Coughlin v. Government Employees Insurance Co.
69 P.3d 986
Alaska
2003
Check Treatment

*1 COUGHLIN, Appellant, Colleen EMPLOYEES

GOVERNMENT COMPANY

INSURANCE

(GEICO), Appellee.

No. S-10072. Alaska. Court

Supreme 18, 2003.

April 9, 2003. June

Rehearing Denied *2 Vаcura, Allen Stepovich Office, Law Fair- and prejudgment interest. Babosky rejected banks, Appellant. for the offer parties and the settled on different terms year. later that Under the terms of Susan D. Mack Wilkerson, and Mark E. the settlement, Coughlin released Associates, Babosky Wilkerson & Ap- for Anchorage, and Colonial from all liability in pellee. exchange for $40,000"and the assumption of responsibility FABE, Justice, Before: Chief for the subrogation claim of Geico Insurance MATTHEWS, EASTAUGH, BRYNER, and Company, in the amount of TEN THOU- CARPENETI, Justices. SAND DOLLARS." Before signing the set- agreement, tlement Coughlin's attorney OPINION faxed a letter to a GEICO adjuster, claims Colrain Ingersoll, 3, on July 1996 asking for FABE, Chief Justice. GEICO's consent to Coughlin's settlement I. INTRODUCTION with Colonial. The letter stated that Cough- Colleen Coughlin $10,000 received a pay- lin was "receiving policy limits from Colonial ment for expenses medical injuries she $50,000." [of] Ingersoll signed the consent sustained in a two-сar accident. Her insur- request from Coughlin and faxed it back to ance company, by terms of the insurance Coughlin's counsel on July 1996. Cough- policy, acquired a lien on any recovery lin then signed the settlement agreement Coughlin obtained from the other driver. with Colonial July Coughlin settled with the other driver's in- GEICO settled its subrogated claim for $40,000 surance company for and assumption Coughlin's medical expenses with Colonial of responsibility payment $10,000 $5,000. It is unclear from the record on for medical coverage. Coughlin asserted she what date this claim settled, was though $50,000 had exhausted the facial limit of the representative for GEICO other stated she policy driver's and that she could believed the claim was settled therefore "several upon draw her own underinsured months" before Coughlin settled Colo- motorist coverage. Coughlin's However, nial. a letter company claims counsel for thаt she failed to exhaust the Colonial July dated implies policy limits of the other driver's insurance. matter was as of that time by conclude that unresolved Coughlin did exhaust stating that "Colonial agreed has address limits of the other driver's insurance the Geico directly." lien policy and therefore reverse superior grant court's of summary judgment in favor Coughlin sent a letter to GEICO March Coughlin's insurance company. 1998 requesting that pay $50,000 it under Coughlin's underinsured motorist coverage. II. FACTS AND PROCEEDINGS The letter asserted that paid Colonial had Colleen Coughlin injured was in an auto- $50,000 limits of requested attor- mobile accident in August 1998. She was ney's fees and interest from GEICO. GEI- by insured Employees Government Insur- CO denied underinsured pay- motorist ance Company (GEICO), and the driver of ment, claimingthat Coughlin did not receive car, the other Kevin Babosky, was insured policy limits from Colonial because she set- Colonial Insurance. Babosky's policy hаd a $40,000 tled for and GEICO settled for $50,000 facial limit of per person. Coughlin's $5,000 for lien, the medical totalling only $10,000 covered in medical payments $45,000on a facial limit of GEICO in underinsured motorist cover- responded that even if Colonial paid had (UIM). age paid GEICO Coughlin $10,000 $50,000, Coughlin still would not have re- expenses, medical resulting in a medical ceived limits because she did not re- against lien any recovery Coughlin made. ceive fees or interest. GEICO Coughlin filed suit against Babosky and Coughlin maintained that should have known in April offered 1996 to settle the case for the that Alaska law defined policy limits to in- $50,000, limits of plus attorney's fees clude attorney's fees and interest because advised court pay. let- in her had add-ons those requested Coughlin what about confused Coughlin requesting to GEICO ter pursued she should limit would payment. it posited declaratory action. in Au- GEICO suit filed *3 that knowledge" "common was and fraud and faith bad allеging gust on claims based not resolve companies underinsured under damages seeking the lien of value the face for liens medical Septem- policy. her of provision motorist that known should Coughlin that and summary for moved sides both 2000 ber $50,000. than less much settling for was she Ingersoll's that argued Coughlin judgment. sig- Ingersoll's that concluded court also The re- Coughlin that established letter consent an not was letter consent on the nature Coughlin from Colonial. limits policy ceived with Co- agreement Coughlin's of acceptance then not could that GEICO argued further Rather, limits. policy one for lonial liability by set- motorist underinsured avoid only allowed signature her held that court than for less claim subrogated its tling It was coverage; pursue Coughlin if and that lien medical of value coverage. such provide commitment not a underin- just to avoid for less settled GEICO commit- such that stated Finally, faith. in bad it acted paymеnt, sured exist, was found ment, if it were even motion. Coughlin's opposed GEICO Coughlin be- misrepresentations based summary for motion in its argued GEICO lim- actually received never she cause for not settle did Coughlin judgment result, the court As a from Colonial its only she because Colonial with limits the set- to characterize to allow