Streff v. State Farm
2017 SD 83
| S.D. | 2017Background
- Jody and Kevin Streff bought a State Farm auto liability policy that included mandatory UIM coverage and paid for higher UIM limits ($250k/$500k).
- They also bought a $1 million personal liability umbrella policy from a related State Farm company and paid an extra premium to add excess UIM coverage under the umbrella.
- Both the auto policy and the umbrella policy contained an exclusion denying UIM coverage for accidents caused by government-owned vehicles.
- Jody was injured when a Colorado police vehicle ran a red light; the Streffs settled with the government tortfeasor for an amount treated as $150,000 and sought UIM benefits from both policies.
- The circuit court held the government-vehicle exclusion unenforceable in the auto policy (because SDCL 58-11-9.4 mandates UIM in motor vehicle liability policies) but enforceable in the umbrella policy; the Streffs appealed the umbrella ruling.
- The South Dakota Supreme Court reversed the circuit court as to the umbrella policy, holding SDCL 58-11-9.4 contemplates additional/umbrella UIM coverage and bars exclusions for government vehicles in such coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SDCL 58-11-9.4 applies to excess/umbrella UIM coverage when the insured requests additional coverage | Streff: statute contemplates "additional coverage" and thus umbrella/excess UIM bought by insured falls within statutory public policy | State Farm: statute only mandates UIM in "motor vehicle liability polic[ies]" issued with respect to in-state registered/garaged vehicles; umbrella is a different policy type and not covered | Court: SDCL 58-11-9.4 contemplates additional UIM coverage; umbrella UIM purchased by insured is subject to the statute's public-policy protection |
| Whether an umbrella policy may validly exclude UIM for government-owned vehicles | Streff: exclusion violates public policy because statute bars excluding UIM for government vehicles from UIM coverage obtained under insured's request for additional coverage | State Farm: exclusion is a valid contractual term in absence of statutory mandate for umbrella policies; insured paid premium for expressly-limited coverage | Court: exclusion invalid; umbrella UIM is subject to the same prohibition against excluding government vehicles |
| Whether the statutory $100k/$300k limits or other statutory language prevent extending the mandate to umbrella coverage | Streff: statute allows higher limits when "additional coverage is requested," showing legislative intent to permit/recognize excess UIM | State Farm: statute’s text limits mandate to motor vehicle liability policies and sets default caps, so extension to other policy types is for the Legislature, not courts | Court: reads statute’s "additional coverage" language to permit umbrella/excess UIM and applies public-policy prohibition despite statutory default caps |
Key Cases Cited
- Bartee v. R.T.C. Transp., Inc., 781 P.2d 1084 (Kan. 1989) (distinguishes statutes that require minimum coverage from those aimed at full recovery; holds umbrella UIM may be required under full-recovery statutes)
- Insurance Co. of Pa. v. Johnson, 987 A.2d 276 (Vt. 2009) (concludes statute requiring UM/UIM limits to be the same as liability limits applies to excess/umbrella policies)
- United Nat’l Ins. Co. v. DePrizio, 705 N.E.2d 455 (Ind. 1999) (interprets matching-limit UIM statutes as reflecting legislative intent to allow insureds opportunity for full compensation)
- Apodaca v. Allstate Ins. Co., 255 P.3d 1099 (Colo. 2011) (notes umbrella policies differ from motor-vehicle liability policies and rejects transforming umbrella into a primary auto policy simply because UIM is added)
- Gloe v. Union Ins. Co., 694 N.W.2d 252 (S.D. 2005) (recognizes statutory $100k/$300k caps reflect legislative determination of adequate protection)