Paul MITCHELL, as Executor of the Estate of Mary S. Mitchell v. Anthony George BROADNAX; Naomi S. Mitchell and Geraldine O‘Dell v. Anthony Broadnax
No. 25539
Supreme Court of Appeals of West Virginia
Submitted Jan. 25, 2000. Decided Feb. 18, 2000.
537 S.E.2d 882
Concurring Opinion of Justice Starcher April 21, 2000. Concurring and Dissenting Opinion of Justice McGraw Oct. 20, 2000.
Mark A. Bramble, Brent K. Kesner, Ellen R. Archibald, Kesner, Kesner & Bramble, Charleston, West Virginia, Attorneys for the Appellee, Anthem Casualty Insurance Company.
Wesley W. Metheney, Paul T. Farrell, Jr., Wilson, Frame, Benninger & Metheney, PLLC, Morgantown, West Virginia, Barry Hill, Law Offices of Barry Hill, Wheeling, West Virginia, Attorneys for Amicus Curiae, West Virginia Trial Lawyers Association.
The appellant herein and plaintiff below, Paul Mitchell [hereinafter “Mitchell“], as executor of the estate of Mary S. Mitchell [hereinafter “Ms. Mitchell” or “the decedent“], appeals from an April 15, 1998, order entered by the Circuit Court of Raleigh County. In that order, the circuit court awarded summary judgment and declaratory judgment to the appellee herein and defendant below, Anthem Casualty Insurance Company [hereinafter “Anthem“],1 and ruled that Anthem was obligated to pay to Mitchell, under the “owned but not insured” exclusion contained in the decedent‘s policy of motor vehicle insurance, uninsured motorist [hereinafter “UM“] benefits equal to the statutorily required minimum limits of such coverage, i.e., $20,000. See
I. FACTUAL AND PROCEDURAL HISTORY
The facts of this case are largely undisputed by the parties. On November 9, 1996, Ms. Mitchell; her daughter, Naomi Mitchell [hereinafter “Naomi“]; and Geraldine O‘Dell [hereinafter “Ms. O‘Dell“] were involved in an automobile accident in Raleigh County, West Virginia, when the 1989 Pontiac Grand Am in which they were traveling was hit by a 1983 Cadillac driven by Anthony George Broadnax [hereinafter “Broadnax“], an uninsured motorist2 who was driving without a
After unsuccessful attempts to recover the UM benefits provided by the Kentucky National and Anthem policies, Paul Mitchell, on behalf of Ms. Mitchell,7 filed this action on March 24, 1997, in the Circuit Court of Raleigh County, seeking to collect the UM benefits provided by both the Kentucky National and Anthem policies.8 Kentucky National ultimately settled with Mitchell and tendered the full policy limits of UM coverage, i.e., $100,000.9 Anthem, however, denied coverage based upon an “owned but not insured” exclusion contained in that policy, which reads:
We do not provide Uninsured Motorists Coverage under this endorsement for property damage or bodily injury sustained by any person while occupying, or when struck by, any motor vehicle owned by you or any family member which is not insured for Uninsured Motorists Coverage under this policy. This includes a trailer of any type used with that vehicle.
Following Anthem‘s motion for summary judgment and declaratory judgment, the circuit court, in an order entered April 15, 1998, found the exclusion to be valid and enforceable above the minimum statutory limits of UM coverage, consistent with our recent holding in Imgrund v. Yarborough, 199 W. Va. 187, 483 S.E.2d 533 (1997).10 The
In our first decision of Mitchell‘s appeal, which was filed on July 16, 1999, and rendered per curiam, we upheld the circuit court‘s ruling. See Mitchell v. Broadnax, No. 25539 (W. Va. July 16, 1999) (per curiam). Upon Mitchell‘s petition for rehearing, we determined the need to further examine the public policy issues inherent in the enforcement of “owned but not insured” exclusions to motor vehicle coverage, based largely upon our conclusion that the parties had not adequately briefed this issue in their original appellate briefs.13 Accordingly, in our August 31, 1999, order granting rehearing, we instructed the parties that our reconsideration of this case would be limited to a consideration of “whether the ‘owned but not insured’ exclusion is against public policy as set forth in West Virginia statutes and/or in case law,” and requested their briefs on rehearing to address the same. Our determination of that narrow issue follows.