refused $50,000. of liability limit $45,000on a received for eligible to be way as a in such tlement not Coughlindid argued further GEICO appeals Coughlin recovery. additional not she did limits because for settle summary judgment. grant of attorney's or receive for counsel asserted GEICO fees. III. DISCUSSION sub- that the experience knew Coughlin Review of A. Standard for settle lien would $10,000 medical rogated summary of grant responded a Coughlin review We that amount. than less indepen apply our settlement de novo.1 judgment of GEICO's not told that she int statutory questions the med- Colonial, judgment the settlement dent with "that of law the rule adopting Coughlin's settlement after occurred erpretation,2 ical lien rea precedent, light she in Colonial, persuasive the settlement is most and with statutory son, policy."3 When re- $40,000 plus reviewing Colonial-for reached $10,000 sliding scale medical apply a GEICO's interpretation, sponsibility lan meaning of the limits. plainer lien-constituted "[the which convincing statute, more guage R. court, Judge Charles superior Pen- must be.4 history legislative contrary motion GEICO's granted presiding, gilly held The court summary judgment. Policy Full Coughlin Settled B. $50,000 from received had Coughlin even Limits. limits Colonial, not settle did she AS dispute that not parties do the at- include did this amount because ex claimant 445(e)(1)5 requires 28.20 otherwise that Colonial torney's fees Co., 29 Ins. Progressive Northwestern Borough, 50 P.3d v. 4. Curran Peninsula v. Kenai 1. Cabana 2001). (Alaska 829, 831-32 P.3d 2002). (Alaska 798, 28.20.445(e)(1) provides: State, Corp. v. Petroleum 2. Tesoro motorists (e) Uninsured 2002); Sim Progressive Co. v. (Alaska (Alaska 1998). 510, 512 P.2d bodily injury, mons, 953 (1) may apply tо damage to or disease, or of an insured death until insured (quoting property of an Guin P.2d at 512 destruction Progressive, 953 prop- injury 1979). Liability all Ha, n. 6 P.2d haust the underlying liability policy limits haust' or 'use up' all underlying lability cov pursuing before underinsured motorist benefi erage before recovering under [an underin- ts.6 What is in dispute is whether sured policy."7 motorist] argues GEICO received limits from Repeat Colonial. that Curran defeats Coughlin'sclaimbecause ing argument before superior court, Coughlin did not exhaust her underlying lia GEICO asserts that Coughlin did not ex bility coverage and thus cannot draw on her haust Babosky's policy limits because Colo underinsured motorist policy. nial only paid out argues GEICO But pattern neither fact Curran, a con alternately that Colonial's"actual" policylim solidation of cases, two pres resembles the it exceeded because Colonial was re ent case. In the first pattern fact Curran, quired costs, pay interest, *4 injured the party, who suffered inju serious fees and Coughlin received none of these. ries in single-vehicle accident while riding reject both of arguments. these We hold as a passenger with husband, her both that Coughlin exhausted offered to poli Colonial's give both her own insurance company and cy limits when $40,000 she received in cash that of her $50,000 husband a "credit" plus agreement Colonial's to respon assume against her prior claims to seeking underin- sibility $10,000 for her medical lien and that sured motorist coverage.8 But costs, because interest, this and attorney's fees are not to proposed "credit" was settlement, not a judg be included in determining whether policy ment, or payment from her husband's insur limits have been exhausted for purpose the er, we held injured drawing upon the party underinsured motorist cover had not satisfied the requirements age. of AS 28.20.445(e)(1).9 In the pattern second fact Curran, addressed in 1. injured subrogated The the party in a medical lien two-vehicle accident was $60,746.03 offered a In exchange for signing a settlement re- $50,000 settlement for a leasing Babosky and Colonial from future by the insurance company for the driver of legal lability, Coughlin $40,000 received the other car.11 injured The party refused cash from Colonial and agreed Colonial this settlement offer but eventually settled assume responsibility for subrogat- GEICO's $25,000.12 for This amount was far less than $10,000 ed medical lien. GEICO at some the limits and consequently precluded point settled this medical lien with Colonial the applicability of underinsured motorist for result, As a Colonial in actuality coverage.13 Curran, therefore, is of little only paid $45,000 out on Coughlin's claim assistance in resolving present the issue oth against Babosky. er than to affirm that policy limits must be According 28.20.445(e)(1), uninsured exhausted before underinsured motorist cov and underinsured motorist coverage cannot erage can be upon. drawn be upon drawn "until the limits of liability of all injury and property damage present liabili The case does not Coughlin involve ty policies bonds and that apply offering have been GEICO a credit her underin- up by used payments, judgments or settle sured coverage, whereby she would ments." In Curran Progressive North be able to upon draw her underinsured mo western Insurance we interpreted this torist coverage but reduce her recovery by " statute to mean that the insured must 'ex the amount necessary to exhaust her other erty damage liability policies bonds and 10. The settlement amount pay- included a base apply have up by been payments, used judg- $40,000 ment of $20,746.03 and an additional ments or settlements. for interest fees. Id. at 831 n. 3. Curran, 29 P.3d at 833. Id. at 831. 7. Id. Id. Id. at 830.

