Lead
¶ 1. This is a review of an unpublished court of appeals per curiam opinion
¶ 2. The "for a covered auto" language on which this case turns is substantive language that appears in several places in the policy, including the endorsement page. When the provisions of the policy are read together, the language is not ambiguous. We agree with the reasoning of Crandall v. Society Insurance,
¶ 3. This case involves a family with multiple personal and business vehicles insured under policies purchased from three companies. Dennis Lisowski, a farmer, owned a Chevy Lumina, a Chevy pickup, a Dodge Avenger, and a Mack semi tractor. He bought insurance policies for the Lumina and the pickup from First Community Insurance Company but allowed the policies to lapse. He had purchased the Avenger for his son, Jonathan Lisowski,
¶ 4. That business auto policy is the policy against which the claim was made. The car accident involving the Avenger, and giving rise to this claim, occurred January 18, 2004. Jonathan Lisowski was a passenger, and a friend of his was driving at the time of the accident.
¶ 5. Jonathan Lisowski sued Hastings Mutual, claiming coverage under the UIM endorsement to the business auto policy on his father's semi tractor. He claimed coverage on the grounds that, as a family member of the named insured, he was entitled to coverage for any injury caused by an underinsured motorist. Hastings Mutual denied coverage on the grounds that the UIM policy applied to covered autos only.
¶ 6. Following a hearing, the Buffalo County Circuit Court, the Honorable James Duvall presiding, dismissed the complaint. The circuit court found that: (1) Dennis Lisowski was the owner of the Avenger; (2) Jonathan Lisowski was a passenger in the Avenger when he was injured; (3) Jonathan Lisowski was an insured under the UIM endorsement of the Hastings Mutual policy; (4) the Avenger was an underinsured motor vehicle under the terms of the UIM endorsement; and (5) the Avenger was not a covered auto in the Hastings Mutual policy. Relying on Crandall, the circuit court concluded that "the introductory language 'for a covered auto' in the UIM endorsement required Jonathan Lisowski to be an occupant of a covered auto in order to trigger UIM coverage" under the Hastings Mutual policy. Because the Avenger was not a covered auto under the policy, the court ordered the case dismissed.
¶ 7. Jonathan Lisowski appealed. On August 23, 2007, the court of appeals certified the appeal to this court, but we did not grant the certification. In an unpublished per curiam opinion, the court of appeals then affirmed the circuit court's decision, on the same grounds: that Crandall required the "for a covered auto" language to be given effect, and the Hastings Mutual policy therefore did not provide UIM coverage. Lisowski v. Hastings Mut. Ins. Co., unpublished slip op., ¶ 9 (Wis. Ct. App. Jan. 31, 2008).
¶ 8. Jonathan Lisowski filed a petition for review, and on May 13, 2008, review was granted.
II. STANDARD OF REVIEW
¶ 9. Interpretation of an insurance policy presents a question of law that we review independently. Smith v. Atlantic Mut. Ins. Co.,
III. ANALYSIS
¶ 10. There is no dispute that the vehicle involved in the accident was not a covered vehicle under the Hastings Mutual business auto policy. Nor is there any dispute that Jonathan Lisowski was an insured as a family member of the named insured, Dennis Lisowski. What the parties dispute is whether Jonathan Lisowski was entitled to coverage as an insured regardless of where he was at the time he was injured by the underinsured motorist. Jonathan Lisowski contends that even if Hastings Mutual could have excluded coverage for him under these circumstances without running afoul of Wisconsin law, the policy was not written in such a way that it actually and unambiguously did so. He points to a statement describing UIM coverage as "all sums the 'insured' is legally entitled to recover as compensatory damages from the owner or driver of an 'underinsured motor vehicle.'" Jonathan Lisowski also points to the UIM endorsement's language identifying insureds. Where the named insured is an individual, the endorsement states, insureds are "[t]he Named Insured and any 'family members'" and "[a’lnyone else 'occupying' a covered 'auto'. . . ." Because the family member provision contains no mention of a covered auto, he contends, there is no requirement that a family member of the named insured be in a covered auto in order for coverage to apply. He also notes that none of the endorsement's exclusions applies.
