249 A.3d 24
Vt.2020Background
- Todd and Melissa Muller were insured under a Progressive primary motorcycle policy (combined single limit $300,000) and an excess automobile policy ($500,000 combined single limit).
- In June 2017 both Mullers were injured in the same accident; GEICO (tortfeasor) paid each Mullers $100,000.
- Progressive applied its policy setoff clause, aggregating the two GEICO payments ($200,000) against the $300,000 primary combined single limit, and paid the remaining $100,000 under the primary; it paid the full $500,000 excess limit.
- Progressive filed for a declaratory judgment seeking confirmation that the setoff could be applied aggregately against the combined single limit.
- The Mullers argued the setoff was ambiguous as to multiple claimants and should be applied separately to each insured (which they said would leave $200,000 primary coverage available).
- The trial court granted summary judgment to Progressive; the Mullers appealed the sole issue of whether the setoff provision is ambiguous as to multiple claimants.
Issues
| Issue | Plaintiff's Argument (Mullers) | Defendant's Argument (Progressive) | Held |
|---|---|---|---|
| Whether the policy's setoff provision is ambiguous as to how offsets apply when multiple insured claimants exist under a single combined single limit | The clause is ambiguous because it does not specify application among multiple claimants; ambiguity should be construed against the insurer, requiring separate successive setoffs per claimant | The provision unambiguously permits reduction of the policy limit by "all sums paid"—i.e., aggregate setoff against the single combined limit—so offsets apply cumulatively | Court held the provision is unambiguous: read with Part III limits language the setoff reduces the combined single limit by all sums paid regardless of number of claimants (affirming summary judgment for Progressive) |
Key Cases Cited
- Medley v. Am. Econ. Ins. Co., 654 N.E.2d 313 (Ind. Ct. App. 1995) (similar setoff clause was clear and single-limit applied regardless of number of insureds or claims)
- Mutual of Enumclaw Ins. Co. v. Key, 883 P.2d 875 (Or. Ct. App. 1994) (single-limit coverage reduced by sums received from tortfeasor)
- Derr v. Westfield Cos., 589 N.E.2d 1278 (Ohio 1992) (Ohio applied separate successive setoffs based on statutory/public-policy considerations)
- Zelko v. Parsons, 505 N.E.2d 271 (Ohio Ct. App. 1987) (applied separate successive setoffs to avoid an inequitable reduction compared with uninsured-motorist recovery)
- Brillman v. New England Guar. Ins. Co., Inc., 228 A.3d 636 (Vt. 2020) (ambiguity in insurance policies construed against insurer; plain meaning controls)
- Commercial Constr. Endeavors, Inc. v. Ohio Sec. Ins. Co., 225 A.3d 247 (Vt. 2019) (policy provisions must be read together as an integrated whole)
- Hardwick Recycling & Salvage, Inc. v. Acadia Ins. Co., 869 A.2d 82 (Vt. 2004) (insurer-drafted policies are construed in favor of the insured)
- Parker's Classic Auto Works, Ltd. v. Nationwide Mut. Ins. Co., 215 A.3d 1084 (Vt. 2019) (court will enforce unambiguous policy terms and will not rewrite a policy to benefit the insured)