II. STANDARD OF REVIEW
On appeal to this Court, Mitchell challenges the propriety of the circuit court‘s decision to award Anthem summary judgment and
In addition to the procedural posture of this case, we also must consider the legal issue at the heart of this matter in determining the applicable standard of review. As we previously have upheld the validity of exclusions to motor vehicle insurance coverage generally, see Syl. pt. 3, Deel v. Sweeney, 181 W. Va. 460, 383 S.E.2d 92 (1989),14 and of “owned but not insured” exclusions specifically, see Syl. pt. 4, Imgrund v. Yarborough, 199 W. Va. 187, 483 S.E.2d 533 (1997),15 we are primarily concerned in this appeal with the public policy considerations attending the incorporation of such exclusions into policies of motor vehicle insurance. Generally, “[a] determination of the existence of public policy in West Virginia is a question of law . . . .” Syllabus point 1, [in part,] Cordle v. General Hugh Mercer Corp., 174 W. Va. 321, 325 S.E.2d 111 (1984).” Syl. pt. 1, in part, Page v. Columbia Natural Resources, Inc., 198 W. Va. 378, 480 S.E.2d 817 (1996). Accordingly, the appropriate standard of review for our deliberation and determination of the public policy issue also is plenary:
“““Where the issue on an appeal from the circuit court is clearly a question of law or involving an interpretation of a statute, we apply a de novo standard of review.” Syllabus point 1, Chrystal R.M. v. Charlie A.L., 194 W. Va. 138, 459 S.E.2d 415 (1995).’ Syllabus point 2, Webster County Commission v. Clayton, 206 W. Va. 107, 522 S.E.2d 201 (1999).”
Syl. pt. 1, State ex rel. McGraw v. Combs Services, 206 W. Va. 512, 526 S.E.2d 34 (1999). Having ascertained the relevant standards of review, we proceed to consider and decide the parties’ arguments.
III. DISCUSSION
With this appeal, we once again are invited to consider the ever-tumultuous realm of motor vehicle insurance law and insurer-incorporated exclusions to such coverage.16 In determining whether enforcement of the “owned but not insured” exclusion17 at issue herein violates the public policy of this State, it is first necessary to review the historical underpinnings which have shaped such exclusions.
The seminal case of Bell v. State Farm Mutual Automobile Insurance Co., 157 W. Va. 623, 207 S.E.2d 147 (1974), was the first of our decisions to definitively consider the validity of “owned but not insured” exclusions. In that case, plaintiff Bell was involved in an accident with an uninsured motorist while riding her motorcycle, which she
Issuing its opinion, the Court ultimately found the “owned but not insured” exclusions to be void and inoperative to preclude Bell‘s recovery of UM benefits under her and her father‘s policies of insurance. To reach this conclusion, the Court first examined the public policy attending this State‘s motor vehicle insurance laws:
As automobile transportation has attained a pervasive status in the organization of society and commerce, the State has a legitimate interest in assuring that the burden of loss in owning, operating, and maintaining automobiles be justly and equitably distributed. For this reason the Legislature has enacted the
West Virginia Uninsured Motorist Law, Code, 33-6-31 , as amended, which contains specific requirements applicable to insurance underwriters. This statute regulates, in part, the relationship between an insured and the insurer, and, therefore, an insurance contract cannot alter the terms as provided by the statute....
Bell, 157 W. Va. at 627, 207 S.E.2d at 150. Recognizing the State‘s preeminent interest in protecting its citizens from the financial burdens of collisions with uninsured motorists, this Court held that policies of motor vehicle insurance are required to comply with the statutory requirements of
The
Uninsured Motorist Law, Chapter 33, Article 6, Section 31, Code of West Virginia, 1931 , as amended, governs the relationship between an insured and insurer and provisions within a motor vehicle insurance policy which conflict with the requirements of the statute, either by adding to or taking away from its requirements are void and ineffective.
Syl. pt. 1, Bell, 157 W. Va. 623, 207 S.E.2d 147. Then, invalidating the “owned but not insured” exclusion at issue in that appeal, the Bell Court ostensibly found that such a limitation of coverage conflicted with the statutory requirements requiring UM insurance:
An exclusionary clause within a motor vehicle insurance policy issued by a West Virginia licensed insurer which excludes uninsured motorist coverage for bodily injury caused while the insured is occupying an owned-but-not-insured motor vehicle is void and ineffective under
Chapter 33, Article 6, Section 31, Code of West Virginia, 1931 , as amended.
Syl. pt. 2, id. Therefore, the “owned but not insured” exclusions were deemed to be void, and Bell was permitted to recover her requested UM benefits.
