Vidmar v. American Family Mutual Insurance

312 N.W.2d 129, 104 Wis. 2d 360, 1981 Wisc. LEXIS 3027

• Court: Wisconsin Supreme Court
• Decided: November 3, 1981
• Docket: 80-410
• Status: Published

Opinions

DAY, J.

This is a review of a decision of the court of appeals, published at 99 Wis. 2d 398, 299 N.W.2d 288 (Ct. App. 1980), reversing a judgment of the Circuit Court for Milwaukee County: HAROLD B. JACKSON, JR., Circuit Judge, presiding.

The question on review is: Does a provision in an insurance policy that excludes coverage “for the operation of or damage, to non-owned automobiles” which are “emergency type automobiles” used or occupied by the insured in connection with his employment nullify the protection afforded to the insured by the uninsured motorists provisions of his auto policy.

We conclude that it does not and under the facts alleged in his complaint the plaintiff insured has stated a cause of action against his insurer.

On August 25, 1976, Robert Yidmar, a city of Milwaukee police officer, was driving a city-owned police vehicle in connection with his employment. While stopped at a stop sign the vehicle was hit by another vehicle which was uninsured and Officer Vidmar was injured.

He brought action under the “uninsured motorist” provisions of his policy issued on his private car against his insurer, American Family Mutual Insurance Company. His policy contained the following provision issued pursuant to sec. 632.32 (3), Stats. 1975:¹

“1. Damages for bodily injury caused by uninsured automobiles. The company will pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, hereinafter called ‘bodily injury,’ sustained by the insured, caused by accident and arising out of the ownership, maintenance, or use of such uninsured automobile; . . .”

The policy also contained the following exclusion, denominated “Endorsement 44,” the interpretation of which is central to this litigation:

“Exclusion of non-owned emergency type automobiles. The insurance afforded under any of the Parts of this policy for the operation of or damage to non-owned automobiles shall not apply to such automobiles while used or occupied by

VIDMAR, ROBERT

in connection with his employment, occupation, or profession.”

The trial court granted summary judgment in favor of American Family, stating that the policy did not provide coverage for Vidmar’s accident. On appeal, the court of appeals reversed, holding that sec. 632.32 precludes excluding an insured from coverage under an uninsured motorists clause.

We affirm the court of appeals but on different grounds. We conclude that under the rules of construction applied to exclusion clauses in insurance policies, the clause used in the policy before us does not preclude recovery by the insured under the facts assumed here, i.e., being hit by an uninsured motorist while driving an “emergency type vehicle in connection with his employment” as a police officer.

Insurance contracts are controlled by the same rules of construction as are applied to other contracts. Ehlers v. Colonial Penn. Ins. Co., 81 Wis. 2d 64, 74, 259 N.W.2d 718 (1977). The goal of construction is to ascertain the true intentions of the parties to the insurance contract. Home Mut. Ins. Co. v. Insurance Co. of N.A., 20 Wis. 2d 48, 51, 121 N.W.2d 275 (1963). However, the test is an objective, rather than subjective one. This court stated in Garriguenc v. Love, 67 Wis. 2d 130, 134-135, 226 N.W.2d 414 (1975) :

“In the case of an insurance contract, the words are to be construed in accordance with the principle that the test is not what the insurer intended the words to mean but what a reasonable person in the position of an insured would have understood the words to mean.”

A construction which gives reasonable meaning to every provision of a contract is preferable to one leaving part of the language useless or meaningless. Stanhope v. Brown County, 90 Wis.2d 823, 848-849, 280 N.W.2d 711 (1979).

Ambiguities in coverage are to be construed in favor of coverage, while exclusions are narrowly construed against the insurer. Davison v. Wilson, 71 Wis. 2d 630, 635-636, 239 N.W.2d 38 (1976). Words or phrases are ambiguous when they are reasonably susceptible to more than one construction. However, when the terms of an insurance policy are plain on their face, the policy should not be rewritten by construction to cover matters not contemplated by the insurer nor paid for by the insured. Limpert v. Smith, 56 Wis. 2d 632, 640, 203 N.W.2d 29 (1973).

Endorsement 44 limits the coverage offered “under any of the parts of this policy for the operation of or damage to non-owned automobiles.” The uninsured motorists coverage provided by the policy provides compensation for “all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance, or use of such uninsured automobile.” The issue before us is whether the uninsured motorists coverage is one of the categories of coverage referenced by Endorsement 44.

