis.2d 703, 608 N.W.2d 722, 729. Fourth, it notes that New Mexico allows subrogation in wrongful death actions. See Reply at 9.4. The Hearing.The Court......
  • Ile v. Foremost Ins. Co., Docket No. 295685.
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    • July 14, 2011
    ...authority. Ammex, Inc. v. Dep't of Treasury, 273 Mich.App. 623, 639 n. 15, 732 N.W.2d 116 (2007). FN15. Taylor v. Greatway Ins. Co., 233 Wis.2d 703, 715, 608 N.W.2d 722 (Wis.App., 2000). FN16. Janssen v. State Farm Mut. Auto. Ins. Co., 266 Wis.2d 430, 437, 668 N.W.2d 820 (Wis.App., 2003). F......
  • Hunt v. N.C. Logistics, Inc., No. CIV 15-0233 JB/GJF
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • June 23, 2016
    ...to indemnify against the insured's accidental death. See Reply at 8 (citing Taylor v. Greatway Ins.Page 8 Co., 2000 WI App 64, ¶ 22, 608 N.W.2d 722, 729. Fourth, it notes that New Mexico allows subrogation in wrongful death actions. See Reply at 9. 4. The Hearing. The Court held a hearing o......
  • Dowhower v. West Bend Mut. Ins. Co., No. 98-2762.
    • United States
    • United States State Supreme Court of Wisconsin
    • June 30, 2000
    ...position of the insured would have understood the words of the policy to mean." Taylor v. Greatway Insurance Co., 2000 WI App 64, ¶ 8, 233 Wis. 2d 703, 608 N.W.2d 722. At oral argument, the Dowhowers argued that before considering the constitutional issue presented here, the threshold quest......
  • Request a trial to view additional results
8 cases
  • Hunt v. N.C. Logistics, Inc., No. CIV 15-0233 JB/GJF
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • June 23, 2016
    ...promises to indemnify against the insured's accidental death. See Reply at 8 (citing Taylor v. Greatway Ins. Co., 2000 WI App 64, ¶ 22, 233 Wis.2d 703, 608 N.W.2d 722, 729. Fourth, it notes that New Mexico allows subrogation in wrongful death actions. See Reply at 9.4. The Hearing.The Court......
  • Ile v. Foremost Ins. Co., Docket No. 295685.
    • United States
    • Court of Appeal of Michigan (US)
    • July 14, 2011
    ...authority. Ammex, Inc. v. Dep't of Treasury, 273 Mich.App. 623, 639 n. 15, 732 N.W.2d 116 (2007). FN15. Taylor v. Greatway Ins. Co., 233 Wis.2d 703, 715, 608 N.W.2d 722 (Wis.App., 2000). FN16. Janssen v. State Farm Mut. Auto. Ins. Co., 266 Wis.2d 430, 437, 668 N.W.2d 820 (Wis.App., 2003). F......
  • Hunt v. N.C. Logistics, Inc., No. CIV 15-0233 JB/GJF
    • United States
    • United States District Courts. 10th Circuit. District of New Mexico
    • June 23, 2016
    ...to indemnify against the insured's accidental death. See Reply at 8 (citing Taylor v. Greatway Ins.Page 8 Co., 2000 WI App 64, ¶ 22, 608 N.W.2d 722, 729. Fourth, it notes that New Mexico allows subrogation in wrongful death actions. See Reply at 9. 4. The Hearing. The Court held a hearing o......
  • Dowhower v. West Bend Mut. Ins. Co., No. 98-2762.
    • United States
    • United States State Supreme Court of Wisconsin
    • June 30, 2000
    ...position of the insured would have understood the words of the policy to mean." Taylor v. Greatway Insurance Co., 2000 WI App 64, ¶ 8, 233 Wis. 2d 703, 608 N.W.2d 722. At oral argument, the Dowhowers argued that before considering the constitutional issue presented here, the threshold quest......
  • Request a trial to view additional results

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