Dennis H. Hagenow and Rosalee A. Hagenow v. American Family Mutual Insurance Company, 846 N.W.2d 373

On Nov. 10, 2008 Dennis Hagenow was rear-ended by Betty Schmidt; Dennis was injured and sued Schmidt for negligence. Schmidt asserted a sudden emergency defense; a jury found Schmidt not at fault.
Both Schmidt and the Hagenows were insured by American Family; Schmidt’s liability policy provided BI limits and American Family defended Schmidt at trial.
The Hagenows’ policy included uninsured motorist (UM) coverage payable when an insured is “legally entitled to recover” from the owner/operator of an “uninsured motor vehicle.”
American Family denied the Hagenows’ UM claim, arguing Schmidt was not an uninsured motorist and that the jury verdict establishing Schmidt’s nonliability meant the Hagenows were not “legally entitled to recover.”
The district court denied American Family’s summary judgment; the Iowa Supreme Court granted interlocutory review and reversed, holding the Hagenows were not entitled to UM benefits.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Hagenows were “legally entitled to recover” under the UM provision	Hagenows: Schmidt was negligent but excused by a sudden emergency—this legal excuse does not defeat their entitlement to UM benefits	American Family: Jury found Schmidt not liable; insured must prove tortfeasor’s liability to be "legally entitled to recover"	Held: Insured must establish the uninsured motorist’s liability; because jury found Schmidt not negligent, Hagenows are not legally entitled to recover
Whether Schmidt’s vehicle was an “uninsured motor vehicle” under the UM policy	Hagenows: Even though Schmidt had liability coverage, American Family’s denial of UM benefits makes Schmidt’s vehicle "uninsured" under the policy clause for "insured but company denies coverage"	American Family: "The company" in the definition refers to the tortfeasor’s liability insurer (here American Family acting as Schmidt’s insurer); American Family did not deny Schmidt’s liability coverage, so Schmidt was not an uninsured motorist	Held: "The company" refers to the tortfeasor’s insurer in its capacity as liability carrier; because American Family (as Schmidt’s liability insurer) did not deny coverage, Schmidt was not an uninsured motor vehicle

Petersen v. American Family Mutual Insurance Co., 679 N.W.2d 571 (Iowa 2004) (interpreting UM policy language and insurer/insured roles)
Waits v. United Fire & Casualty Co., 572 N.W.2d 565 (Iowa 1997) (insured may prove damages he would have recovered at judgment to obtain UIM/UM benefits)
Wetherbee v. Economic Fire & Casualty Co., 508 N.W.2d 657 (Iowa 1993) (statutory purpose of UIM/UM requires insured show damages caused by tortfeasor’s fault)
Leuchtenmacher v. Farm Bureau Mutual Insurance Co., 461 N.W.2d 291 (Iowa 1990) (judgment against tortfeasor not always required to pursue UIM benefits)
Otterberg v. Farm Bureau Mutual Insurance Co., 696 N.W.2d 24 (Iowa 2005) (insured not "legally entitled to recover" where law provided no underlying right of recovery)
Rodman v. State Farm Mutual Automobile Insurance Co., 208 N.W.2d 903 (Iowa 1973) (legislative purpose of UM is to protect insureds from motorists whose liability is not covered)
Hagenow v. Schmidt, 842 N.W.2d 661 (Iowa 2014) (affirming underlying jury verdict of no fault and discussing sudden emergency instruction)