Since endorsements are generally written after the body of the policy, they will prevail if there is an irreconcilable conflict between endorsement and policy provisions. Inter-Insurance Ex. v. Westchester Fire Ins. Co., 25 Wis. 2d 100, 105, 130 N.W.2d 185 (1964). However, the policy and the endorsement should be construed, if fairly possible, to give full effect to all words and provisions of both. Id., see also, Riteway Builders, Inc. v. First National Ins. Co., 22 Wis. 2d 418, 420-421, 126 N.W.2d 24 (1964). Here, there is no conflict between the terms of the endorsement and the uninsured motorist coverage afforded by the policy. To the extent that the words “insurance afforded under any of the parts of this policy for the operation of or damage to non-owned automobiles” create an ambiguity as to the scope of coverage, we must resolve any such ambiguity against the insurer.

American Family would have us interpret Endorsement 44 to exclude Vidmar from all coverage while he is operating a non-owned “emergency type” automobile in connection with his occupation. Thus, they would have us interpret Endorsement 44 to read:

“Exclusion of non-owned emergency type automobiles. The insurance afforded under any of the parts of this policy . . . shall not apply to . . . VIDMAR, ROBERT [when using non-owned emergency type automobiles] in connection with his employment, occupation or profession.”

However, this interpretation would render the language in Endorsement 44 referring to “for the operation of or damage to non-owned automobiles” superfluous, and we decline to do so if a construction which gives meaning to that phrase is fairly possible.

A more reasonable interpretation of the Endorsement 44 language is that it excludes Vidmar’s liability coverage while he is using or occupying a police vehicle. The record on appeal does not contain a copy of the entire insurance policy.² Standard automobile liability coverage generally explicitly delineates various categories of vehicles for coverage purposes. An insured is generally covered while driving a nonowned vehicle, for injuries to the person or property of another for which he may be liable including, unless specifically excluded by the policy, damage to the nonowned vehicle itself. See N. Risjord and J. Austin, Automobile Liability Insurance Cases: Standard Provisions And Appendix (Supp. 1974), pp. 265-268; see also F. Blashfield, Automobile Law and Practice, sec. 316.8 (1966).³

Accordingly, we conclude that it is reasonable to interpret the phrase “parts of this policy for the operation of or damage to non-owned automobiles” as referring to the liability portions of the policy, which specifically cover the insured while he operates a “non-owned vehicle.” This interpretation of the scope of Endorsement 44 is also consistent with our perception that the increased risk incident to operating a police vehicle is of injury to the person or property of other people, or damage to the police vehicle caused by accidents occurring during high-speed chases, in setting up roadblocks, or similar activities.

The uninsured motorists coverage afforded by the policy applies when the insured sustains a bodily injury resulting from an accident for which an uninsured motorist may be liable. While the accident must arise out of the “ownership, maintenance or use” of the uninsured vehicle, the insured is covered regardless of the activity in which he is engaged at the time of the accident, be it driving a car, bicycling or walking.⁴ What the insured is doing when he is injured is irrelevant to his coverage so long as the injury is caused by an uninsured motorist. The insurer may, subject to the statutory requirements set forth in sec. 632.32, Stats., limit the scope of coverage, but as the drafter of the policy, it must use clear language when doing so.

This court recently gave effect to a clearly drafted limit on insured motorists coverage in Roe v. Larson, 99 Wis. 2d 332, 298 N.W.2d 580 (1980). The exclusion at issue in that case read:

“ ‘This policy does not apply: . . . Under the Uninsured Motorists Coverage, ... (o) to bodily injury to an insured while occupying a highway vehicle (other than an insured automobile) owned by the named insured or by any person resident in the same household who is related to the named insured by blood, marriage or adoption, or through being struck by such a vehicle Roe v. Larson, supra, 99 Wis. 2d at 336.

In Roe this court determined that the exclusion did cover the claim at issue therein and then proceeded to evaluate the validity of the exclusion in light of the coverage mandated by sec. 204.30(5), Stats. 1973, (the precursor of sec. 632.32(3), Stats. 1975). In contrast, the clause before us does not mention uninsured motorist coverage.

