Meckert v. Transamerica Insurance

701 P.2d 217, 108 Idaho 597, 1985 Ida. LEXIS 464

• Court: Idaho Supreme Court
• Decided: May 6, 1985
• Docket: 15738
• Status: Published

Opinions

SHEPARD, Justice.

The United States Court of Appeals for the Ninth Circuit has certified a question of law to this Court. 742 F.2d 505 (1984). Meckert sustained injuries in a vehicular accident and when his insurer, Transamerica, denied insurance coverage, Meckert brought an action in the state district court, which was removed to the federal district court. The federal district court granted summary judgment in favor of Transamerica, and Meckert appealed to the Ninth Circuit, which held that a question of state law was presented for which there was no controlling Idaho law, and in accordance with I.A.R. 12.1, certified the question to this Court.

Meckert owned a motorcycle, a car, and a truck. The motorcycle was insured under a policy issued by Viking Insurance Company, which is not a party to this action. The car and the truck were insured under a policy issued by Transamerica Insurance Company.

While Meckert was riding his motorcycle, it was struck by a vehicle driven by Linda Strong. There appears no question of the liability of Strong. The car Strong was driving was owned by her parents and was insured for liability limits of $25,000, which was tendered by the liability carrier and accepted by Meckert. This recovery did not cover Meckert’s damages, which included $26,000 in lost wages, $18,000 in present medical expenses, and continuing medical treatment.

Meckert filed this action against Transamerica seeking a recovery under the underinsured coverage of the Transamerica policy, which provides:

“2. UNDERINSURED MOTORISTS COVERAGE. We will pay damages which a covered person is legally entitled to recover from the owner or operator of an underinsured motor vehicle because of bodily injury sustained by a covered person and caused by an accident. The owner’s or operator’s liability for these damages must arise out of the ownership, maintenance or use of the underinsured motor vehicle.

We will pay under this coverage only after the limits of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements. ‘Covered person’ as used in this Part means:

1. You or any family member

‘Underinsured motor vehicle’ means a land motor vehicle or trailer of any type 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.” (Emphasis in original.)

There is no question that Meckert is a “covered person,” that the Strong vehicle was “underinsured,” or that Strong’s liability policies have been exhausted.

Transamerica denied coverage under the “underinsured motorist coverage” on the basis of an exclusion contained in the policy, which provides:

“EXCLUSIONS

A. We do not provide Underinsured Motorists Coverage for bodily injury sustained by any person:

1. While occupying, or when struck by, any motor vehicle or trailer of any type owned by you or any family member which is not insured for this coverage under this policy. (Emphasis added.)

Uninsured motorist coverage, subject to an identical exclusionary clause, was also contained in the Transamerica policies, but that uninsured coverage is not an issue here.

Transamerica denied coverage because Meckert was injured while riding his motorcycle, which was not insured by Transamerica, and therefore came within the “other owned vehicle” exclusion. Meckert brought the instant action, asserting that the “other owned vehicle” exclusion: (1) violates public policy; (2) conflicts with the plain language of the underinsured coverage; (3) is fatally vague and ambiguous; and (4) contradicts Meckert’s “reasonable expectations” as a purchaser of insurance.

Meckert argues that the “other owned vehicle” exclusion contravenes a public policy of protecting innocent victims of negligent and financially irresponsible motorists, as exemplified by I.C. §§ 41-2502, 49-1505(d). We disagree. I.C. § 41-2502 requires a policy of motor vehicle liability insurance to also provide protection to the insured from injury by uninsured vehicles. That protection cannot be less than the minimum limits for bodily injury or death set forth by the motor vehicle safety responsibility act, I.C. § 49-1505(d). If an applicant for insurance desires to reject such uninsured vehicle coverage, he must do so expressly in writing. However, the Idaho statutes do not regulate under-insured motorist coverage. There are no requirements that insurance carriers offer such underinsured motorist coverage, nor that motorists have such underinsured coverage. Neither the Idaho legislature nor the courts have declared that there exists a public policy applicable to underinsured motorist coverage. While such a policy might be desirable (See Palisbo v. Hawaiian Ins. & Guaranty Co., 57 Hawaii 10, 547 P.2d 1350 (1976); Porter v. Empire Fire and Marine Ins. Co., 106 Ariz. 274, 475 P.2d 258 (1970), modified on other grounds, 106 Ariz. 345, 476 P.2d 155 (1970) pointing out the anomalous result from regulating and requiring uninsured vis-avis, underinsured motorist coverage), that public policy should be enunciated by our legislature and not by this Court. Hence, we hold that there is no public policy basis upon which to rule that the language of the exclusion clause presented here is invalid.