9. Id. at 834-38. Id. at value more than potentially in Curran heldWe

claims. able they will be hope thаt 28.20.445(e)(1) be of AS purpose defeat than its less like for lien claimant assumed a UIM settle "allow it would cause alto liability insurer amount. bypass stated Curran coverage as effectively use UIM gether could Coughlin it is true While however,is Coughlin, insurance.1 primary payment single for a Colonial with settled Coughlinset attempt here. no such making paid GEICO herself $50,000 and then worth her was what claim tled pay- medical for the $10,000 reimbursement payment plus $40,000 payment $50,000-a with through its made ments GEICO ‍‌‌‌‌‌‌​‌​​​‌‌​‌​​​‌‌‌‌​​​‌​​​​‌​‌‌​​​​​‌‌‌​‌​‌‌​‍lien. GEICO $10,000medical Cough- requiring nothing legally her, there only worth was lien $10,000 medical reaching the parties this. lin to do settled GEICO is what $5,000because to settle expected be cannot agreement However, cannot Colonial. for with face value than more be what ulti what GEICO responsible held were settlement terms if the was GEICO claim. mately does value collected. fully enforced claim to settle obligation no under Colоnial Coughlin and to both settlement pursue chosen $5,000 could agree- the settlement time at the necessary. litigation fall amount *5 by measure reached; is the that ment was Coughlin unlikely that Furthermore, it is has Coughlin whether determine to which com than the more for settled have could poli- the Colonial of face value exhausted $10,000medical $40,000payment bined cy. the Colonial limit of facial lien. concluded court superior $50,000. The pre- include Policy do not limits counsel, legal her through Coughlin, attorney's judgment interest lien the medical known have should drawing purpose of fees for value because face less than for settle would cover- motorist upon underinsured true, if But even knowledge. common this is age. that Colonial to believe reason is no there Coughlin if that even argues GEICO for a settle to offered have would full her $50,000, than this is less for settle did responsibility assumption of payment at not include it does limits because lien, which $10,000medical of the payment interest prejudgment torney's fees reasoning would according to GEICO's Cough- contends, raise would which, GEICO $50,000. In of payout in a final resulted well above limits actual lin's superior reasoning of the effect, the court relies GEICO argument, of this support settlements, we a result discourage would insurers have held in which assumption on cases avoid,15by preventing towish are costs litigation pay all to contract agreement. a settlement part of of liens who Rule Civil pay Alaska therefore required be lien cannot of value The ultimate interes prejudgment fees and beforehand, and insurance definitively known cites that GEICO the cases While t.16 settle unlikely to companies are which contract being insurance Id. draw she could before exhaust need would News, coverage from Daily Anchorage upon Anchоrage v. Dist. Sch. Na- Farquhar v. Alaska 1989) ("'We recog (Alaska in 1191, As we held GEICO. 779 P.2d prejudg- of the inclusion by those tional Insurance public policy served important nize the upon dependent policy limits settlement."); ment interest Interi encourage which measures policy. the insurance of terms contractual Bussing, 559 P.2d Bureau, Inc. Credit 2001); (Alaska also see 580-81 1977) (Alaska ("Stipulations and settlements Co., 754 P.2d Indem. v. Travelers Schultz they simplify, shorten because in law favored are 1988) ("In determining consti- what taking up valuable litigation without and settle coverage, insurance maximum tutes the resources."). court court for the it is limits, necessary i.e., policy obligations undertaken the contractual review it is unclear be noted It should question in policy in insurance in the insurer below proceedings trial and from record statutes, regulations and applicable light was included interest payment of this is- addressed which have opinions with Babosky, contract Colonial's support proposition,17 they are not dis- statute: to ensure that UIM coverage is positive present case. The secondary cases cited rather than primary by GEICO and the dissent do purport while at the same time making the benefit of interpret broadly available.19 the statutory meaning "policy limits"; they simply consider what meaning Given the purposes dual of AS the term given should be particular 445(e)(1), 28.20. it is difficult to believe that is, contractual setting-that purposes legislature would use the term "limits" in determining the amount that an insurer must a sense that would engender litigation and tender to satisfy an unqualified insured's de uncertainty in many cases. In such cases as mand for "policy limits." Hughes, Bohna v. Thorsness, Gantz, Powell Brundin, & "policy limits" is a concept that We have considered items such as attor describes the maximum amount that an in ney's fees and prejudgment inbe surance company pay have to under a addition to the amount of policy limits.18 policy if it went to trial and received an They can be considered incorporated into adverse verdict.20 But the amount overall limits to the extent that insur limits under this definition is sometimes a companies ance legally obligated pay guess-as where attorney's per fees are a them, they but do not necessarily bear on the centage expected verdiet rather than a question of whether "limits ... percentage of the facial coverage-and it up" been used purposes of AS unlikely in en 28.20. acting 28.20.445(e)(1) would have intend We conclude that the term "limits of incorporate ed to such an concept uncertain liability" as used in the statute refers to in a context where purpose is not maxim facial coverage, and not extras. In reaching ization but the establishment of a this conclusion we look *6 purpose definite to the readily and ascertainable threshold.21 sue."). prejudgment Because we hold that astrophic inter- Safety loss." Corp. Nat'l Cas. v. Pacific est is not policy included in the Co., limits for the Employers 748, Ins. (Alas- 927 P.2d 750 n. 1 purpose determining policy of 1996). limits had been ka coverage, UIM unlike excess cover- exhausted, this issue is moot and need not be age, does not extreme or contemplate unusual upon addressed remand. circumstances, but rather exists to compensate injured an insured "to the extent that the tortfea- Safety Corp. See Nat'l Cas. Employ v. Pacific liability sor's is insufficient to Co., (Alaska ers Ins. 1996) 927 P.2d compensate injured person fully for his or ("'Under Alaska law it is primary established that Progressive loss."" Curran v. Northwestern policy include, among limits things, other facial (Alaska 2001). 29 P.3d 829, 832 limits and fees taxed attorney's under Rule coverage."); еxtent of Hughes, Bohna v. 828 P.2d 1992) (cita- 745, 755 n. 20 Thorsness, Gantz, Powell & Brundin, omitted). tion (Alaska 1992) ("[The 768 n. 58 'policy term limits' self-explanatory is any prior even without 21. The dissent Policy language contends that cases. necessarily in the limits are what an in Safety Motor Vehicle Responsibility supports company surance Act pay would have to under its argument policy extras must be if it went to exhausted to trial and received an adverse trigger verdict."); coverage. UIM Schultz, Dissent at 993-995. 754 P.2d at ("[Plolicy Specifically, 28.20.070(a) the dissent looks to limits ... AS include{ the attorney's ] amount of fees 28.20.440(b)(2). and AS pre- which These sections have been awarded had this case required scribe the gone trial."). amount of insurance that each driver carry. in Alaska recognize must both sections language describing contain the In a "exclu- settlement offer in Curran, we $20,746.03 stated that "a sive payment of interest imposing additional and costs" in Alaska's рrejudgment mandatory attorney's interest and minimum fees limits. But we do not agree against would not have counted absence qualifying of such limit." lan- guage 28.20.445(e)(1) 29 P.3d at 831 n. 3. compels the conclu- phrase sion that the liability" "limits of means all argues 19. The dissent that no conceptu- relevant potentially payable "amounts under all the liabil- al difference exists between UIM ity and excess coverages cov- underlying of liability policy." erage. However, Dissent at 995. the statute's ‍‌‌‌‌‌‌​‌​​​‌‌​‌​​​‌‌‌‌​​​‌​​​​‌​‌‌​​​​​‌‌‌​‌​‌‌​‍28.20.440(b)(2) Dissent at 993. Alaska Statutes making concern with widely 28.20.070(a) avail- and define the bare limits of manda- distinguishes able significantly it tory coverage. explicitly Both statutes state coverage. Excess insures mandatory "cat- minimum limits are "ex- CONCLUSION IV. policy rea strong