¶ 11. Hastings Mutual points to the sentence at the top of the UIM endorsement that begins, "For a covered 'auto'. . . ." It contends that this language mirrors the "covered auto" language in the main body of the policy and limits UIM coverage accordingly. As for the exclusions, Hastings Mutual argues that they operate only to limit coverage, not create it, and that the exclusions are relevant only after coverage is established.
A. The key language
¶ 12. The language on which this case turns is found in the policy's declarations page and in the endorsement for UIM coverage. On the declarations page, Item One lists Dennis Lisowski as the named insured. Item Two, the Schedule of Coverages and Covered Autos, says, "Each of these coverages will apply only to those 'autos' shown as covered 'autos'. 'Autos' are shown as covered 'autos' for a particular coverage by the entry of one or more of the symbols from the covered auto section of the business auto coverage form next to the name of the coverage."
¶ 13. Turning to the endorsement page, one finds the words, "For a covered 'auto' licensed or principally garaged . . . in[] Wisconsin, this endorsement modifies insurance provided under the following: Business Auto Coverage Form." On the same page, in section A.I., the policy reads, "We will pay all sums the 'insured' is legally entitled to recover as compensatory damages from the owner or driver of the 'underinsured motor vehicle.'" In section B.I., the endorsement states that where the named insured is an individual, which is the case here, insureds are "[l]a. The Named Insured and any 'family members'" and "[l]b. Anyone else 'occupying' a covered 'auto'. . . ."
¶ 14. There is no dispute that Jonathan Lisowski, as a family member, is an insured under his father's business auto policy and under the UIM endorsement. The Declarations page designates Dennis Lisowski as an individual, and the Endorsement, in section B.l.a., says the named insured and any "family members" are insureds when the named insured is designated in the Declarations as an individual.
B. Discussion
¶ 15. Jonathan Lisowski advances a half-dozen reasons the business auto policy his father held on the 1985 Mack semi tractor should provide coverage for the injuries he sustained as a passenger in the Avenger, even though it is not a covered vehicle:
(1) the "for a covered auto" language in the UIM endorsement is not part of the policy; it is nothing more than introductory language and should not be given effect;
(2) the UIM endorsement changed the "covered auto" requirement in the declarations page and trumps any conflicting language elsewhere in the policy;
(3) Hastings Mutual is wrongly seeking to have the court either add words to the policy or write into the policy a permissible exclusion under Wis. Stat. § 632.32(5)(j) that Hastings Mutual itself omitted;
(4) the "for a covered auto" language should be treated as an exclusion and construed narrowly against the insurer;
(5) the introductory language is contextually ambiguous and thus must be construed in Jonathan Lisowski's favor; and, finally,
(6) Crandall should not apply here because it is factually distinguishable and its holding is over-broad.
¶ 16. Hastings Mutual responds that the "for a covered auto" language is part of the policy, and, if characterized as an exclusion, is a proper one; that there is no ambiguity; and that Crandall is both rightly decided and applicable.
¶ 17. Jonathan Lisowski first contends that the "for a covered auto" language is not actually a part of the policy because it
¶ 18. Mau concerned a German tourist, Wolfgang Mau, who had purchased an underinsured motorist insurance policy for a rental car. While traveling, he was involved in a minor accident on an icy road, and a deputy stopped to assist him. At the deputy's request, Mau sat in the squad car while towing arrangements were made for the disabled vehicle. As Mau waited, a passing driver lost control and crashed into the squad car; Mau sustained serious injury.