The intended purpose of a type of insurance coverage should be kept in mind when construing an exclusion from coverage. Bertler v. Employers Insurance of Wausau, 86 Wis. 2d 13, 18, 271 N.W.2d 603 (1978). The purpose of uninsured motorists coverage is to compensate an insured who is the victim of an uninsured motorist’s negligence to the same extent as if the uninsured motorist were insured. In view of this purpose, and applying the rules of construction pertaining to insurance policies, we conclude that Endorsement 44 does not limit Vidmar’s uninsured motorists coverage.

By the Court. — The decision of the court of appeals is affirmed.

1 “632.32. Required provisions for animal and automobile liability insurance. . . (3) Uninsured motorist coverage, (a) Required coverage. Every policy of insurance delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state and insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall provide therein or supplemental thereto in limits for bodily injury or death in the amount of at least $15,000 per person and $30,000 per accident under provisions approved by the commissioner, for the protection of persons injured who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death resulting therefrom. The uninsured motorist bodily injury coverage limits provided in such a policy may be made available to the insured up to the bodily injury coverage limits provided in the remaining portions of the policy.”

2 Generally, an appellate court will assume that omissions from the record would support the trial court’s exercise of discretion. See, Austin v. Ford Motor Co., 86 Wis. 2d 628, 641, 273 N.W.2d 233 (1979). However, this case is before us on a trial court’s order for summary judgment, and the trial court’s discretion is significantly curtailed. Schlumpf v. Yellick, 94 Wis. 2d 604, 612, 288 N.W.2d 834 (1980). Unlike Austin, supra, there is nothing-in the record to suggest that the trial court had the benefit of the omitted materials in reaching its decision. Accordingly, we are not constrained to construe the missing portions of the record so as to affirm the trial court and reverse the court of appeals in this case.

3 The policy may exclude coverage for damage to a nonowned automobile in charge of the insured, generally by excluding “property in charge of the insured” from coverage. See generally, cases discussed in Annot: Scope of Provision of Automobile Liability Insurance Policy Excluding Liability for Damage to Property in Charge of Insured, or Variation of such Provision, 10 A.L.R.3d 615 (1966 and 1981 Supp).

See also, Middlesex Mutual Fire Ins. Co. v. Ballard, 148 So. 2d 865, 867 (La. Ct. App 1963); Northwestern Mut. Ins. Co. v. Haglund, 387 S.W.2d 230, 233 (Mo. App. 1965); MacDonald v. Hardware Mut. Ins. Cas. Co., 105 N.H. 458, 202 A.2d 489 (1964).

4 The coverage provided by uninsured motorists insurance for the named insured was stated in R. Scherman, Automobile Liability Coverage, (1981) at pages 21-22:

“Generally speaking, uninsured motorist protection follows a category (1) Insured [(1) The named insured and, while residents of the same household, the spouse of any such named insured and relatives of either]; everywhere. He is covered while driving his own or a nonowned vehicle or occupying either one as a passenger, and is likewise covered while a pedestrian. As stated in Motorists Mutual Insurance Co. v. Bittler, [14 Ohio Misc. 23, 235 N.E.2d 745, 751 (1968)]:

“ ‘Thus, the uninsured motorists coverage was applicable, if, at the time of sustaining injury, Mr. Bittler, a named insured, was occupying the Ford described in his policy, or was on foot or on horseback, or while sitting in his rocking chair on his front porch or while occupying a non-owned automobile furnished for his regular use. . ,

Accord: Northland Insurance Co. v. West, 294 Minn. 368, 201 N.W.2d 133, 135-136, (1972); Cannon v. American Underwriters, Inc., 150 Ind. App. 21, 275 N.E.2d 567, 571 (1972); Rodish v. Standard Mut. Ins. Co., 44 Ill. App. 3d 949, 358 N.E.2d 1187, 1189 (1976); Elledge v. Warren, 263 So. 2d 912, 918-919, (La. Ct. App. (1972); Allstate Ins. Co. v. Morgan, 59 Hawaii 44, 575 P.2d 477, 479-480, (1978); Bilbrey v. American Automobile Ins. Co., 495 S.W.2d 375, 376 (Tex. Ct. App. 1973); Gulf American Fire & Casualty Co. v. McNeal, 115 Ga. App. 286, 154 S.E.2d 411, 416 (1967). See generally, A. Widiss, A Guide To Uninsured Motorists’ Coverage, sec. 2.8 (1969 and 1981 Supp.).