De Smet Insurance Co. of South Dakota v. Pourier
2011 SD 47
| S.D. | 2011Background
- Pourier sustained damages exceeding $250,000 in an auto accident and received $25,000 from the at-fault driver’s insurer and $100,000 in GEICO’s underinsured motorist coverage (primary).
- Pourier, a minor at the time, resided with her father who carried a De Smet underinsured motorist policy providing $100,000 per person.
- De Smet denied underinsured coverage to Pourier under an owned-but-not-insured exclusion for damages arising from injuries while occupying a vehicle owned by a family member not insured for this coverage.
- De Smet filed a declaratory action arguing the policy exclusion precluded coverage and that SD stacking rules barred recovery; the circuit court granted summary judgment upholding the exclusion and stacking prohibition.
- Pourier argued the exclusion violates public policy and SDCL 58-11-9.5, which she contends requires coverage to follow the insured, not the vehicle, and should allow recovery from De Smet as the secondary insurer.
- The Supreme Court upheld the owned-but-not-insured exclusion, determining it complies with SDCL 58-11-9.5 and does not violate public policy; the public policy supports insurer limitations under the statute.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the owned-but-not-insured exclusion voids coverage as public policy. | Pourier argues exclusion conflicts with public policy and SDCL 58-11-9.5, which protects the insured. | De Smet contends exclusion is reasonable under SDCL 58-11-9.5 and necessary to prevent cross-vehicle coverage abuse. | Exclusion valid; not against public policy. |
| Whether SDCL 58-11-9.5 permits terms and conditions that restrict coverage based on vehicle ownership. | Pourier claims statute requires coverage to follow the insured, not the vehicle. | De Smet argues statute allows conditioning coverage and restricting coverage as to specific vehicles. | Statute allows conditions; exclusion upheld. |
Key Cases Cited
- Cimarron Ins. Co. v. Croyle, 479 N.W.2d 881 (S.D. 1992) (upholds family-member exclusion under SDCL 58-11-9.5)
- Lefler v. Gen. Cas. Co., 260 F.3d 942 (8th Cir. 2001) (supports limiting UM coverage via conditions on policy)
- Jaimes v. State Farm Mut. Auto. Ins. Co., 53 P.3d 743 (Colo. Ct. App. 2002) (UM/UIM should protect insured regardless of vehicle status)
- Mikelson v. United Services Auto. Ass’n, 111 P.3d 601 (Hawai'i 2005) (insurer’s ownership-based exclusions perceived as public policy concerns)
- Kalberer v. IDS Prop. Cas. Ins. Co., 661 N.E.2d 881 (Ind. Ct. App. 1996) (discusses interplay of UM coverage and conditions on policy)
- Powell v. State Farm Mut. Auto. Ins. Co., 86 Md.App. 98, 585 A.2d 286 (Md. Ct. Spec. App. 1991) (illustrates concerns about dual coverage across multiple vehicles)
- Gloe v. Iowa Mut. Ins. Co., 2005 S.D. 29, 694 N.W.2d 238 (S.D. 2005) (public policy considerations in UM/UIM coverage)
- Clampit v. State Farm Mut. Auto. Ins. Co., 309 Ark. 107, 828 S.W.2d 593 (Ark. 1992) (identical problem of same-insurer multi-vehicle coverage)
- Demaray v. De Smet Farm Mut. Ins. Co., 2011 S.D. 39, 801 N.W.2d 284 (S.D. 2011) (statutory interpretation and UM/UIM considerations in SD)