Western Fire Insurance v. Wallis

613 P.2d 36, 289 Or. 303, 1980 Ore. LEXIS 934

• Court: Oregon Supreme Court
• Decided: June 24, 1980
• Docket: A7706-07917, CA 12981, SC 26668
• Status: Published

Opinions

PETERSON, J.

The issue in this case is whether the no-fault personal injury protection coverage (PIP coverage) of a motor vehicle insurance policy includes loss of income benefits to the survivors of a person who was killed while driving an automobile covered by the policy. The insurer sought a declaratory judgment to resolve the disputed issue of coverage. On motions for summary judgment filed by both parties, the trial court ruled that defendants were entitled to receive those benefits. The Court of Appeals reversed per curiam, 43 Or App 476, 602 P2d 1170 (1979), citing its decision in Perez v. State Farm Mutual Auto. Ins. Co., 43 Or App 19, 602 P2d 284 (1979). We granted petitions for review in both cases.

Defendants are the personal representative and heirs of Rachelle Gerhold, who was killed in an accident while she was driving the insured vehicle. Defendants claim benefits for loss of income resulting from Ms. Gerhold’s death, basing that claim on two alternative arguments. They first contend that under ORS 743.800, which requires PIP coverage in every motor vehicle policy, benefits exist for loss of income resulting from death. We rejected that construction of the statute in Perez v. State Farm Mutual Ins. Co., 289 Or 295, 613 P2d 32 (1980), decided this day. We need here consider only defendants’ other contention that even if the statute does not require that coverage, the plaintiff drafted its policy using broader language than the statute required and therefore coverage exists under the policy. ORS 743.820.¹

The relevant policy provisions, somewhat different from those involved in Perez, are:

"OREGON PERSONAL INJURY PROTECTION

"The Company will pay Oregon Personal Injury Protection benefits for:

(a) medical and hospital expenses,

(b) income continuation expenses,

(c) loss of services expenses and

(d) funeral expenses

incurred with respect to bodily injury sustained by an injured person and caused by an accident arising out of the ownership, maintenance or use of a motor vehicle as a motor vehicle.

^ * *

"Definitions

"When used in reference to this insurance:

t?s{c >{: ‡ % if:

" 'bodily injury’ means bodily injury, sickness or disease, including death at any time resulting therefrom.

* * * *

" 'income continuation expenses’ means 70% of the injured person’s loss of income from work during a period of disability caused by bodily injury sustained by such person in the accident; provided that

«íjc ifc ifc ifc

"(3) income continuation expenses shall include only expenses for loss of income incurred from the date such disability commenced to the date on which such person is able to return to his usual occupation or upon the expiration of not more than 52 weeks / from the commencement of such disability, whichever occurs first;

" 'injured person’ means

* * * *

"(b) any other person, who sustains bodily injury while occupying or using the insured motor vehicle, with the permission of the named insured, or while a pedestrian, through being struck by the insured motor vehicle. ”²

Defendants point out that the policy defines "income continuation expenses” to cover loss of income caused by "bodily injury” and that "bodily injury” is defined to include death. In essence, they claim that the policy should be construed to read as follows:

"The Company will pay * * * income continuation expenses * * * incurred with respect to [bodily injury, sickness or disease, including death at any time resulting therefrom] * * *.

" 'income continuation expenses’TawTiS, 70% of the injured person’s loss of income from work * * * caused by [bodily injury, sickness or disease, including death at any time resulting therefrom].”

If the policy contained only this language, defendants might well be right. However, the phrase "caused by [bodily injury, sickness or disease, including death at any time resulting therefrom],” is preceded by the clause "during a period of disability.” The bracketed language quoted above modifies the phrase "during a period of disability.” Defendants have concentrated their argument on the policy definition of "bodily injury” and have not addressed the significance of the fact that the policy defines income continuation expenses as a percentage of "loss of income from work during a period of disability caused by bodily injury * * *.” (Emphasis added.) We find the emphasized phrase significant. As we said in Perez, "disability” is not usually used to mean death. We find nothing in the policy which suggests that the word was used there with any different meaning than we concluded it has in ORS 743.800: inability, while living, to perform one’s usual activities. Perez v. State Farm Mutual Ins. Co., supra at 299-300.

The policy definition of "bodily injury” to include death does not itself create an ambiguity. It clarifies the provision that the company will pay funeral expenses "incurred with respect to bodily injury.” Funeral expenses are not payable for every bodily injury within the policy definition but only when the injury is in fact a death. Similarly, the policy makes it clear that income continuation benefits are not payable on account of every bodily injury, but only those injuries which result in a period of disability. Death, although it is a bodily injury within the policy definition, does not cause a period of disability within the ordinary meaning of those words. Accord: Griffin v. Travelers Indemnity Company, 328 So 2d 207 (Fla App 1976). See also, Benton v. State Farm Mutual Automobile Ins. Co., 295 So 2d 344 (Fla App 1974); Svec v. Allstate Insurance Co., 53 Ill App 3d 1033, 369 NE2d 205 (1977); Hamrick v. State Farm Mut. Auto. Ins. Co., 270 SC 176, 241 SE2d 548 (1978); Marriot v. Pacific National Life Insurance Company, 24 Utah 2d 182, 467 P2d 981 (1970).

Finally, the defendants argue that the policy language is at least ambiguous and the ambiguity should be resolved against the insurer and in favor of extending coverage, citing Shadbolt v. Farmers Insur. Exchange, 275 Or 407, 411, 551 P2d 478 (1976). That well-established rule is not applicable in this case. The policy before us can be read to provide the coverage for which defendants contend only if an unusual meaning is assigned to the phrase "period of disability.” There is no independent basis in the policy provisions for giving those words anything other than their usual meaning. The rule of construction upon which defendants rely is applicable when a policy provision, because of the insurer’s choice of language, is reasonably susceptible of more than one meaning. It is not a device for creating insurance coverage by attributing possible but unlikely meanings to the terms employed without some basis in the policy for doing so. See I-L Logging Co. v. Mfgrs. & Whlse. Ind. Exc., 202 Or 277, 318-336, 273 P2d 212, 275 P2d 226 (1954) and Jarrard v. Continental Casualty, 250 Or 119, 127, 440 P2d 858 (1968).

In the policy before us, there is no reason to believe that "disability” would be understood by an insured to have other than its ordinary meaning. When it is given that meaning, the policy is not ambiguous in the sense we have described above.

The decision of the Court of Appeals, reversing that of the trial court, is affirmed.

1 ORS 743.820 provides:

"Nothing in ORS 731.418, 743.786 to 743.795 and 743.800 to 743.835 is intended to prevent an insurer from providing more favorable benefits than those required by ORS 743.800 and 743.805.”

2 The italicized words are in the policy. Normally, such words are italicized only to indicate that the words are expressly defined elsewhere in the policy.