Thе trial court granted summary disposition to defendant pursuant to MCR 2.116(I)(2) in this declaratory judgment action. Plaintiff appeals as of right, arguing that the trial court incorrectly determined that defendant was insured under the policy at issue. We reverse and remand.
The parties agree to the underlying facts of this case:
On June 11, 1994, [defendant] was employed as a police officer with the Village of Lake Linden. While on duty, [defendаnt] stopped to question Ronald Jutila whom he suspected of operating a motor vehicle while under the influence of intoxicating liquors. During the course of his investigation, [defendant] reached into Mr. Jutila’s vehicle. As he did, Ronald Jutila attempted to drive away. [Defendant] became caught on the vehicle, was carried for some distance, and was allegedly injured. It is undisputed that [defendant] was not in, upon, getting in, on, out or off of any vehicle owned by the Village of Lake Linden at the time of his injury.
[Defendant] sued Mr. Jutila. Mr. Jutila’s motor vehicle insurance company settled this suit by paying the $25,000 policy limits under his policy. Because of the amount paid, [defendant] made a claim for underinsurance benefits under his employer’s contract with [plaintiff]. [Plaintiff] denied the claim because [defendant] was not an insured due to the fact that he was not occupying a covered auto at the time of his alleged injuries.
*380 [Plaintiff] filed this declaratory judgment action and moved for summary disposition under MCR 2.116(C)(10) on the issue of whether [defendant] was an insured under the Village’s contract with [plaintiff] for рurposes of the underinsured motorist coverage. . . .
The trial court. . . issued an Order Following Consideration of Motion for Summary Disposition which not only denied [plaintiff’s] motion for summary disposition but, pursuant to MCR 2.116(I)(2), granted summary judgment in appellee’s favor. Judge Hood 1 11 concluded that “construing the policy as Plaintiff suggested would render certain portions of the policy meaningless and such a construction would be contrary to the principles of contract interpretation which mandate that meaning must be given to all terms in an insurance policy.”
On appeal, this Court reviews a grant of summary disposition de novo.
Spiek v Dep’t of Transportation,
Plaintiff insured the Village of Lake Linden with an insurance policy that cоntained provisions relating to underinsured motorist coverage. The key issue to be *381 resolved is whether defendant was insured for under-insured motorist coverage under the policy language. No reported decision of this Court has addressed this issue, specifically whether a policy issued to an entity should be construed to provide coverage to individual employees of the entity on the basis that only employees, and not the entity itself, could suffer personal injuries so as to recover under the policy as written. In other words, if the insured entity could never recover under one portion of the provision as plainly written, should an ambiguity be found in the contract and a different interpretation be given to that portion so that it is not rendered meaningless.
The policy language at issue is as follows:
INSURING AGREEMENT
1. We will pay damages which an “insured” is legally entitled to recover from the owner or operator of an “underinsured motor vehicle” because of bodily injury”:
a. Sustained by an “insured”; and
b. Caused by an accident.
The owner’s or operator’s liability for these damages must arise out of the ownership, maintenance or use of the “underinsured motor vehicle.”
We will pay under this coverage only after the limit of liability under any applicable bodily injury liability bonds or policies have been exhausted by payment of judgments or settlements.
2. “Insured” as used in this endorsement means:
a. You or any “family member.”
b. Any other person occupying “your covered auto.”
c. Any person for damages that person is entitled to recover because of “bodily injury” to which this coverage applies sustained by a person described in a. or b. abоve.
*382 Part of the policy defines the relevant terms as follows:
"You" and "your" mean the person or organization shown as the named insured in item one of the declarations.
The named insured of the policy at issue, as listed in ITEM ONE of the declarations, is the Village of Lake Linden. Its employees are not listed as named insureds.
Michigan case law is replete with guidelines for determining when ambiguities are present in insurance contracts and for determining what to do when an ambiguity is found. A contract is ambiguous when its words can reasonably be understood in different ways.
Raska v Farm Bureau Mut Ins Co of Michigan,
When determining what the parties’ agreement is, the trial court should read the contract as a whole and give meaning to all the terms contained within the policy. The trial court shall give the language contained within the policy its ordinary and plain meaning so that technical and strained constructions are avoided. A policy is ambiguous when, after reading the entire document, its language can be rеasonably understood in different ways. If the trial court determines that the policy is ambiguous, the policy will be construed against the insurer and in favor of coverage. However, if the contract is unambiguous, the trial court must enforce it as written. [Royce v Citizens Ins Co,219 Mich App 537 , 542-543;557 NW2d 144 (1996) (citations omitted; emphasis added).]
In this case, the parties argue over whether the terms “[y]ou or any ‘family member’" cover defendаnt such that he is entitled to underinsured coverage under the policy. If defendant qualifies as the “you” in the provision, he may collect underinsured benefits even if he was not occupying a covered automobile at the time of the injury. A plain reading of the policy precludes coverage for defendant. Reading the policy as a whole, аnd giving ordinary and plain meanings to its terms, the language cannot be reasonably understood to mean village employees and their families. Clearly, the term “you” in the provision refers only to the village. No mention is made of employees. Therefore, under the policy language, plaintiff is only obligated to pay damages to the village or any оf its “fam *384 ily members” that are entitled to “underinsured motor vehicle” coverage because of bodily injury. Our inquiry cannot end with this conclusion, however.