Indeed, there and attorney's fees including for not sons statutory con- matter of summary, as a of the determination interest prejudgment inju- all liability of struction, of "limits satisfied have been whethеr used AS phrase is ry policies," ... motor underinsured invoking of purpose amount only to the refers 28.20. of value ultimate As with coverage. ist Colonial, it Moreover, when coverage. of fees of monetary value liens, the $40,000in addition pay agreed to specula quite is interest prejudgment $10,000 GEI- for the responsibility assuming concluded, may it is matter Until tive. $50,000 face lien, up the used medical CO to determine impossible if not difficult RE- Accordingly, we policy. amount inter prejudgment attorney's fees what judgment and summary grant of VERSE starting a new wary of areWe est will be. with consistent proceedings REMAND disputing at industry centered litigation opinion. agreements for settlement torney's fees table. on the is left no dime making sure Justice, dissenting. EASTAUGH, settlement hinder unjustifiably This pos eliminating the virtually by negotiations Justice, dissenting. EASTAUGH, has settled certainty that one sibility of disagree respectfully I Introduction. A. limits. We one's value of full face It opiniоn. of the court's III.B.2 Part limit is exhausted hold that therefore value" the "face payment holds that invoking purposes for the his policy exhausted Babosky's Kevin value full face coverage when motorist 445(e)(1) for 28.20 satisfying AS coverages, judg "payments, through paid is un- Coughlin's invoking Colleen purposes of how settlements," regardless ments (UIM) It coverage.1 derinsured attorney's fees and payment did exhaustion holds that consequently believes The dissent resolved. Ba- which of the "add-ons" payment require peo wrong ruling will "burden that this covered.2 coverages also bosky's insurer the the UIM transferring to ple" subsec the result contrary to holding is This tortfeasor alleged defending the expenses explain 445(e)(1) I first will requires. tion damages plaintiffs challenging and then the issue resolve we should how according to the dis Consequently, claims.23 *7 court's disagreement with my explain expensi more become sent, coveragewill UIM analysis. If result. anticipate this ve.24 We excess of injuries in plaintiff sustained this Issue. Decide How We Should B. policy, that tortfeasor's value of impor the face practical question poses a case This of whether regardless remains injured insureds: their and to insurers tant prejudg attorney's fees and plaintiff received triggers What (here, ment interest. insurer the UIM coverage, requiring GEICO) Alaska Statute pay? limits Thus, hold that 445(e)(1) question: answers 28.20 policy is value of the face when exhausted limits "the pay after must insurer or non- insured; any payment paid to the lability ... injury ... bodily liability of all and attorney's fees payment of 3 up." used ... have been policies determination. of this independent interest is GEICO's no claim Op. There is at 992. similarly plain 1. and costs." of interest clusive Coughlin than favorable policy terms are more "bodily 28.20.445(e)(1) refers language, AS .445(e)(1). subsection damage" but not to limits "property injury" and elements can constitute the extras that Op. 992. 2. at contexts. in other limits part: 28.20.445(e)(1) pertinent provides in AS 28.20.445(e)(1). AS cov- motorists (e) and underinsured Uninsured erage at Dissent sickness, injury, bodily (1) may apply to damage to or disease, insured or of an or death at 999. 24. Dissent legislature's What do the unqualified bility Act. Nearby passages in that act reveal liability" words "limits of mean? Read in meaning intended. Alas by isolation ignoring companion in sections 28.20.070(a) ka Statute specifies the manda 28.20, they AS could have two different theo tory minimum numerical applicable limits meanings. They retical could mean the automobile lability policies effective in Alas amounts potentially payable under all the ka. It requires each policy to limit, have "a lability coverages any underlying lability exclusive of costs, of not less policy.4 This is the meaning I think they interest $50,000 than because of bodily injury. ..." have. they (or Or could mean the facial Similarly, 28.20.440(b)(2) AS specifies numerical) manda specified limits in the declarations tory minimum "limits any underlying policy. exelusive of This is the mean ing the gives them in this case. $50,000 Our and costs" a vehicle owner's job is to determine the meaning legisla lability policy.7 Both subsections gave ture them.5 specify the mandatory facial, minimum or numerical, limits automobile liability policies guess. 445(e)(1) We need not Subsection part is of the Motor Vehicle Safety Responsi must have in Alaska. property destruction of cy an insured until the limits' meant the policy, facial limit plus ' bodily limits fees.") injury Rule of all prop- (quoting Schultz erty damage liability policies bonds and Travelers Indem. apply up by payments, been used judg- 1988)). ments or settlements.... added.) (Emphasis 5. Curran, 29 P.3d at 831; Baker v. State, 30 P.3d (Alaska App.2001). qualifier, I use a such as "facial" or "numeri- cal," with "limits" or limits" to refer "policy 28.20.070(a) provides: the numerical specified poli- in the cy's deсlarations. A or bond is not effective under AS 28.20.060 unless it is issued an insurance opinion The court's equivalent uses these and company surety company or authorized to do qualifiers purpose. for the same It therefore state, business in except provided (b) in "$50,000 speaks limit," (Op. 'facial at section, of this and if the accident resulted in 987), (id. the "face policy," value of the Colonial death, injury or unless the 990), limits," at (id. "the amount of at limit, subject bond is to a exclusive of interest 991), (id.), coverage," "facial "full face value of costs, $50,000 of not less than because of limits," (@d. 992), one's at and "full face bodily injury to person or death of any one (id.). policy." value of the (Although we have and, subject one accident to the same limit for sometimes used "face referring value" when one to a limit of person, not less than $100,000 liability policies, facial limits of concept bodily injury because of to or death of two or of "value" seems better describing suited to life persons accident, any more one and if the property coverages.) loss accident injury has resulted to, or destruc- practice This past consistent with our use of of, property tion to a limit of not less than qualifying descriptive phrases words or when we injury because of to or destruction of only limits, see, refer to the numerical e.g., State property *8 of others in one accident. Farm Mut. Harrington, Auto. Ins. Co. v. 918 P.2d 1022, (Alaska 1996) ("numerical 1025-26 facial 28.20.440(b)(2) provides: 7. AS limit"; limits"; policy limits"); "facial "facial Hughes (Alas v. Harrelson, policy The 844 P.2d 1106, 1108 liability owner's of insurance must 1993) ("minimum limits"); ka Tucker v. (2) United Servs. Auto. person Ass'n, 827 P.2d 440, 441 insure the every named and other (Alaska 1992) ("base liability limit"); person Wold using v. the express vehicle with the or Progressive Co., 155, Ins. implied P.3d permission insured, Preferred of the named (Alaska 2002) ("nominal limits"), or when liability loss imposed by from the law clear, context meaning makes e.g., our Curran damages v. arising ownership, out of the Progressive Co., Northwestern maintenance, Ins. 29 P.3d or use of the vehicle within the 830, 831, (Alaska 2001) ("policy n. 35 limit subject United States or Canada, to limits ex- $50,000 "$50,000 per person"; of limits"; clusive of interest and costs, with respect add-ons"). plus ‍‌‌‌‌‌‌​‌​​​‌‌​‌​​​‌‌‌‌​​​‌​​​​‌​‌‌​​​​​‌‌‌​‌​‌‌​‍"facial applicable each vehicle, as follows: $50,000 because of qualifiers These necessary because we have injury person any to or death of one in consistently unqualified used the phrase "policy subject one accident, and, to the same limit for See, limits" to include all coverages. $100,000 person, one bodily injury because of eg., v. Alaska to or persons death of Farquhar Nat'l any two or more 20 P.3d in one (Alaska 2001) (''We 580-81 accident, 'poli- found that injury and because of to or ap meaning a statute's terminology con When of must be." choice legislature's party the unambiguous, and clear pears meant legislature the here. When