¶ 19. To determine whether there was coverage under the policy Mau had purchased for the rental car, we first determined that "Mau [was] a named insured under the [UIM] policy." We then determined that the occupancy requirement in the UIM endorsement was not valid under Wis. Stat. § 632.32 (1995-96) because the statute prohibits an exclusion for a named insured. Mau,
¶ 20. Mau is inapposite here; the footnote to which Jonathan Lisowski cites says merely, "[R]ather than relying on the heading to determine who is a named insured, we look to the substance of Endorsement #1, the definitions, to define the named insured." Id., ¶ 14 n.4 (emphasis added). The first question in Mau was whether the person seeking coverage was a named insured, and we were presented with a policy that was ambiguous in defining a named insured. There, where the declarations page referred to the endorsement for the named insured ("Named Insured: See Endorsement #1" (Id., ¶ 10)), we did nothing more than read all of "Endorsement #1" to find the answer. Nothing in that approach requires us to ignore language in the Hastings Mutual policy. Unlike in Mau, the language we look to here is substantive language, not a heading.
¶ 21. Jonathan Lisowski's argument that the endorsement changes the policy and trumps any language to the contrary in the declarations page is easily disposed of. It's true that the endorsement says, at the top of the page, "This endorsement changes the policy. Please read it carefully." It is also true that an endorsement is "a provision added to an insurance contract altering its scope or application that takes precedence over printed portions of the policy in conflict therewith." Muehlenbein v. West Bend Mut. Ins. Co.,
¶ 22. Because the endorsement itself contains the "for a covered auto" requirement, there is no conflict between the endorsement and the rest of the policy. For the same reason, there is no way to read the endorsement as modifying the provisions of the Coverage Form to expunge the "covered auto" requirement. As noted
¶ 23. Jonathan Lisowski contends that for this court to deny coverage here we must rewrite the policy in one of two ways, either (1) by adding in words such as "who is occupying a covered auto" to the definition of an insured; or (2) by inserting an exclusion permitted under Wisconsin statutes that the insurer failed to put into the policy explicitly enough.
¶ 24. Jonathan Lisowski asserts that Mau compels us to construe the "for a covered auto" language as an exclusion and to construe it narrowly against the insurer. In Mau, one of the questions before this court was whether an "occupancy requirement," the equivalent of a "covered auto requirement," could apply against a named insured under Wis. Stat. § 632.32(6). In order to apply the statute, which addresses what a policy may not exclude, we acknowledged that a requirement can be the functional equivalent of an exclusion. Mau,
¶ 25. Jonathan Lisowski asserts that a discrepancy between the endorsement's statements creates ambiguity — the introductory language mentions covered autos and the coverage definitions do not. If words or phrases in a policy are susceptible to more than one reasonable construction, they are ambiguous. Mau,
¶ 26. It is true, as Jonathan Lisowski points out, that none of the endorsement's exclusions applies.
¶ 27. Jonathan Lisowski and Hastings Mutual differ as to the applicability of Crandall to this case. Crandall involved a policyholder who had purchased a business policy for his garage operations. The policy contained a UIM endorsement. When the policyholder's daughter was injured in an accident, in a vehicle driven by a friend, the daughter sought coverage under her father's UIM coverage. The endorsement language, as here, included the words, "For a covered 'auto' licensed or principally garaged, or 'garage operations' conducted in Wisconsin, this endorsement modifies insurance ... ." Crandall,
¶ 28. This case mirrors Crandall's facts in relevant ways. Crandall involved a businessowner's garage operations policy; here, the policy involved is a business auto policy. The cover of the policy here notes in large bold type that it is a "Business Auto Policy." In both cases, an insured, but not the named insured, was injured while a passenger in an underinsured vehicle not listed in the policy. The relevant language in the policies' endorsements is identical.
¶ 29. We agree with the court of appeals' reasoning in Crandall that:
[T]his is a policy for Crandall's business, not for him as an individual. ... The policy is described in various places within the policy as a businessowner's policy and a garage policy. It would be unexpected for this kind of policy to cover Crandall and his family under circumstances wholly unrelated to Crandall's business.
