Tri-State Ins. Co. of Minnesota v. De Gooyer

• Decision Date: 18 December 1985
• Docket Number: No. 85-594,TRI-STATE,85-594
• Citation: 379 N.W.2d 16
• Parties: INSURANCE COMPANY OF MINNESOTA, Appellee, v. Denise De GOOYER as the Administrator of the Estate of Veryl Dean De Gooyer, Deceased, Appellant.
• Court: Iowa Supreme Court

Page 16

379 N.W.2d 16

TRI-STATE INSURANCE COMPANY OF MINNESOTA, Appellee, v. Denise De GOOYER as the Administrator of the Estate of Veryl Dean De Gooyer, Deceased, Appellant.

No. 85-594.

Supreme Court of Iowa.

Dec. 18, 1985.

Randall A. Roos, Sioux Center, for appellant.

H.R. Grigg of Smith, Grigg, Shea & Klinker, P.C., Primghar, for appellee.

Considered by REYNOLDSON, C.J., and McCORMICK, McGIVERIN, LARSON and SCHULTZ, JJ.

SCHULTZ, Justice.

The determinative issue in this appeal is whether an underinsured motorist provision which prevents the "stacking or pyramiding" of coverages is a valid limitation under Iowa Code section 516A.2. The insurance policy in question provided underinsurance motorist coverage on each of the insured's two vehicles. After the insured was killed in an automobile accident, the insurer brought a declaratory judgment action seeking to limit its liability to the face amount of a single coverage under its policy. The district court construed section 516A.2 to permit the insurer to prohibit, under its underinsured motorist provision, the "stacking" of multiple vehicle coverages and entered judgment in favor of the insurer. We affirm.

The facts are undisputed. Veryl De Gooyer was insured by Tri-State Insurance Company of Minnesota (insurer) under a policy that provided insurance coverages on two separate vehicles. The declaration page of the policy revealed that both vehicles were insured for "underinsured motorist" coverage with a "limit of liability" in the amount of "$55,000 each person." This coverage provided the insured protection for bodily injury resulting from an accident with an underinsured motorist.

On October 13, 1984, Veryl Dean De Gooyer was killed in an automobile accident caused by another motorist who carried $50,000 liability insurance coverage. At the time of the accident decedent was operating a vehicle that he did not own. The insured's death was caused by the negligence of the other motorist. The parties agree that decedent's estate was damaged in the amount of at least $160,000 by his wrongful death. After credit was given for the other motorist's liability coverage of $50,000, decedent's estate remained underinsured for at least $110,000.

The insurer commenced declaratory judgment action against Denise De Gooyer, administrator of decedent's estate, seeking to determine the extent of its liability. The insurer alleged the extent of its liability was determined by the "Limit of Liability" provision contained in the underinsured motorist endorsement which in pertinent part provides:

The limit of liability shown in the Schedule [Declaration Page] for this coverage is our maximum limit of liability for all damages resulting from any one accident. This is the most we will pay regardless of the number of:

................................................................................

* * *

3. Vehicles or premiums shown in the Declarations; ...

In its amended and substituted petition the insurer requested the district court declare its liability to the administrator be $55,000, the amount shown on the declaration page. In her answer and counterclaim, the administrator alleged that the $55,000 coverage on each vehicle was available to satisfy the underinsured loss, for a total of $110,000 recoverable from the insurer. Relying upon our decisions in McClure v. Employers Mutual Casualty Company, 238 N.W.2d 321 (Iowa 1976), and Holland v. Hawkeye Security Insurance Company, 230 N.W.2d 517 (Iowa 1975), the district court concluded that under the terms of the underinsured motorist provision, the "stacking" of coverages was validly prohibited.

On appeal the appellant claims that because the insured's two vehicles were separately insured the coverage limit for each vehicle should be combined or "stacked" up to the amount of the underinsured loss. Appellant does not contend that the "Limit of Liability" provision in the underinsured motorist provision is ambiguous or unclear. This provision plainly limits the maximum amount of liability for any one accident to the limit of liability shown in the declaration. The declaration page sets out the liability limit for underinsured motorist coverage to be $55,000 per person for each occurrence. The genuine dispute between the parties is whether this policy limitation is in accord with our statutory requirements for underinsured motorist coverage.

Initially, what effect does a statute have on an insurance contract? A statute that authorizes a contract of insurance has application beyond merely permitting or requiring such a policy. The statute itself forms a basic part of the policy and is treated as if it had actually been written into the policy. Rohret v. State Farm Mutual Automobile Insurance Company, 276 N.W.2d 418, 419 (Iowa 1979). The terms of the policy are to be construed in light of the purposes and intent of the applicable statute. American States Insurance Company v. Estate of Tollari, 362 N.W.2d 519, 521 (Iowa 1985); Benzer v. Iowa Mutual Tornado Insurance Association, 216 N.W.2d 385, 388 (Iowa 1974).

Iowa code chapter 516A authorizes automobile insurance coverage for protection against injuries caused by underinsured motorists and uninsured motorists or hit-and-run vehicles. § 516A.1. It is mandatory that such coverage ¹ be provided by a motor vehicle liability insurance policy unless such coverage is rejected by the insured. Id. The focal point of the parties' dispute rests on the intendment of section 516A.2 which provides:

Except with respect to a policy containing both underinsured motor vehicle coverage and uninsured or hit-and-run motor vehicle coverage, nothing contained in this chapter shall be construed as requiring forms of coverage provided pursuant hereto, whether alone or in combination with similar coverage afforded under other automobile liability or motor vehicle liability policies, to afford limits in excess of those that would be afforded had the insured thereunder been involved in an accident with a motorist who was insured under a policy of liability insurance with the minimum limits for bodily injury or death prescribed in subsection 10 of section 321A.1. Such forms of coverage may include terms, exclusions, limitations, conditions, and offsets which are designed to avoid duplication of insurance or other benefits.

The insurer maintains that the last sentence in 516A.2 clearly authorizes a limitation to prevent stacking of coverages that it placed in its policy. On the other hand, appellant urges that "duplication of insurance or other benefits" was intended by the legislature to prevent an actual duplication of compensation for the same loss, or a double recovery.

As indicated by the trial court, we have previously addressed the issue of stacking policies. In McClure we examined how section 516A.2 (1975) applied to uninsured, rather than underinsured, motorist coverage. 238 N.W.2d at 326-27. In McClure the decedent insured carried uninsured motorist coverage on his own vehicle and such insurance also covered him while he was in other vehicles. He was killed in an accident while riding as a passenger in another vehicle...