trols a corre meaning "bears urging another limits, in it did as facial to the refer 440(b)(2), demonstrating .070(a) it did of heavy burden and spondingly subsections "limits," "limit," or decline intent." We words unqualified contrary legislative the use Instead, in subsection the liability." where a statute of extend "modify "limits or phrase the with .070(a) "limit" qualified it legisla the and is clear language statute's 9] And costs." and ambiguity."[ no of history reveals "exclusive tive "limits" with .440(b)(2) qualified it subsection apply the must we approach, Applying that must legislature phrase. same the begin 'We as written. statute language A45 usage. Section its own of aware been the statute.10 language of the analysis of with There A440. section immediately follows context, in subsections revealed Statutory those to use reason no have been meaning .070(a), A40(b)(2) confirms and in sub "limits" "limit" or qualify phrases to .070(a) intended. .440(b)(@2) legisla legislature if the sections "limit," words unqualified its intended ture Hability" AS Further, reading "limits only mean liability" to "limits," "limits of or thing as 445(e)(1) the same to mean 28.20 legislature Had the limits.8 facial in AS costs" of interest exclusive "limits liability" in AS "limits of the words intended "limit, of interest 28.20.440(b)(2) exclusive lim only the facial 28.20.445(e)(1) to refer 28.20.070(a) conflicts in AS costs" insurance, it would underlying under statutory construction rule of our it used else phrase qualifying the same used to all words give effect which Responsi Safety Motor Vehicle in the where superfluous.11 none render statute facial specify the it meant Act when bility in subsection phrase unadorned Reading the it not demonstrates it did That limits. limits makes A4b(e)(1) facial only to to refer "limits of Hiabili words unqualified meant in subsec words qualifying superfluous the A45(e)(1) to all to refer ty" subsection .070(a). .440(b)(2) and tions liability policy's under payable amounts limits. just its facial coverages, and suggests history legislative No approach our recently summarized We differеnt. something meant legislature con- opinion that in an statutory construction outweighs attention brought to our Nothing had exhausted policyholders whether sidered words. legislature's meaning of the plain limits of an underlying in the next discuss Nor, I will reasons policy: permit a purposes legislative part, do approach to sliding scale apply a Instead, precepts two reading. contrary to determine interpretation: statutory the read- confirm to UIM approach Alaska's legisla to its we look a statute meaning of requires. language statutory plain ing the plain on language is if its history, even tive contain policies First, requirement meaning plainer "the But its face. coverage reflects what statute, more con language current "Alaska's has described history contrary legislative any vincing omitted). (footnotes Curran, at 831-32 29 P.3d one property of others in destruction accident.... State, Reg'l Affairs, Cmty. & Dep't Bullock v. terminology 2001); in AS used similar Gerber 8. The *9 (Alas Vehicle Insurance Motor 76 28.22, 74, 2 P.3d Mandatory Mem'l Bartlett Hosp., Juneau 28.22.101(d) Thus, part requires in AS Act. 2000). ka subject "limits liability policy motor vehicle State, Dep't Reve "$50,000 Corp. v. be costs" of 11. of interest exclusive Louisiana-Pacific 2001); (Alaska 422, nue, Kodiak 427 P.3d 26 person." of one injury to or death cause of 757, 761 Corp., 991 P.2d Borough v. Exxon 28.22.201(a)(1) Island underinsured provides that 186, State, P.2d 1999); 991 (Alaska v. Romann Chapter 22 "does coverage required motorists Village 1999); Fancyboy Alaska (Alaska v. 190 bodily injury ... until the limits apply to 1999); (Alaska 1133 Coop., P.2d 984 Elec. apply have been policies that liability bonds and Dist., P.2d Anchorage 864 Rydwell Sch. v. judgments or settle by payments or up used 1993). (Alaska 528 ments."

