Thompson v. Grange Ins. Ass'n

• Decision Date: 03 March 1983
• Docket Number: No. 5644-5-II,5644-5-II
• Citation: 34 Wn.App. 151,660 P.2d 307
• Parties: Richard D. THOMPSON and Mary Ann Thompson, his wife, Respondents and Cross Appellants, v. GRANGE INSURANCE ASSOCIATION, a Washington corporation, and Great American Insurance Company, a Foreign corporation, Appellants.
• Court: Washington Court of Appeals

Page 151

34 Wn.App. 151

660 P.2d 307

Richard D. THOMPSON and Mary Ann Thompson, his wife, Respondents and Cross Appellants, v. GRANGE INSURANCE ASSOCIATION, a Washington corporation, and Great American Insurance Company, a Foreign

corporation, Appellants.

No. 5644-5-II.

Court of Appeals of Washington,

Division 2.

March 3, 1983.

Review Denied April 15, 1983.

William Hickman, Seattle, for appellants.

Frank A. Peters, Tacoma, Matt Murray, Seattle, for respondents and cross appellants.

PETRICH, Chief Judge.

Great American Insurance Company (Great American) appeals a declaratory judgment entitling Richard D. Thompson to claim up to $765,000 in uninsured motorist benefits. Grange Insurance Association (Grange) appeals from the same judgment which declares that it has secondary liability by virtue of a policy issued to and naming the Thompsons as the insureds to the extent of $30,000. Thompson and his wife cross-appeal, contending that he should be permitted to stack more vehicles and that she should be permitted to recover under both policies for her separate loss of consortium claim.

The primary issues presented in this appeal are: ¹

1. Whether Thompson, as an operator of his employer's motor vehicle, is entitled to stack uninsured motorist coverage provided by his employer's insurance policy where the policy extends coverage to Thompson as an occupant of the vehicle and not as a named insured.

2. Whether Mrs. Thompson's claim for loss of consortium is a bodily injury which would trigger the upper limits of the uninsured motorist coverage provisions of the policies.

3. Whether the delay in claiming uninsured motorist coverage benefits precludes recovery.

We hold that stacking of the uninsured motorist coverage (UMC) of the employer's policy is not permitted; that though the wife may be entitled to benefits for loss of consortium those benefits are limited to the single limits of the policy and she is not entitled to a separate claim; and that the delay does not preclude recovery.

On June 26, 1974, Thompson was driving a Lewis County truck in the course of his employment when he was severely injured in an accident caused by an uninsured motorist. At the time, Thompson had a Grange insurance policy providing UMC of $15,000 per person and $30,000 per accident; he had been paying two uninsured motorist premiums for two cars. Lewis County's 156 vehicles were insured under a Great American policy, the named insureds of which were Lewis County and its elective or appointive officials. The general liability section of the Great American policy provided that:

(a) "Insured" means the named insured and:

* * *

(8) any other person while using an owned automobile ... with the permission of the named insured ...

The uninsured motorist section provided that:

Each of the following is an insured under this insurance to the extent set forth below:

(a) the named insured and any designated insured ...;

(b) any other person while occupying an insured highway vehicle; and

(c) any person, with respect to damages he is entitled to recover because of bodily injury to which this Insurance applies sustained by an insured under (a) or (b) above.

* * *

"Insured highway vehicle" means a highway vehicle: (a) described in the schedule as an insured highway vehicle to which the bodily injury liability coverage of the policy applies; ...

All Lewis County vehicles had bodily injury liability coverage.

Lewis County's Great American policy provided UMC for 50 passenger vehicles, each of which was covered up to $15,000 per person and $30,000 per accident. The policy required the county to pay a $5 premium for each of these vehicles. No premium was charged or paid for any UMC on the remaining 106 vehicles, one of which was the truck driven by Thompson.

On July 2, 1973, Lewis County had taken out a Great American "catastrophe" or "umbrella" policy to pay for the ultimate net loss in excess of the total applicable limits of the underlying policies. It did not mention UMC.

After failing in a suit against Lewis County, ² the Thompsons brought a declaratory judgment action against Grange and Great American on July 11, 1979. The court ruled: (1) that Mrs. Thompson was not entitled to bring her separate claim for loss of consortium under the UMC of either defendant; (2) that Grange was not prejudiced by the plaintiff's delay in bringing this action; (3) that Lewis County had not rejected UMC as to Great American's fleet and catastrophe policies; (4) that because the county paid 50 uninsured motorist premiums charged in the fleet policy, Thompson was entitled to stacking ($15,000 X 50 = $750,000); (5) that because no UMC was offered in the catastrophe policy, Thompson was entitled to claim the statutory minimum for UMC under that policy ($15,000); and (6) that Grange had secondary liability of $30,000.

