Bethke v. Auto-Owners Insurance
2013 WI 16
| Wis. | 2013Background
- Bethkes seek UIM coverage under Kathryn Bethke's Owners policy after Avis's rental car caused fatal and serious injuries; Avis was statutorily liable for $50,000 total.
- Owners denied UIM coverage, arguing Avis as a self-insurer under the policy's exclusion is not an underinsured automobile.
- Policy defines underinsured automobile and lists exclusions, including vehicles owned or operated by a self-insurer under any automobile law.
- Circuit court held Avis was a self-insurer, so no UIM coverage; Bethkes appealed.
- Wisconsin statutes pair car-rental self-insurance and statutory liability with a potential absurd result if Avis is treated as a self-insurer for UIM purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is 'self-insurer' ambiguous as applied to Avis? | Bethke argues ambiguity under policy terms and statutes. | Owners maintains 'self-insurer' is unambiguous and excludes Avis. | Ambiguous under these facts. |
| If ambiguous, should policy be construed in the insured's favor to provide coverage? | Bethke demands coverage be read in favor of the insured. | Owners contends ordinary rules of construction apply; ambiguity may not favor coverage. | Policy interpreted in favor of insured to afford coverage. |
| Would applying the exclusion to Avis produce an absurd result under UIM purposes? | Ambiguity plus absurd result would undermine UIM goals. | Exclusion should be read plainly if unambiguous. | Exclusion would produce an absurd result; interpretation in favor of coverage warranted. |
Key Cases Cited
- Olson v. Farrar, 2012 WI 3 (Wis. 2012) (declaratory judgment review and discretion standard)
- Hull v. State Farm Mut. Auto. Ins. Co., 222 Wis. 2d 627 (Wis. 1998) (ambiguous policy language review)
- Acuity v. Bagadia, 310 Wis. 2d 197 (Wis. 2008) (ambiguity and interpretation of undefined terms)
- Langridge v. State Farm Mut. Auto. Ins. Co., 275 Wis. 2d 35 (Wis. 2004) (common-meaning interpretation of policy terms)
- Teschendorf v. State Farm Ins. Cos., 293 Wis. 2d 123 (Wis. 2006) (premiums and coverage alignment with underinsured concept)
- Welin v. American Family Mut. Ins. Co., 292 Wis. 2d 73 (Wis. 2006) (interpretation of UIM coverage and ambiguity favors insured)
- Murray v. American Family Mut. Ins. Co., 429 F.3d 757 (8th Cir. 2005) (absurd-result rationale in self-insurer context)
- Boatright v. Spiewak, 214 Wis. 2d 507 (Wis. Ct. App. 1997) (self-insurer vs statutory liability framework)