995 approach."12 excess We have stated principles underlying Alaska's current UIM approach is statute. Other principles-treating the UIM coverage excess, as prеmised upon requiring injured idea that exhaustion of the underlying coverages, person is and aiming entitled to recover under for full his or compensation-refute her own proposed underinsured coverage motorist distinc the extent that tion and outweigh lability tortfeasor's whatever relevance the availability principle may here. And insurance coverage is insufficient to com pensate excess coverage person the insured is not fully for extraordinary his or or limit loss, ed subject only catastrophic to the limits of claims. It simply is coverage."[13] coverage purchased to cover claims exceed ing the primary coverage. It is routinely purpose described the of Alaska's ex consumers, available to may, who for eco approach cess UIM as follows: "Exeess cov reasons, nomic carry minimum primary lim erage provide thus strivеs to additional cov its and use excess coverage to extend their erage, as needed to fully compensate injured limits. Given that motor vehicle accidents motorists, after available coverage can easily generate 14 non-catastrophic has been completely Classify exhausted." exceeding primary limits, excess insur ing coverage UIM as "excess" confirms that ance is not limited to "extreme or unusual all underlying lability coverages, including cireumstances."1 It has the same ultimate coverage any "add-ons," must be exhaust purpose as UIM coverage: to satisfy the ed. In dealing with primary-excess coverage injured claims of an victim to the extent the disputes, require complete exhaustion of tortfeasor's underlying liability coverage is underlying primary liability coverages, in insufficient compensate the victim fully.18 cluding lability add-ons, coverage before the exeess coverage play.15 comes into There is Second, it is speak anomalous to of "com no conceptual difference relevant here be plete exhaustion" in terms of compensati "full tween excess coverage. UIM on"19 injured unless truly claimant is The court states that UIM and excess being compensated for the loss use of the coverage disputes are distinguishable. It as money damages suffered at the moment of support serts in that the UIM statute's "con injury, costs, and for the including attorney's making cern with coverage widely fees, avail of obtaining compensation. distinguishes able it significantly from concept of making the claimant whole to the coverage," "exeess coverage insures extent of the available coverage has driven against catastrophic loss," and that "UIM this court to reason inter coverage, unlike excess coverage, does not part est is of compensatory damages contemplate extreme or unusual cireum-s part therefore of the maximum limits of a tances."1 my view, that covers prejudgment interest.21 It these assertions support the distinction the court draws. has likewise driven this court to hold that a The noted "concern" only one of several policy's coverage plaintiff's litigation Curran, 12. 29 P.3d at 832. Op. 16. at 991 n. 19. Progressive 17. Id. Ins. Co. v. Simmons, 953 P.2d 510, (Alaska 1998). 517 n. 6 Curran, quoted 29 P.3d at 832 above in the Cf. Curran, 29 P.3d at 832. text. Curran, (describing P.3d at 832 purpose "Only primary when the Cf. insurer's limits are of UIM "fully needed to obligations exhausted do part on the of the ex- compensate" liability coverage after has been cess insurers arise. Under ‍‌‌‌‌‌‌​‌​​​‌‌​‌​​​‌‌‌‌​​​‌​​​​‌​‌‌​​​​​‌‌‌​‌​‌‌​‍Alaska law it is estab- "completely exhausted"). primary include, lished among things, other facial limits and fees Ha, Guin v. taxed under Rule 82, to the coverage." extent of 1979). Safety Corp. Nat'l Cas. Employers Pacific *10 Co., (Alaska 1996) (citations 927 P.2d 751 omitted). Tucker, 21. 827 P.2d at 441. awards, the add- that with fees, cost a lo- is the insured against awardable costs substantially coverage liability ons, Colonial's when must tender insurer an bility limits.25 facial policy's the exceeded offer.22 settlement limits" "policy

