Pierce v. Allstate Insurance

848 P.2d 1197, 316 Or. 31, 1993 Ore. LEXIS 42

• Court: Oregon Supreme Court
• Decided: April 8, 1993
• Docket: CC 90-1515-L-1; CA A67513; SC S39392
• Status: Published

Opinions

GRABER, J.

ORS 742.502 provides for the issuance of uninsured and underinsured motorist liability coverage:

“(1) Every motor vehicle liability policy insuring against loss suffered by any natural person resulting from liability imposed by law for bodily injury or death arising out of the ownership, maintenance or use of a motor vehicle shall provide uninsured motorist coverage therein or by indorsement thereon when such policy is either:

“(a) Issued for delivery in this state; or

“(b) Issued or delivered by an insurer doing business in this state with respect to any motor vehicle then principally used or principally garaged in this state.

“(2) The insurer issuing such policy shall offer one or more options of uninsured motorist coverage larger than the amounts prescribed to meet the requirements of ORS 806.070[, set out in note 1, infra,1 up to the limits provided under the policy for motor vehicle bodily injury liability insurance. Offers of uninsured motorist coverage larger than the amounts required by ORS 806.070 shall include underin-surance coverage * * *. Underinsurance benefits shall be equal to uninsured motorist coverage benefits less the amount recovered from other automobile liability insurance policies.”

The issue in this case is whether ORS 742.502(2) required defendant insurance company to offer plaintiff “options of uninsured motorist coverage * * * up to the limits provided under the policy for motor vehicle bodily injury liability insurance” every time that plaintiff added vehicles to her automobile liability insurance policy, deleted vehicles, or replaced vehicles named in the policy with other vehicles. The trial court held that ORS 742.502(2) did not require such offers and granted summary judgment for defendant. Plaintiff appealed; the Court of Appeals reversed. Pierce v. Allstate Ins. Co., 112 Or App 530,829 P2d 1032 (1992). We reverse the decision of the Court of Appeals and reinstate the judgment of the trial court.

The material facts are not in dispute. Plaintiff purchased an automobile liability insurance policy from defendant in 1985. The policy covered a 1981 Datsun and a 1985 Ford. When plaintiff obtained the policy in 1985, defendant offered plaintiff “optional” uninsured motorist liability coverage in an amount up to $100,000, the amount of bodily injury liability coverage provided in the policy. That offer complied with the requirements of ORS 742.502. Plaintiff did not accept the offer. As a result, the policy issued to her included uninsured motorist coverage in the amount of $25,000 per person, the minimum amount required by ORS 742.502(1), 806.060(1), and 806.070(2)(a).¹

In May 1986, plaintiff deleted the Ford from the policy. In September 1986, she added a 1965 Chevrolet. In January 1987, she deleted the Datsun and added a 1986 Isuzu. As issued by defendant, plaintiffs policy permitted those additions, deletions, and replacements as modifications to the existing policy.² Defendant did not offer optional uninsured motorist coverage to plaintiff on any of those occasions.

In March 1988, while standing on her front porch, plaintiff was severely injured by a car driven by an underin-sured motorist. The underinsured motorist’s insurer paid plaintiff $50,000, which was less than her total damages. Plaintiff brought a declaratory judgment action against defendant, seeking to determine her rights under ORS 742.502 and the insurance policy. She asserts that ORS 742.502(2) required defendant to have offered her optional uninsured motorist liability coverage in the amount of $100,000, the bodily injury liability limit under her policy, each time she deleted automobiles from, replaced, or added automobiles to her policy and that, because defendant had not done so, she is entitled to coverage in the amount of $100,000.

The question before us is whether the deletion, replacement, or addition of a vehicle is an event requiring an offer of optional uninsured motorist coverage under ORS 742.502(2). In interpreting a statute, our task is to discern the intent of the legislature. ORS 174.020; State ex rel Juv. Dept. v. Ashley, 312 Or 169, 174, 818 P2d 1270 (1991). We begin with the text and context of the statute; other provisions of the same statute are part of that context. ORS 174.010; Sanders u. Oregon Pacific States Ins. Co., 314 Or 521, 840 P2d 87 (1992).

ORS 742.502(1), set out on page 33, states that a motor vehicle liability policy insuring against loss from liability for bodily injury must provide a minimum amount of uninsured motorist coverage when the policy is “[ijssued.” ORS 742.502(2) states that the insurer must also offer “options of uninsured motorist coverage larger than” that minimum, up to the limits of the liability policy; however, it does not state when that offer must be made. Construing ORS 742.502(1) and (2) together, we conclude that ORS 742.502(2) requires that an insurer offer optional uninsured motorist coverage at the time the policy is “issued.”

We then reach the question whether the addition of a vehicle to a policy, the deletion of a vehicle, or the replacement of one insured vehicle with another under the same policy constitutes “issuance” of a policy within the meaning of ORS 742.502(2).³ Several sections of the Insurance Code demonstrate that the answer is “no.”