Id., ¶ 9.
IV CONCLUSION
¶ 30. The "for a covered auto" language on which this case turns is substantive language that appears in several places in the policy, including the endorsement page. When the provisions of the policy are read together, the language is not ambiguous. We agree with the reasoning of Crandall,
By the Court. — The decision of the court of appeals is affirmed.
Notes
Lisowski v. Hastings Mut. Ins. Co., unpublished slip op. (Wis. Ct. App. Jan. 31, 2008).
As explained more fully below, Wisconsin Stat. § 632.32(5)(j) permits insurers to exclude coverage under certain circumstances. All subsequent references to the Wisconsin Statutes are to the 2005-06 version unless otherwise indicated.
Dennis Lisowski testified that he considered Jonathan the owner of the Avenger and had intended to transfer the title to him but had not gotten around to doing so before the accident.
For each type of coverage (liability, auto medical payments, uninsured motorists, underinsured motorist, physical damage, and comprehensive), the Schedule of Coverages and Covered Autos also lists the policy limits and the premium.
Jonathan Lisowski also proffered an affidavit from an editor of an insurance industry trade publication in support of his position that the introductory language cannot modify the coverage terms. For the reasons stated herein, we do not find the editor's affidavit persuasive.
In this case, the heading on the endorsement page— "Wisconsin Underinsured Motorists Coverage" — is not relevant to the question of whether this business policy provides coverage when the injured person is neither a named insured nor an occupant of a covered vehicle.
Wisconsin Stat. § 632.32(5)(j) permits insurers to exclude coverage under certain circumstances:
A policy may provide that any coverage under the policy does not apply to a loss resulting from the use of a motor vehicle that meets all of the following conditions:
1. Is owned by the named insured, or is owned by the named insured's spouse or a relative of the named insured if the spouse or relative resides in the same household as the named insured.
2. Is not described in the policy under which the claim is made.
3. Is not covered under the terms of the policy as a newly acquired or replacement motor vehicle.
Jonathan Lisowski argues, without citation to authority, that such an exclusion is permissible only "if [the insurer] had specified the three requirements of Wis. Stat. § 632.32(5)(j) in the express written exclusion clauses of the UIM endorsement." There is, however, no such requirement in the statute.
Given this statutory scheme, the dissent's focus on the distinctions between Class I and Class II insureds is misplaced, where, as here, it is clear under the language of the policy as well as under the circumstances presented that there is no coverage; therefore, we do not find that distinction significant.
Jonathan Lisowski does not claim that the policy violates Wis. Stat. § 632.32(6)(b)2. Mau v. North Dakota Insurance Reserve Fund,
(b) No policy may exclude from the coverage afforded or benefits provided:
2.a. Any person who is a named insured or passenger in or on the insured vehicle, with respect to bodily injury, sickness or disease, including death resulting therefrom, to that person.
In both cases, the answer was that an occupancy requirement violated the statute because both cases involved injured parties who were named insureds. In this case, that statute is not implicated because Jonathan Lisowski is neither a "named insured" nor "[a] passenger in or on the insured vehicle."
See Dowhower v. West Bend Mut. Ins. Co.,
The exclusions apply, for example, when the named insured is occupying a vehicle he or she owns that is not a covered auto; when a family member is occupying a vehicle that the named insured's family member owns; and when a family member is occupying a vehicle owned by the named insured that has UIM coverage under another policy. Jonathan Lisowski fit none of those descriptions. He was not the named insured. He was a family member occupying a car (the Avenger) owned by the named insured (Dennis Lisowski). The car had no UIM coverage under any other policy.
Dissenting Opinion
¶ 31. (dissenting). I agree with the majority that the dispute here is "whether Jonathan Lisowski was entitled to coverage as an insured regardless of where he was at the time he was injured by the underinsured motorist." Majority op., ¶ 10 (emphasis added). Based upon what I refer to as Rule 101 of underinsured motorist coverage (UIM), the answer is undoubtedly: yes.
