UIM recovery limited to covered autos (72412)

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A son cannot recover underinsured motorist (UIM) benefits under his father’s business auto policy, where the car he was injured in was not listed as a covered auto under the policy.

Onalaska attorney Lee J. Fehr, who represented the insurer, praised the decision as good for consumers.

Noting that the father consciously chose to list only one vehicle he owned as a “covered auto,” though he could have included all four that he owned, Fehr said, “It is good for consumers. They will get what they pay for. It would be bad for all consumers if some were able to insure only one car and get insurance for all the others they own.”

But the son’s attorney, Joel W. Brodd, said that poor draftsmanship on the part of the insurer resulted in ambiguity that should have gone in favor of the insured.

“What they did was take standard UIM policy language from an personal automobile policy, and then tacked on an introduction that said it applies only to covered autos, which is inconsistent with the ‘personal and portable’ nature of UIM coverage,” Brodd said. “I am totally shocked at the outcome.”

The son, Jonathan Lisowski, insured a Dodge Avenger that he drove, but which his father, Dennis, owned. Dennis owned a Mack semi tractor that he used for farming and insured under a business policy with Hastings Mutual Insurance Company.

The Hastings policy included UIM coverage, which listed only the Mack as a covered auto; Jonathan’s insurance policy did not.

According to the decision, Jonathan was severely injured as a passenger in an accident involving the Avenger. The accident was the fault of his friend, who was driving. After settling with his insurer, Jonathan sued Hastings Mutual, seeking UIM coverage, as a family member of his father — the named insured.

Both the circuit court and the Court of Appeals held there was no coverage, pursuant to another case involving a business auto policy, and an injured party who was injured in a non-covered auto. Crandall v. Society Insurance, 2004 WI App 34, 269 Wis.2d 765, 676 N.W.2d 174.

The Court of Appeals agreed with Jonathan that the policy should provide coverage, because, as Dennis’ son, Jonathan was an insured, and the vehicle was an underinsured motor vehicle. Nevertheless, it affirmed, because it concluded Crandall was binding precedent.

The Supreme Court granted review, but affirmed, in an opinion by Justice N. Patrick Crooks, concluding that Crandall was correctly decided.

Quoting the Court of Appeals’ opinion in Crandall, the court iterated: “[T]his is a policy for Crandall’s business, not for him as an individual. … The policy is described in various places within the policy as a businessowner’s policy and a garage policy. It would be unexpected for this kind of policy to cover Crandall and his family under circumstances wholly unrelated to Crandall’s business.”

The majority opinion found the key language to its holding in the policy’s declarations page, which stated that the UIM coverage would only apply to “covered autos,” which included only the Mack.

The majority rejected Lisowski’s argument that this statement was merely “introductory language,” rather than part of the policy.

Finding the Court of Appeals’ reasoning in Crandall persuasive, the majority found it equally applicable in this case.

Both cases involved a business auto policy, and an insured who was injured while a passenger in an underinsured vehicle not listed in the policy.

Justice Ann Walsh Bradley dissented from the majority holding, in an opinion joined by Chief Justice Shirley S. Abrahamson, emphasizing that, because UIM coverage is “personal and portable,” it is irrelevant whether the Avenger was a “covered auto” under the business policy.

The dissenters found it irrelevant whether the vehicle in which Jonathan was injured was a “covered auto,” because UIM coverage is “personal and portable.”

Bradley wrote, “What does it mean to be ‘personal and portable’? ‘Personal’ means that the coverage follows the person and not the vehicle, and ‘portable’ means that it follows the person regardless of where he is at the time of the accident. Unlike general automobile liability policies which insure a specific auto, UIM policies insure the person.”

Because UIM coverage follows the insured, even if he is on foot when injured by an underinsured motorist, the dissenters concluded that the policy is ambiguous, and therefore must be construed in favor of granting coverage to the insured.

Rejecting the majority opinion that the policy unambiguously denies coverage, Bradley wrote, “I am reminded of the words of a nonsense poem by Lewis Carroll: ‘I have said it thrice: What I tell you three times is true.’ “Just because Wisconsin courts thrice proclaim that this language is clear and unambiguous, it makes it no more true than was the proclamation in Carroll’s poem.”