The Insurance Code does not contain an explicit definition of “issuance.” “Policy” is defined, however, in ORS 731.122:

“ ‘Policy’ means the written contract or written agreement for or effecting insurance, by whatever name called, and includes all clauses, riders, indorsements and papers which are a part thereof and annuities.” (Emphasis added.)

That definition implies that a single “policy” may include multiple riders and indorsements, which often are incorporated after the issuance of the policy. See also ORS 742.458 (with respect to motor vehicle liability insurance policy, “[t]he policy, the written application therefor, if any, and any rider or indorsement * * * shall constitute the entire contract”).

Other statutes suggest that a “policy” generally is “issued” only once, in response to an application by the prospective insured. Under ORS 742.013, the insured’s statements in an application for an insurance policy are “deemed to be representations.” Misrepresentations, omissions, con-cealments of fact, and incorrect statements prevent recovery under “the policy” only if they are “contained in a written application for the insurance policy, and a copy of the application is indorsed upon or attached to the insurance policy when issued.” Ibid, (emphasis added). ORS 742.046 requires that every policy “be mailed or delivered to the insured or to the person entitled thereto within a reasonable period of time after its issuance except where a condition required by the insurer has not been met by the insured.” (Emphasis added.) See also ORS 742.026 (two or more insurers may jointly “issue” certain underwriters’ and combination policies).

The statutory scheme also makes clear that the renewal of a motor vehicle liability policy for an additional period does not constitute the issuance of a new policy. ORS 742.560(2), which relates to cancellation and nonrenewal of automobile liability insurance policies, provides in part:

“ ‘Renewal’ or ‘to renew’ means to continue coverage for an additional policy period upon expiration of the current policy period of a policy.” (Emphasis added.)

Unless “a policy” is canceled or nonrenewed by the statutorily required method, it continues. ORS 742.560 to 742.570. More generally, and to similar effect, ORS 742.051 provides:

“Any insurance policy terminating by its terms at a specified expiration date and not otherwise renewable, may be renewed or extended at the option of the insurer, if renewed or extended upon a currently authorized policy form at the premium rate then required therefor, for a specific additional period or periods by certificate or by indorsement of the policy, without requiring the issuance of a new policy.” (Emphasis added.)

That is, any insurance policy may be renewed or extended “without requiring the issuance of a new policy.”

Finally, and most directly relevant to plaintiffs specific claim here, ORS 742.504(2)(b) defines the term “insured vehicle” in the context of uninsured and underinsured motorist coverage as follows:

“As used in [an uninsured motorist liability] policy:

“(b) ‘Insured vehicle,’ * * * means:

“(A) The vehicle described in the policy or a newly acquired * * * vehicle, * * * insured under the * * * provisions of the policyU” (Emphasis added.)

We interpret the text of ORS 742.504(2)(b)(A) to mean that the addition of a vehicle to a policy, the deletion of a described vehicle, or the replacement of one vehicle by another under the same policy does not constitute issuance of a policy in the context of uninsured and underinsured motorist coverage. That is, the statute contemplates that vehicles may be added, deleted, or replaced as modifications to an existing, ongoing insurance policy.

Reading the relevant provisions of the uninsured motorist statute and Insurance Code together,⁴ we conclude that, when plaintiff added vehicles to the motor vehicle liability insurance policy issued to her by defendant, deleted vehicles, or replaced vehicles insured under that policy with other vehicles, defendant was not required, under ORS 742.502(2), to offer plaintiff “options of uninsured motorist coverage larger than” the minimum amounts provided. Rather, ORS 742.502(2) requires that an offer be made when an insurer initially issues a policy to an insured.⁵

Although we do not agree with the holding below in the present case, we agree with the Oregon Court of Appeals’ statement that ORS 742.502 (formerly ORS 743.789) was intended “to provide Oregon drivers an affirmative choice whether to obtain more than minimum protection against uninsured [and, by later statutory amendment, underinsured] motorists.” White v. Safeco Insurance Co., 68 Or App 11, 15, 680 P2d 700 (holding that an insurer has an affirmative duty to communicate expressly to insureds the availability of optional additional uninsured coverage), rev den 297 Or 492 (1984). We also agree with the Court of Appeals that,

“once an insured has been made aware that the coverage is available, an insurer is not obligated, as the trial court aptly put it, to inquire continuously whether the insured really meant to refuse. Plaintiff has not asserted that defendant’s notice in April, 1982, was not adequate and, having once given it, defendant was not required to provide notice again. ’ ’ (Footnote omitted.)

Wood v. State Farm Mutual Automobile Ins. Co., 100 Or App 576, 580, 787 P2d 504 (holding that new offers were not required to be made concurrently with renewals of policy over three-year period after the insurer gave the statutorily required offer), rev den 310 Or 133 (1990).

The case is not, as Justice Van Hoomissen’s dissent would have it, one in which the two possible answers are evenly balanced, so that the scales are tipped by resort to a general principle of “liberal construction.” 316 Or at 44, 51. This case is, instead, one in which the statutory context compels the answer. The dissent fails to consider the implications of the pertinent portions of the Insurance Code, discussed above, which demonstrate the relevant legislative intent.

