Kozak v. Detroit Automobile Inter-Insurance Exchange

262 N.W.2d 904, 79 Mich. App. 777, 1977 Mich. App. LEXIS 830

• Court: Michigan Court of Appeals
• Decided: November 25, 1977
• Docket: Docket 30107
• Status: Published

Opinions

Per Curiam.

The issue presented for this Court’s consideration is whether several uninsured motorist coverages issued by the same insurance company to the same insured may be stacked or pyramided so that uninsured motorist benefits are payable in an amount exceeding the limits of any one of the separate uninsured motorist coverages.

Paula Sue Kozak was injured on October 5, 1974, when the motorcycle on which she was a passenger was struck by an uninsured motorist in Biloxi, Mississippi. The driver of the motorcycle, who was not at fault, was insured but carried no uninsured motorist coverage.

At the time of the accident, plaintiff was a resident of her parents’ home in Michigan. Her father owned three automobiles at the time, each of which was insured by defendant. Each of the three policies provided for uninsured motorist coverage in the limits of $20,000/$40,000. Premiums for this coverage, which covered plaintiff in the Biloxi accident, were paid on each policy.

Each of the policies contained an "other insurance” clause which stated:

"6. Other Insurance.

"With respect to bodily injury to an insured sustained while occupying an automobile or through being struck by an uninsured automobile, if such insured is a named insured under other similar insurance available to him, then the damages shall be deemed not to exceed the higher of the applicable limits of liability of this insurance and such other insurance, and the Exchange shall not be liable under this coverage for a greater proportion of the applicable limit of liability of this coverage than such limit bears to the sum of the applicable limits of liability of this insurance and such other insurance.

"Subject to the foregoing paragraph, if the insured has other similar insurance available to him against a loss covered by this coverage, the Exchange shall not be liable under this coverage, for a greater proportion of such loss than the applicable limit of liability hereunder bears to the total applicable limits of liability of all valid and collectible insurance against such loss.”

Plaintiff sought to recover under the uninsured motorist coverage of each of the three policies, claiming that the benefits should be stacked or pyramided entitling her to a total coverage of $60,000. Defendant, claiming that its liability was limited by the "other insurance” clause to a total of $20,000, paid the plaintiff $20,000 by three separate checks, each drawn on a separate policy for one-third of the total amount. Plaintiff filed an action for declaratory judgment which was decided in favor of the defendant. Plaintiff appeals.

In Horr v Detroit Automobile Inter-Insurance Exchange, 379 Mich 562; 153 NW2d 655 (1967), the Michigan Supreme Court held that an "other insurance” clause substantially similar to the one in the present case precluded stacking of uninsured motorist benefits between two insurance companies. Horr was decided at a time like the present when uninsured motorist coverage was not required. The Court, after finding no statutory or decisional law applicable, attempted to determine the intent of the contracting parties in interpreting the "other insurance” clause. The Court gave the "other insurance” clause its literal meaning and concluded that the maximum combined coverage of the policies was $10,000, which was the limit of liability in both policies. The "other insuranee” clause was then used to prorate the coverage between the insurers.

In Blakeslee v Farm Bureau Mutual Insurance Co of Michigan, 388 Mich 464; 201 NW2d 786 (1972), the plaintiff was allowed to stack uninsured motorist coverage from two insurance companies. However, the injury in Blakeslee occurred after the passage of MCLA 500.3010; MSA 24.13010 (since repealed) which required uninsured motorist coverage. The Court distinguished Horr and held that "[i]t would be unconscionable to permit an insurance company offering statutorily required coverage to collect premiums for it with one hand and allow it to take the coverage away with the other by using a self-devised 'other insurance’ limitation”. 388 Mich at 474.

The issue now before the Court was addressed in Arminski v United States Fidelity & Guaranty Co, 23 Mich App 352; 178 NW2d 497 (1970), leave granted, October 20, 1970, appeal dismissed by order dated June 2, 1971, 384 Mich 769. Arminski, like Horr, grew out of incidents which occurred before the statutory requirement of uninsured motorist coverage went into effect.

The plaintiff sought to stack two uninsured motorist provisions issued to him in a single contract. This Court found unpersuasive plaintiff’s attempt to distinguish Horr on the grounds that there was one insurance company charging two premiums in Arminski. The Court citing Horr gave a literal meaning to the language of the policy and found that defendant’s liability was limited to $10,000, which was the limit in each provision.

The rule in Michigan, in accord with Horr and Arminski, is that the insurer’s liability under a policy containing an "other insurance” clause is limited to the amount stated on the face of the policy. When an insurer issues multiple insurance policies, each providing uninsured motorist coverage and containing an "other insurance” clause, the insured party may not pyramid his damages, but can recover only the maximum amount to which he is limited by the "other insurance” clause.

In the clause involved here, there is no uncertainty or ambiguity. The clause is set forth as part of the insurance contract in clear and understandable terms: if the insured has other similar insurance available to him against a covered loss, the insurer can avoid the effect of cumulative or multiple limits on a single accident by a proration of the amount the insured can recover. This contract is enforceable unless considerations of equity and justice or of public policy dictate otherwise. Unlike Blakeslee v Farm Bureau Mutual Insurance Company of Michigan, supra, no such considerations are present here.

It is true that the insured has paid three separate premiums, but it is not true that under the Horr-Arminski analysis he is paying the extra amount for nothing. The additional premiums represent payments for the extra risks taken by the insurance company in insuring additional vehicles and were intended as such. This is the clear and plain import of the "other insurance” clause in the policy.

In the absence of ambiguities, the rights of the parties rest on the insurance contract as written. Courts should not indulge in forced construction so as to cast upon the insurance company liability which it has not assumed. See Topolewski v Detroit Automobile Inter-Insurance Exchange, 6 Mich App 286; 148 NW2d 906 (1967). The intention manifested by the policy is to limit the insurer’s liability. Both parties agreed to the provision and we cannot presume to rewrite their contract.

We note that a significant number of other jurisdictions which have considered the question have held that clauses prohibiting the pyramiding of recoveries by limiting them through "other insurance” and similar provisions on a pro rata basis are valid and enforceable. See Allstate Insurance Co v Shmitka, 12 Cal App 3d 59; 90 Cal Rptr 399 (1970), Otto v Allstate Insurance Co, 2 111 App 3d 58; 275 NE2d 766 (1971), Allstate Insurance Co v McHugh, 124 NJ Super 105; 304 A2d 777 (1973), aiFd, 126 NJ Super 458; 315 A2d 423 (1974), Kennedy v American Hardware Mutual Insurance Co, 255 Or 425; 467 P2d 963 (1970), Paciñc Indemnity Co v Thompson, 56 Wash 2d 715; 355 P2d 12 (1960).

We adopt the view of this line of cases and the view of our own Michigan courts in Horr and Arminski. Accordingly, we hold the "other insurance” clause agreed to by the parties in this case validly prohibits plaintiff from stacking her recoveries under the separate policies issued by the defendant. She is limited to a recovery of $20,000, the maximum liability on any of the three policies.

Affirmed.