2024 S.D. 49
S.D.2024Background
- Acuity issued a commercial auto insurance policy to Terra-Tek, LLC, which included John Waba and Sheila Foreman as additional named insureds for an extra premium.
- Waba was injured in a car accident on December 30, 2019, while driving a 1993 GMC Jimmy owned by Foreman; the at-fault driver was underinsured.
- After recovering the limits from the at-fault driver’s insurer, Waba sought underinsured motorist (UIM) benefits from Acuity.
- Acuity denied the claim, arguing the GMC Jimmy was not a “covered auto” under Terra-Tek’s policy.
- Acuity filed for declaratory judgment; both parties moved for summary judgment on the scope of UIM coverage.
- The circuit court ruled in favor of Waba and Terra-Tek, finding the endorsement provided UIM coverage to Waba despite not occupying a covered auto.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UIM coverage requires occupying covered auto | Coverage limited to insureds occupying a covered auto | Named insured need not occupy a covered auto | UIM coverage for named insureds does not require occupying a covered auto |
| Effect of "For a covered auto" language | Limits all UIM coverage to covered autos | Phrase only relevant for certain property damage coverage | Not a universal limitation; applies as to property damage only |
| Interpretation of policy’s definition of insured | "Who is an insured" must be read in context of covered autos | Named insured defined in endorsement, independent of covered auto | Definition in endorsement governs; no such limitation imposed |
| Whether policy is ambiguous | Terms unambiguously require use of a covered auto | Any ambiguity construed in favor of coverage | Even if ambiguous, interpretation favors insured (coverage) |
Key Cases Cited
- Grinnell Mut. Reinsurance Co. v. Haight, 697 F.3d 582 (7th Cir. 2012) (majority view: "for a covered auto" does not limit UIM coverage for named insureds unless policy language clearly requires it)
- Lisowski v. Hastings Mut. Ins. Co., 759 N.W.2d 754 (Wis. 2009) (minority view: "for a covered auto" limits UIM coverage to those occupying covered autos)
- Munroe v. Cont’l W. Ins. Co., 735 F.3d 783 (8th Cir. 2013) (declarations page controls only when other policy provisions do not modify or amplify coverage)