making a more than paid that Colonial No one the conclusion require past decisions Our not exhaust did $50,000. therefore Colonial for not achieved is compensation" "full that per subsection liability" "limits its coverage under triggering purposes implicating GEI- A4Ab(e)(1) purposes for applicable un 445(e)(1) all unless subsection coverage.26 paid. CO's UIM have been coverages liability derlying the Opinion. Because The Court's C. is also statute interpretation This legisla the implicitly concludes opinion of similar past treatment by our compelled the exhaustion resolve not words do ture's often Policies policies. in insurance terms analyt on an avoidable it question, embarks tort Liabilityfor an insured's only not cover wrong in the arrives It then voyage. ical Hability awards, an insured's also but damage legisla the first translates opinion port. The awards, for costs such as for additional words, then but court's into the words ture's coverages as such refer interest. We meaning the those words give not to chooses policy's to a added must be "add-ons" equivalent given them part of a are Add-ons limits.23 numerical on in reliance this choice It disputes. bases must An insurer coverage. liability policy's legisla the policy and public perception its limits" "policy pay them pay therefore pre clarity The statute's purposes. ture's would cover the amount maximum aids, interpretive but those on cludes reliance the insured against entered judgment were purpose assess policy and think the court's I include would Judgment a Because at trial.24 court The event. incorrect ment is awards, limits of a additional these Hability"-the con ultimately "limits reads awards these additional liability for covering 28.20.445(e)(1)-to in in AS trolling words coverages for the until the not exhausted are except facial coverages liability no clude additional for these exposure insured's stage disagree with each I policy limits.27 coverages These too. are exhausted awards approach. the court's Hability." "limits of part of the Because words. 1. The statute's liability" consequently "limits Colonial's or enforce recognize does not opinion had Colonial everything include drew, it does distinctions entered judgment been had a pay in- meaning words give legislature's undisputed that It is trial. insured after proposition above. I tended. discussed only Babosky not covered Colonial's opin court's words. awards, 2. The court's but аlso damage liability for legislature's, its words interest, attorney's ion substitutes lability for parties appeal 1025-26; that the GEICO asserts 25. at Harrington, P.2d Schultz pre- policy covered dispute Colonial's 265, 267 Indem. Travelers costs, interest, fees. judgment 1988). assertion, and dispute this Coughlin does not fees and held out for represents "had she Curran, 835 n. 35. P.3d at interest," recovery would have Colonial $67,750. According demand to a about been Tucker, 162-63; see, e.g., Wold, at P.3d GEICO, Rule 82 add-on made on $50,000 policy would be & n. P.2d at 440-41 for a agreement settle a carrier's An insurance of the med- agree resolution with the court's I company obligates the "policy limits" claim IILB.1., my but conclusion Part issue in ical lien liability available potential pay its maximum not exhausted were Colonial's limits policy.... under the lien issue. moot the disputed ("'We involves that a hold Op. ... Whether therefore at 992 costs, limit, invoking prejudg- purposes of liability base exhаusted for limit is interest, potential when total the insured's it is ment full (Emphasis paid...." insured in to the value is of concern which passage added.) court's footnote ""policy settlement. limits" .445(e)(1).}. cites subsection Tucker, 440-41. 827 P.2d at *11 translating .the statute's policy Public legislative "policy words into purposes are limits."28 This substitution obscures the inherently weak interpretative aids. There need to legislature's words, focus on the is no need to resort to them when the stat opinion forees try the explain why ute's words are so clear. They are especially "policy limits" something means different in unhelpful here they because speak cases than in other insurance specificallyto the narrow issue before us. At exhaustion contexts. It also results in a best, they reflect broad considerations which public policy analysis unsupported that is by explain do not what the statute means in this legislature wоrds the used. specific worst, context. At they reflect projections court's own about what legis But if we going ignore are the effect of lature must not intended,32 and its own legislature's words, qualifying past our expressions public policy not by voiced decisions guide should us. There logi- is no legislature.33 Relying public on policy seems cal or functional difference between this case particularly here, chancy given that the re policy and our limits cases. Both deal with sult-allowing partial exhaustion trigger this central question: what must the tortfea- the UIM coverage-is inconsistent with the pay sor's insurer policy exhaust its limits legislature's express words and purposes. (or, words, the statute's the "limits of liability")? We should answer question possible Concerns about delays jus do not the same way in both contexts. tify ignoring the statute's words. sig More disputes nificant about cases the underlying discussed above hold cover (whether age policy liability limits of a apply, exclusions are not for example) ex hausted liability justify unless coverages for triggering add-ons the UIM cover paid. are age. also usage Disputes Our is also over coverage instructive. for add-ons will When occasionallydelay speak we wish to exhausting the underlying numerical limit set out in policy's declarations, liability limits, but I doubt they will meaning qualified our words to make our unduly delay UIM First, claims. a lability ear.29 cl insurer good-faith with a in litigating a coverage dispute about add-ons can "ex The court here uses similar qualifiers to haust" agreeing pay make its meaning clear.30 That it must do so whatever the court require will when it re when it intends to exclude for add- solves the dispute.34 add-ons agree This ons illustrates the incongruity of reading ment has the effect of exhausting limits, .445(e)(1)'s subsection unqualified phrase as they be, whatever prove to triggering UIM though legislаture qualifiedit. coverage. A liability insurer has incentive to legislative Public enter into such pur agreement an to avoid bad poses. opinion faith public relies on claims. And if insurer and the perception court's purposes engaging in bad faith in a limits situa underlying UIM coverage tion, to justify its choice UIM insurer relies at peril not to follow our policy limits cases.31 the liability This insurer's recalcitrance.35 Fur reliance is unwarranted. ther, difficulty no in determining the extent 988-89, Op. at 990-92. appears 34. This to have practice been the fol- lowed in v. Travelers Schultz Indem. supra 29. See cases cited note 4. (Alaska 1988). P.2d 265, 266-67 supra 30. See note 4. payment Insistence on may actual expose an Op. at 991-92. excess insurer to a bad anticipa- faith claim for torily repudiating See, its contract. Grace v. ("it eg., Op. at 991 is difficult to believe Cf. Am., Co. N. use"; legislature 467 & n. 15 "it would 1997) ("[The unlikely duty triggered insurer's] ... would have in- tended"). when Bell became liable for sums in excess ‍‌‌‌‌‌‌​‌​​​‌‌​‌​​​‌‌‌‌​​​‌​​​​‌​‌‌​​​​​‌‌‌​‌​‌‌​‍of limit, INA's lower rather than when the See, eg., ("there Op. strong at 992 underlying actually paid."). limits were reasons").