¶ 32. By Rule 101,1 mean that basic to the nature of underinsured motorist coverage is that it is "personal and portable" for resident family members of the named insured. As a learned treatise on Wisconsin insurance law explains: "Keep in mind that UIM as well as UM coverage is personal and portable and follows Class I insureds [resident family members of the named insured]." 1 Arnold R Anderson, Wisconsin Insurance Law § 4.14 (5th ed. 2004).
¶ 33. What does it mean to be "personal and portable"? "Personal" means that the coverage follows the person and not the vehicle, and "portable" means that it follows the person regardless of where he is at the time of the accident. Unlike general automobile liability policies which insure a specific auto, UIM policies insure the person.
¶ 34. We have previously explained that coverage for Class I insureds follows the insured "wherever he may go, be it 'in an unowned vehicle, on a motorcycle, on a bicycle, whether afoot or on horseback or even on a pogo stick.'" Teschendorf v. State Farm Ins. Co.,
¶ 35. The majority correctly acknowledges that there is no dispute that, as a resident family member of the named insured, Jonathan is a Class I insured. Majority op., ¶ 10. Thus, I conclude based on Rule 101 (UIM coverage is "personal and portable") that Jonathan is covered under his UIM policy regardless of where he was at the time he was injured.
¶ 36. The problem with the majority opinion is twofold: (1) by ignoring this basic tenet of UIM coverage, it collapses the distinction between Class I and Class II insureds, requiring all insureds to be occupants of covered autos; and (2) by concluding that the language of the policy is clear and unambiguous, it contradicts a parade of cases from other courts and avoids the cannon of construction that ambiguity is decided in favor of the insured.
I
¶ 37. The majority concludes that occupancy of a covered auto is a requirement
¶ 38. UIM policies traditionally cover three distinct classes of insureds. Wisconsin Insurance Law, supra, § 4.11. The named insured and any relatives who reside in the named insured's household are Class I insureds. Id. Class II insureds, or "occupant insureds," include anyone else while occupying a covered auto. Id. Finally, anyone who is entitled to a derivative claim is a Class III insured. Id. In Wisconsin as well as nationally, UIM coverage is personal and portable for Class I insureds.
¶ 39. The provisions of Jonathan's father's UIM policy correspond with this understanding of UIM insurance. The initial grant of coverage states that Hastings will "pay all sums the 'insured' is legally entitled to recover as compensatory damages from the owner or driver of an 'underinsured motor vehicle.'" The policy further defines three distinct classes of insureds:
I. The Named Insured and any [resident] "family members."
II. Anyone else "occupying" a covered "auto" or temporary substitute for a "covered auto”....
III. Anyone for damages he or she is entitled to recover because of "bodily injury" sustained by another "insured."
¶ 40. The definition of Class I insureds contains no occupancy requirement. The only insureds who must occupy a covered auto to be afforded coverage are Class II insureds. Under the majority's analysis, however, there is no distinction between Class I and Class II insureds — both must be occupants of a covered vehicle in order to receive coverage.
¶ 41. An established principle of policy interpretation is that courts should read a policy to give meaning to every provision, avoiding constructions that render portions of the policy meaningless. Isermann v. MBL Life Assur. Corp.,
¶ 42. Reading this policy to give meaning to every provision, I conclude that there is a distinction between Class I and Class II insureds — Class I insureds need not occupy a covered auto in order to be covered under the UIM endorsement. As a Class I insured, Jonathan's UIM coverage is personal and portable and he is entitled to coverage wherever he may go.
II
¶ 43. After eschewing this basic principle of UIM coverage, the majority embarks upon a determination of whether the language of the policy is ambiguous or unambiguous. The lynchpin of the majority's analysis is that the language of the policy is clear and unambiguous. If, however, the majority concluded that the language was ambiguous, it would have to decide the case in favor of coverage for Jonathan. Ambiguity in an insurance policy must be construed in favor of coverage.