The parties and Justice Van Hoomissen’s dissent cite cases from other jurisdictions in support of their positions. Those cases are of limited persuasive value, because they involve different statutes, different facts, inapposite holdings, or a combination of those things. We note, however, that many cases from other jurisdictions support our conclusion.⁶

We also note that the dissent cites 13A Appleman, Insurance Law and Practice § 7648 (1976 ed). 316 Or at 46. In the cited section, entitled “Renewal as Continuation, or as New Certificate,” the author states: Here, as demonstrated above, the legislature has “shown clearly that the original and renewal agreements shall constitute one continuous contract.”

“A renewal contract has been stated by many jurisdictions to be a new, and a separate and distinct contract, unless the intention of the parties is shown clearly that the original and renewal agreements shall constitute one continuous contract.” Id. at 450-51 (footnote omitted; emphasis added).

In conclusion, we hold that summary judgment for defendant was proper.

The decision of the Court of Appeals is reversed. The judgment of the circuit court is affirmed.

1 ORS 806.060(1) provides:

“A person who is required to comply with the financial responsibility requirements of this state must be able to respond in damages, in amounts required under this section, for liability on account of accidents arising out of the ownership, operation, maintenance or use of motor vehicles * * *.

“(1) To meet the financial responsibility requirements, a person must be able to respond in damages in amounts not less than those established under * * * ORS 806.070.”

ORS 806.070(2)(a) provides:

“The schedule of payments is as follows:

“(a) $25,000 because of bodily injury to or death of one person in any one accident!.]”

2 Under “Part I - Automobile Liability Insurance,” the insurance policy contained the following explanation of what constituted an insured vehicle:

“Insured Autos

“(1) Any auto described on the declarations page and the four wheel private passenger auto or utility auto you replace it with.

“(2) An additional four wheel private passenger auto or utility auto you acquire ownership of during the premium period. This auto will be covered if we insure all other private passenger autos or utility autos you own. You must, however, notify us within 60 days of acquiring the auto and pay any additional premium.” (Bold emphasis in original.)

Under “Part III - Uninsured Motorists Coverage,” the policy stated in part:

“An insured auto is a motor vehicle:

“(1) described on the declarations page, and the motor vehicle you replace it with.

“(2) you acquire ownership of during the premium period. This additional motor vehicle will be covered if Allstate insures all other private passenger motor vehicles you own. You must, however, notify Allstate within 60 days after you acquire the motor vehicle and pay any additional premium.” (Bold emphasis in original.)

3 The parties’ automobile liability insurance policy treated the addition, deletion, and replacement of insured vehicles as amendments to one ongoing policy, and plaintiff does not argue otherwise. The question before us is, however, one of statutory construction, not one of construction of the insurance policy.

4 Legislative history is not of assistance.

5 We need not decide in this case whether the structure and purpose of ORS 742.502(2) require that a reoffer of optional uninsured motorist coverage be made when an insurer offers, or an insured selects, an increase in the insured’s motor vehicle bodily injury liability coverage.

6 See, e.g., Mouton v. Guillory, 494 So 2d 1374 (La App 1986) (an insurer who issues a renewal or substitute policy need not present the insured with the option of rejecting uninsured motorist coverage); Moore v. Young, 490 So 2d 519 (La App 1986) (increase in amount of liability coverage was a “renewal policy,” to which limit of uninsured motorist coverage, selected seven years earlier, continued to apply); Hoskins v. State Farm Mut. Auto. Ins. Co., 26 Ohio St 3d 87, 497 NE2d 87 (1986) (insurer was not required to reoffer underinsured motorist coverage upon reinstating policy, where insured had rejected such coverage before allowing policy to lapse and where policy was reinstated upon payment of premium without filing of new application); Makela v. State Farm Mut. Auto. Ins. Co., 147 111 App 3d 38, 497 NE2d 483 (1986) (Illinois statute does not require new offer of uninsured motorist coverage when policy is renewed; addition of vehicle constitutes renewal of policy). Cf. El-Habr v. Mountain States Mut. Cas. Co., 626 SW2d 171 (Tex App 1981) (indorsement to existing insurance policy, which added new vehicle, did not give rise to new policy). See also Allstate Ins. Co. v. Parfrey, 830 P2d 905 (Colo 1992) (noting that amended Colorado statute provides that, where insured has declined uninsured motorist coverage, insurer heed not reoffer that coverage when vehicle insured under policy changes or when policy is reinstated, transferred, substituted, amended, altered, modified, replaced, or renewed); Metro. Property and Liability Ins, Co, v. Gray, 446 So 2d 216 (Fla App 1984) (revised Florida statute provides that new offer of uninsured motorist coverage need not be made in connection with an amendment or indorsement to an existing policy); Annot, Construction of Statutory Provision Governing Rejection or Waiver ofUninsured Motorist Coverage, 55 ALR3d 216, § 7.5 (1992 Supp) (collecting cases in respect to when renewal of offer of uninsured motorist coverage must be made and showing a split of authorities).