998 line bright a short, draws the court In prevent coverage has add-ons amount And it not draw. legislature did the something which add-ons treating the from ed us carries full assuming that exhaustion liability so does the maximize pay to must insurer an public not a That is it. with as have detriments insured. its it owes coverage us, the words given open to policy choice "quantifiable" figure total this sumed duty to a statute. insurer the imposed discharge to specific amount a

tender result benefits Marginal The benefit. 4. may have indeed, claim a UIM And limits.36 a UIM to make allowing her on the damages trial liability and await a to antici- the court claim, the social benefits but Only the tortfeasor. plaintiff's improbable, or hypothetical pates tortfeasor whether known it be then will the detriments. оutweighed by likely be will actually underinsured. purpose to the First, the harm I think statutory pur a supposes The court prejudice any possible outweighs exhaustion coverage of UIM the benefit "making pose of an chose legislature coverage. The to UIM reading of supports broadly available" reading The court's approach.42 excess UIM disputes how apparent is not It statute.37 making is inconsistent the statute obligations underlying insurer's about compensate fully to coverage available cover availability of UIM reduce could Hability available "after injured motorists than more is worth claim age. If a 3 exhausted."4 completely has been coverage is little liability, there underlying ex has not been coverage underlying coverage will the UIM case given in a chance may mean that The result hausted. of mak A social implicated.38 not be loss of wholе for made never be claimant will readily available coverage more ing UIM damages award prospective use of her say the statute reading justify recovering from incurred fees costs and states also The court not. something it does UIM requiring And insurer. underlying legisla to believe" "it is difficult premature plaintiffs compensate insurers "en terminology that might use ture insur underlying recalcitrant ly may reduce many uncertainty litigation gender judg 9 liability for excess exposure 'to ers' spec so, general this Perhaps but cases."3 so, If it would claims. faith and bad ments contrary to reading justify a ulation cannot of their injury plaintiffs deprive personal no reason There is words. statute's policy limits settlements seeking tool main adopt a intended to think insurers. the tortfeasors' than exhaustion standard different adopted. will bur- Second, the result predict I pur- It will burden wrong people. den about expresses concern court also motorists It chasers of limits. determining policy uncertainty of implicated) (which easily more now be will guess" a "is sometimes recognizes that 40 purchase who "wary of tortfeasors and benefit It is speculative." quite and "is (whose have less now insurers will But an industry."4 litigation new starting a has if the claimant pay add-ons need already stands industry existing litigation may transfer pursue). It insurer personal every aspect of dispute prepared to the insurer tortfeasor's alleged from the injury claims. Gantz, Thorsness, Op. 992. at 40. Hughes, Pow E.g., Bohna v. 1992). (Alaska Brundin, ell & Op. at 992. Op.at991. insurer to her UIM Coughlin's letter demand Progressive Northwestern 42. Curran $150,000. exceeding She as- alleged losses total 2001). P.3d damages exceeded appeal her serts on Id. Op. at 991. expense UIM insurer the of defending the D. short, Conclusion. I think the su- perior correctly other challenging analyzed driver and plaintiff's this issue. I would therefore affirm. so, damages claims. If it will make UIM expensive, again more at the ex- *13 pense parties who are not at fault.