Meckert also argues that the Transamerica policies were sold with uninsured and underinsured coverage as a package, and that therefore the public policy behind the statutory requirement that an insurance carrier offer uninsured motorist coverage should be extended equally to under-insured motorist coverage. We disagree. Here the record does not indicate whether Meckert could reject either the uninsured or underinsured motorist coverage, but even assuming that the insured had to accept the two coverages as a package, such fact does not alter our holding that a statute governing uninsured motorist coverage does not represent any public policy regarding underinsured motorist coverage. Underinsured and uninsured coverage are not identical in either definition or operation. Blackburn v. State Farm Mutual Automobile Ins. Co., 108 Idaho 85, 697 P.2d 425 (1985).

Meckert argues that many courts have held uninsured motorist coverage to be personal in nature as opposed to vehicle-related in nature, i.e., that the coverage is “portable” and covers the insureds, whether they might be injured in an owned vehicle named in the policy, while on foot, or even while sitting on a porch swing. Meckert asserts that this Court should hold the same to be true as to underinsured motorist coverage, and permit him to recover for injuries which he sustained while outside a covered vehicle. Here Meckert was not on foot or occupying a porch swing, but rather he was injured while traveling on and occupying a motor vehicle owned by Meckert and “which is not insured for this coverage under this policy.” Hence, we need not address if such underinsured motorist coverage is “personal” or “portable” in nature since Meckert falls squarely within the specific exclusion, i.e., he was occupying a vehicle not covered by the Transamerica policy.

Meckert next asserts that the “other owned vehicle” exclusion is invalid because it conflicts with the plain language granting underinsured motorist coverage. We hold that such conflict does not require a finding that the exclusionary clause is invalid. An insurance carrier has the right to limit its coverage of risk and its liability, and in so doing may impose conditions and restrictions upon its contractual obligations which are not inconsistent with public policy. Safeco Ins. Co. of America, Inc. v. McKenna, 90 N.M. 516, 565 P.2d 1033 (1977) (homeowners policy); National Ins. Underwriters v. Carter, 17 Cal.3d 380, 131 Cal.Rptr. 42, 551 P.2d 362 (1976) (aircraft liability policy); Kepner v. Western Fire Ins. Co., 109 Ariz. 329, 509 P.2d 222 (1973) (homeowners policy).

Meckert also contends that the language of the exclusion is fatally vague and ambiguous, hence invalid and to be construed most strongly against the insurer. We hold that the language of the ex-elusionary clause is clear and unambiguous. This Court has held that an insurer must use clear and precise language if it wishes to restrict the scope of its coverage. Moss v. Mid-America Fire and Marine Ins., 103 Idaho 298, 647 P.2d 754 (1982). We hold that Transamerica has met its burden of clarity and precision. In the absence of ambiguity, the words used in an insurance policy are to be given their plain, ordinary and popular meaning. Porter v. Farmers Ins. Co. of Idaho, 102 Idaho 132, 627 P.2d 311 (1981).

The exclusionary clause appears in the policy directly below the insuring clause granting underinsured motorist coverage. The exclusion is couched in plain and conspicuous language in printing of the same size and intensity of the remainder of the policy. The language distinctly communicates to the insured that no underinsured motorist coverage is afforded if the covered person is injured while occupying a motor vehicle not insured under the policy. Meckert falls squarely within the clear and uncertain terms of the exclusion.

Meckert’s final contention is that the exclusionary language is invalid because it contradicted his “reasonable expectations” as a purchaser of insurance. As noted in Foremost Ins. Co. v. Putzier, 102 Idaho 138, 627 P.2d 317 (1981), the doctrine of reasonable expectations has not been adopted as the law in Idaho. Since we have held that there is no ambiguity in the language of the exclusion here, the closely related rule of contract construction under which ambiguous insurance policies are construed liberally in favor of the insured is not available to Meckert. See Foremost, supra; Casey v. Highlands Ins. Co., 100 Idaho 505, 600 P.2d 1387 (1979).

The language of the exclusionary clause is unambiguous and we find no conflict with the Idaho statutes. The exclusionary provision is therefore enforceable. See State Farm Auto. Ins. Co. v. Kiehne, 97 N.M. 470, 641 P.2d 501 (1982). No costs or attorney’s fees are allowed.¹

DONALDSON, C.J., and BAKES, J., concur.

1 . We note there are two cases presently pending before this Court, i.e., Hammon v. Farmers Insurance Group, 107 Idaho 770, 692 P.2d 1202 (App.1984), and Dullenty v. Rocky Mountain Fire & Casualty Co., 107 Idaho 777, 692 P.2d 1209 (App.1984). The Court of Appeals held in both cases that “other owned vehicle” exclusions to uninsured motorist coverage were invalid. Since both those decisions of the Court of Appeals turn upon uninsured motorist coverage, we deem them to be, in any event, distinguishable from the instant case.