Defendant points out, and the trial court agreed, that a plain interpretation of the language renders the portion of the policy at issue meaningless. Specifically, if a plain interpretation is used, no one is entitled to receive underinsured coverage under the provision because the village cannot sustain bodily injury and cannot have family members who can sustain bodily injury. Because of this, defendant argues that the policy is ambiguous and should be construed to include employees of the village and their families. While we agree that the plain, unconstrained reading renders a portion of the policy meaningless, we disagree that there is an ambiguity. Therefore, we will not construe the language or reform the contract to include, as insureds, village employees and members of their families.
There is authority to support our holding that the contract language is not ambiguous as written and should nоt be reformed so as to include defendant as an insured. Numerous other jurisdictions have addressed this issue. The majority of those jurisdictions have ruled that a policy like the one at issue is not ambiguous and should be construed as written, even if certain provisions are rendered meaningless by a plain reading of the language. The arguments made in those casеs and the language in the policies are substantially similar to those in this case. Several examples are discussed below.
*385
In
Dixon v Gunter,
A contract of insurance should be given a fair and reasonable construction; and likewise should be given a sensible construction, consonant with the apparent object and plain intention of the parties; a construction such as would be given the contract by an ordinary intelligent business man; and a practical and reasonable rather than a literal construction. The contract should not be given a forced, unnatural or unreasonable construction which would extend or restrict the policy beyond what is fairly within its terms, or which would lead to an absurd conclusion or render the policy nonsensical and ineffective. [Id. at 441, citing 44 CJS, Insurance, § 296, pp 1163-1165.]
*386
In
General Ins Co of America v Icelandic Builders, Inc,
24 Wash App 656;
The named insured is the corporation and there is no other designated insured. The policy language describes unambiguously who is insured under the policy. There is no basis for applying rules of construction which [the defendant’s director] seeks to invoke. The courts cannot create an *387 ambiguity when none exists and thereby rewrite a policy. [Id. at 660 (citation omitted).]
In
Meyer v American Economy Ins Co,
Even if... there is no category one coverage if the policy is read to meаn what it unambiguously says, that does not create an ambiguity. If - ■ . defendant has collected premiums for coverage that does not exist, that might provide the corporation with some form of remedy against defendant; it does not mean that plaintiff is covered [however]. [Id. at 163.]
Because there was no ambiguity, the court read the policy as written and deсlined to utilize rules of construction, including the rule that “every provision in the policy must be deemed to mean something,” to reform the contract. Id.
In
Grain Dealers Mut Ins Co v McKee,
Although interpreting an insurance policy to give a reasonable meaning to all provisions is preferable to interpreting the policy in a way that creates surplusage or leaves a portion of the policy useless or inexplicable,.. . surplusage alone does not make an insurance policy ambiguous. Unlike a unique contract tailor-made to the interests peculiar to each party, the um/uim and [personal injury protection] endorsements are standard forms crafted to accommodate a wide variety of insurance needs. [Id. (emphasis added).]
The court noted that the majority of jurisdictions that have considered this issue have found that the language does not create an ambiguity. Id. at 459. It listed numerous other cases to support the majority view. Id.
*389
In most of the minority view cases, the corporations were small, closely knit, family corporations and the courts identified the corporation with the individuals for purposes of the policy.
Hager v American West Ins Co,
In the case at hand, the village is not a closely knit corporation or family business. It is not identified with its employees, but is a separate legal entity. Moreover, we believe thаt the majority approach is more appropriate and adopt it as our own. We cannot accept the proposition that an ambiguity arises whenever a plain reading of policy language renders a portion of the policy meaningless. In other words, we agree with the McKee court that a finding of surplus-age does not equate to a finding of ambiguity. A contract is only ambiguous when its words may reasonably be understood in different ways. Raska, supra at 362.
In this case, there is only one interpretation that can be made when looking at the language as written. Any casual reader, giving ordinary and plain meanings to the language as written, would realize that the insured “you” does not refer to individual employees, but refers only to the village itself. Where the policy language describes unambiguously who is insured under the policy, there is no basis for finding an ambiguity. See Icelandic Builders, supra. Because *390 the policy is clear as written, we are bound by the specific language, Heniser, supra at 160, and will not construe the policy to cover defendant simply to avoid a finding that there is surplus language in the contract.
In this case we find that the provision as written does include surplusage. The policy is sloppily and inartfully drafted. It appears to be a standard policy, which was not tailored to the needs of the village. The language providing coverage to the village and its family members is clearly surplusage because the village cannot sustain bodily injury or have family members. Howеver, as we have previously concluded, our ruling that this language is surplus does not require us to reform the contract. We also note that if the insurer collected premiums for coverage that does not exist, the village may have a remedy against defendant, but this “does not mean that plaintiff is covered”. See Meyer, supra at 163.
On appeal, plaintiff also argues that defendant was not covered under the second portion of the underinsured motorist provision. That language provides underinsured motorist coverage to “[a]ny other person occupying ‘your covered auto.’ ” Defendant does not contest this on appeal, nor did he contest this argument below. Therefore, resolution of this issue is unnecessary.
Reversed and remanded for entry of summary disposition in favor of plaintiff.
Notes
Houghton Circuit Court Judge Garfield W. Hood.