¶ 44. The problem with the majority opinion is that it remains steadfast to its conclusion that the language is clear and unambiguous, disregarding the conclusions of court after court examining the same language. Indeed, a parade of courts has examined identical language and reached a conclusion opposite to the majority.
¶ 45. Both the circuit court and the court of appeals found Jonathan's argument that the language was ambiguous to be persuasive. Nonetheless, both courts were bound to follow the holding of Crandall ex rel. Johnson v. Society Insurance,
¶ 46. To begin, the circuit court stated that Jonathan's legal arguments and secondary authorities were persuasive: "I would be tempted to be sympathetic to the language — to a finding that it does create ambiguity." Nonetheless, the court concluded — as it must— that it was constrained to follow Crandall.
¶ 47. Initially, the court of appeals certified the question to this court, noting that "[t]he introductory provision Crandall relied on is plainly inconsistent with the provisions that follow it" and asked us to modify, limit, or overrule Crandall. We did not accept certification, and the court of appeals ultimately determined that under Cook v. Cook,
¶ 48. Likewise, the court of appeals in Ruenger v. Soodsma,
¶ 49. Courts around the country have examined identical language and have uniformly determined that it is ambiguous. See Reisig v. Allstate,
¶ 50. It should give the majority pause that in all of these cases, the courts have determined that identical language was, at the very least, contextually ambiguous. Nonetheless, the majority unhesitatingly
¶ 51. The majority determines that there is no ambiguity because the covered auto language in the UIM endorsement is consistent with the declarations page of the liability policy. Majority op., ¶ 25. It ignores, however, the obvious conflict between the covered auto language and the grant of coverage in the UIM endorsement. In focusing on the symmetry between the declarations page and the "for a covered auto" language, the majority skirts the established principle of insurance policy construction that ambiguity must be construed in favor of coverage.
¶ 52. Finally, as requested by the court of appeals in its certification memorandum to this court, I would take this opportunity to modify Crandall. The court of appeals correctly explained that "[t]he introductory provision Crandall relied on is plainly inconsistent with the provisions that follow it." Our interpretation should comport with the reality observed by other courts that have examined the same language — the policy language is ambiguous.
¶ 53. Although the majority proclaims that the language is clear and unambiguous, it does not necessarily make it so. Instead, all too often this court finds policy language unambiguous which then obviates the need for further meaningful analysis. I am reminded of the words of a nonsense poem by Lewis Carroll: "I have said it thrice: What I tell you three times is true."
¶ 54. Just because Wisconsin courts thrice proclaim that this language is clear and unambiguous, it makes it no more true than was the proclamation in Carroll's poem. For the above reasons, I would conclude that Jonathan's injuries are covered under his father's UIM policy. This interpretation is consistent with established principles of UIM coverage and of insurance policy interpretation. Accordingly, I respectfully dissent.
While Teschendorf dealt with an uninsured motorist (UM) policy, its analysis applies to UIM policies as well. See 1 Arnold R Anderson, Wisconsin Insurance Law § 4.14 (5th ed. 2004).
Wisconsin Insurance Law, supra, § 4.14; see also Alan I. Widiss & Jeffrey E. Thomas, Uninsured and Underinsured Motorist Insurance § 33.2 (3d ed. 2005) ("Most significantly, clause/class (1) insureds do not have to be an occupant of an insured vehicle when an injury occurs in order to be covered.").
"Just the place for a Snark!" the Bellman cried,
As he landed his crew with care;
Supporting each man on the top of the tide
By the finger entwined in his hair.
"Just the place for a Snark! I have said it twice:
That alone should encourage the crew.
Just the place for a Snark! I have said it thrice:
What I tell you three times is true."
Lewis Carroll, "The Hunting of the Snark" (1876).