A preliminary question to resolve is whether UMC extends at all to Lewis County's 106 nonpassenger vehicles, one of which was involved in Thompson's accident. Only 50 passenger and sheriff vehicles were specifically covered in the UMC endorsement. Coverage, then, depends on whether the county rejected UMC as to the 106 nonpassenger vehicles. If UMC was not rejected, there is coverage. RCW 48.22.030.

The question of whether an insured exercised his right to reject UMC is a question of fact to be determined from the circumstances of the particular case. Grange Ins. Ass'n v. Great Am. Ins. Co., 89 Wash.2d 710, 575 P.2d 235 (1978). RCW 48.22.030, wherein the named insured is given the right to reject UMC, does not require a written rejection. It is sufficient if the insured knew of the existence of UMC, understood his rights to accept or reject it, and made an informed choice to reject it. Grange Ins. Ass'n v. Great Am. Ins. Co., supra. Substantial evidence supports the trial court's findings that Lewis County never rejected UMC on the 106 nonpassenger vehicles included in the Great American policy.

The situation here is not like that in Grange Ins. Ass'n v. Great Am. Ins. Co., supra, in which the Tacoma City officials and their consultants who prepared the specifications for insurance coverage reflected sophisticated knowledge of insurance matters including UMC provisions. Failure to specify UMC clearly established a rejection of such coverage. Here, the Lewis County officials displayed no special knowledge of insurance matters, and the schedules and memoranda concerning UMC were prepared by the insurance broker or the company and not by the County. The evidence before us does not suggest that Lewis County acted as a sophisticated purchaser of insurance or that it was fully aware of its right to accept or reject UMC. The court below was correct in finding the absence of a valid rejection, and, thus, the required minimum UMC will be read into the Great American policy. Grange Ins. Ass'n v. Great Am. Ins. Co., supra; Touchette v. Northwestern Mut. Ins. Co., 80 Wash.2d 327, 494 P.2d 479 (1972).

Another preliminary question is whether RCW 48.22.030, which requires UMC in any new or renewal policy, imposes UMC on Great American's catastrophe policy. Because this policy did not specifically provide for UMC, the trial court read into it the minimum amount of $15,000 as being available to Thompson. This was error.

Catastrophe-type policies pick up where primary coverages end. 8A J. Appleman, Insurance § 4909.85 (1981). They provide coverage excess to that provided by the primary policy or policies. Here, the Great American catastrophe policy agreed to pay only the ultimate net loss in excess of the total applicable limits of the underlying policies. Although it was, in a sense, a new policy, it was really a continuation of the primary policies, in that it provided for coverage in addition to that already existing. And, although the fleet policy was first in time, the fleet policy supplemented the catastrophe policy in the sense that it fulfilled or completed the statutory requirement. That being the case, the catastrophe policy did not need to supply any UMC, and the court was in error to read in the minimum UMC. ³

We now turn to the issue of stacking. The Thompsons first note that RCW 48.22.030 mandates UMC, absent rejection, "for the protection of persons insured" under the policy's liability coverage. They also point to the following language in Federated Am. Ins. Co. v. Raynes, 88 Wash.2d 439, 444, 563 P.2d 815 (1977):

[Touchette v. Northwestern Mut. Ins. Co., supra, and Farmers Ins. Co. v. Miller, 87 Wash.2d 70, 549 P.2d 9 (1976) ] stand for the proposition that the parties may agree to a narrow definition of insured so long as that definition is applied consistently throughout the policy, but once it is determined that a person is an insured under the policy, that person is entitled to uninsured motorist coverage.

The Thompsons' argument is that RCW 48.22.030 only speaks of one class of insured and that because Mr. Thompson was an insured under the Great American policy for liability purposes, he should also have all the rights of an insured for UMC purposes, including the right to stacking. They therefore defend the court's judgment allowing Mr. Thompson to stack the uninsured motorist coverages of the 50 vehicles on which uninsured motorist premiums had been paid. ⁴ We disagree.

Subsequent to trial below, Division One of this Court decided a very similar case, Continental Cas. Co. v. Darch, 27 Wash.App. 726, 620 P.2d 1005 (1980), petition for review denied, 95 Wash.2d 1013 (1981), which we choose to follow.

Darch, who was driving one of his employer's 35 commercial vehicles, was injured by an uninsured motorist. Darch was an "insured" under both the company policy's liability section and UMC section because he had been occupying an insured highway vehicle. He contended that since he was recognized as an "insured," he must be given the same coverage as the policy's "named insureds." In other words, on the basis of American...