[¶ 1.] Farm & City Insurance Company appeals the trial court’s holding that it is financially obligated to indemnify Zachory Friesz up to fifty thousand dollars according to the underinsured motorist provision within the insurance рolicy. We reverse.
[¶ 2.] On August 14, 1993 Chad Schatz, the father of Zachory Friesz, was killed in a car accident. The car in which Schatz was a passenger was allegedly traveling at a rate in excess of ninety miles per hour. In 1996, Schatz’ estate sued the driver of the car, Cody Warne, and secured a settlement in the amount of twenty five thousand dollars.
[¶ 3.] Through Zachory Friesz, this case was brought to enforce the claim of the estate of Schatz against his own insurance company, Farm & City, for underinsured motorist coverage. According to the Schatz policy, the limit the insurance company was obligated to pay is twenty-five thousand dollars “per person” and fifty thousand dollars “per accident.” The trial court determined that although there was only one person attempting to collect under the policy, the insurance policy allowed a recovery up to the fifty thousand dollar limit. The trial court reasoned that since the settlement of twenty-five thousand dollars would negate the underinsured policy limit if it were deemed to be twenty-five thousand dollars, the fifty thousand dollar limit would apply in order for Schatz’ estate to recover. The court surmised that if the higher amount was not used, the underinsured motorist provision would be in effect “illusory.”
[¶4.] The trial court also determined that the endorsement attached to the policy controls whether Friesz is entitlеd to recovery. The endorsement expressly delineated a “per accident” limit only, and not a “per person” limit. The endorsement was blank as to the amount of the “per accident” limit. Based on the public policy against “illusory” insurance contracts and the language of the endorsement, the trial court held in favor of Friesz. Farm & City appeal raising the following issues:
1) Whether the trial court erred in plaсing a fifty thousand dollar limit on the underinsured motorist provision considering the language of the entire insurance policy.
2) Whether the twenty-five thousand dollar limit under the policy’s under-insured motorist provision amounted to “illusory” insurance coverage.
STANDARD OF REVIEW
[¶5.] When interpreting insurance contracts, we have uniformly held them reviewable as a matter of law under the de novo standard.
De Smet Ins. Co. v. Gibson,
DECISION
ISSUE I
[¶ 6.] Whether the trial court erred in placing a fifty thousand dollar limit on the underinsurеd motorist provision considering the language of the entire insurance policy.
[¶ 7.] We have stated that “a contract is ambiguous when application of rules of interpretation leаve a genuine uncertainty as to which of two or more meanings is correct.”
City of Watertown v. Dakota, Minnesota & E. R.R. Co.,
[¶ 8.] Where the provisions of an insurance policy are fairly susceptible of different interpretations, the interpretation most favorable to the insured should be adopted. This rule of liberal cоnstruction in favor of the insured and strictly
[¶ 9.] Here, Friesz argues that an ambiguity exists because the description page, which outlines the ⅞ thousand dollar limits “per persоn” and “per accident” conflicts with the endorsement page, which lists only a “per accident” limitation with a blank space where the dollar amount should be written. When the insurance contract is read as a whole, and in light of statutory mandates, it is clear that additional recovery is not warranted under the underinsured motorist provision. The description page details in clear and unambiguous language that the policy limits coverage to twenty-five thousand dollars per person and fifty thousand dollars per accident. In fact, on the face of the description page, the premium paid by Schatz is broken down for each coverage provision. For each premium paid, Schatz paid $73.95 for bodily injury protection, the same for propеrty damage protection, $8.40 for uninsured motorist coverage, and $2.55 for underinsured motorist coverage. One is only entitled to benefit to the level of the premium paid. Because Schatz paid $2.55 for underinsured motorist coverage, he is only entitled to the amount of recovery attributable to that risk taken by the insurer, that being the o limits stated on the description page.
[¶ 10.] The endorsement page and the description page read together leads one to conclude that twenty-five thousand dollars is the limit Friesz could collect under the underinsured motorist provision. A сontract is to be examined and read in its entirety with all provisions being read together to construe its meaning.
See Kimball Invest. Land Ltd. v. Chmela,
[¶ 11.] When the insurance contract is read in light of SDCL 58-11-9.5 it is clear that Friesz cannot receive more than the twenty-five thousand dollars already recovered under the settlement. According to SDCL 58-11-9.5, “[c]overage shall be limited to the underinsured motorist coverage limits on the vehicle of the party recovering less the amount paid by the liability insurer of the party recovered against.” Likewise, we have also often stated that the underinsured’s recovery is “confined to ‘the difference between the UIM policy limits less the amount paid by the liability insurer of the tortfeasor.’ ”
Farmland Ins. Co. v. Heitmann,
ISSUE II
[¶ 12.] Whether the twenty-five thousand dollar limit under the policy’s underinsured motorist provision amounted to “illusory” insurance coverage.
[¶ 13.] It has been established that it is against public policy to validate illuso
[¶ 14.] The State of South Dakota has enacted a statutory schеme for minimum insurance coverage. SDCL 58 — 11— 9.4, in pertinent part, provides:
No motor vehicle liability policy of insurance may be issued or delivered in this state with respect to any motor vehiclе registered or principally garaged in this state, except for snowmobiles, unless underinsured motorist coverage is provided therein at a face amount equal to the bodily injury limits of the policy. [Emphasis supplied].
A simple observation here is that our Legislature has spoken. If a different statutory scheme is preferred, it seems clear that this is a matter for the Legislature alone to accоmplish. The policy in question has a ⅝ thousand dollar limit for underin-sured motorist coverage and a ¾ thousand dollar limit for bodily injury. The Schatz policy conforms to the statutory requirement listed in SDCL 58-11-9.4. The compliance with a statutory mandate such as SDCL 58-11-9.4 cannot constitute an “illusory” contract for insurance. “When an insurance company offers coverage mandated by law, in words which parallel the language of the statute, it is logically impossible to charge the insurance company with offering an illusory contract, when the contract offered is mandated.”
Fagundes v. Am. Int’l Adjust. Co.,
[¶ 15.] Moreover, the insurance contract is not “illusory” as there are numerous scenarios under which Friesz might рossibly recover. For example, if the settlement was less than the twenty-five thousand dollars actually received, then the insured would be able to collect the amount of the differencе between the policy limit and the settlement agreement. In other words, if Friesz had obtained a ten thousand dollar settlement, he would then be entitled to fifteen thousand dollars under the underinsured motorist provision. Other factual scenarios exist where recovery under the underinsured motorist provision is possible. The fact that, at minimum levels, the underinsured portion will rarely be used does nothing to rеnder the coverage illusory. This is particularly true, as noted, where the offered coverage is expressly mandated by statute.
[¶ 16.] Therefore, we reverse and remand.
Notes
Friesz relies upon the dеcision of the Supreme Court of Illinois in
Glazewski v. Coronet Ins. Co.,