Following Bell, the legal history of motor vehicle exclusions momentarily veered off the path of judicial precedent and turned sharply towards the legislative arena. In 1979, the West Virginia Legislature substantially amended the UM law of this State by adding to
(k) Nothing contained herein shall prevent any insurer from also offering benefits and limits other than those prescribed herein, nor shall this section be construed as preventing any insurer from incorporating in such terms, conditions and exclusions as may be consistent with the premium charged.[18]
Thereafter, this Court was presented with another case involving “owned but not insured” exclusions to motor vehicle insurance, Deel v. Sweeney, 181 W. Va. 460, 383 S.E.2d 92 (1989). Unlike the plaintiff in Bell, however, Deel attempted to recover underinsured motorist [hereinafter “UIM“] benefits. Plaintiff Deel was involved in an accident with Sweeney. Sweeney was an uninsured motorist, but the vehicle he was driving at the time of the accident, which was owned by Ramsey, was insured. Additionally, Deel owned the vehicle he was driving at the time of the accident and insured the same, but he did not carry UIM coverage. After recovering insurance benefits from Ramsey‘s insurer, Deel attempted to recover UIM benefits from his father‘s policy of motor vehicle insurance.19 This policy, like the ones at issue in Bell, contained an “owned but not insured” exclusion upon which the issuing insurer based its declination of UIM coverage. Deel, 181 W. Va. at 461-62, 383 S.E.2d at 93-94.
In deciding Deel, this Court considered its prior decision in the Bell case and reiterated those tenets by holding that “[s]tatutory provisions mandated by the
Insurers may incorporate such terms, conditions and exclusions in an automobile insurance policy as may be consistent with the premium charged, so long as any such exclusions do not conflict with the spirit and intent of the uninsured and underinsured motorist statutes.
Syl. pt. 3, Deel v. Sweeney, 181 W. Va. 460, 383 S.E.2d 92. Based upon this permissive provision and the fact that UIM coverage is optional, and not mandatory, as is the case with UM coverage, 181 W. Va. at 463, 383 S.E.2d at 95, the Deel Court held the “owned but not insured” exclusion valid and quashed Deel‘s attempt to recover UIM benefits under his father‘s insurance policy.
This brings us now to our most recent decision impacting the viability of “owned but not insured” exclusions, Imgrund v. Yarborough, 199 W. Va. 187, 483 S.E.2d 533 (1997).20 The facts of Imgrund are akin to those presented by Bell and Deel. Imgrund was involved in an accident while he was riding a motorcycle which he owned and for which he had purchased motor vehicle insurance. Yarborough, the other driver involved in the accident, was uninsured. Imgrund successfully recovered UM benefits from his own insurance policy, and, as he was living with his parents at the time of the accident, attempted to collect additional benefits from his parents’ policy of motor vehicle insurance, which insured their two vehicles. Again, however, the policy under which the plaintiff sought to recover contained an “owned but not insured” exclusion to coverage, and the issuing insurer denied coverage on this basis. 199 W. Va. at 188-89, 483 S.E.2d at 534-35.
When faced with the question of the exclusion‘s validity in Imgrund, we were forced to reconcile our prior decisions in this field. On the one hand, Bell expressly denied the validity of “owned but not insured” exclusions, while on the other hand, Deel acknowledged the Legislature‘s allowance of motor vehicle insurance exclusions and found such a limitation to be valid and effective in denying UIM benefits. 199 W. Va. at 192, 483 S.E.2d at 538. Appreciating this inconsistency, this Court in Imgrund carefully balanced our conflicting precedents while adhering to the statutory provisions governing UM insurance and enabling insureds to
An “owned but not insured” exclusion to uninsured motorist coverage is valid and enforceable above the mandatory limits of uninsured motorist coverage required by
W. Va. Code §§ 17D-4-2 (1979) (Repl. Vol. 1996) and33-6-31(b) (1988) (Supp. 1991). To the extent that an “owned but not insured” exclusion attempts to preclude recovery of statutorily mandated minimum limits of uninsured motorist coverage, such exclusion is void and ineffective consistent with this Court‘s prior holding in Syllabus Point 2 of Bell v. State Farm Mutual Automobile Insurance Company, 157 W. Va. 623, 207 S.E.2d 147 (1974).
Syl. pt. 4, Imgrund v. Yarborough, 199 W. Va. 187, 483 S.E.2d 533. We therefore found the “owned but not insured” exclusion in Imgrund‘s parents’ policy to be valid.
Having recounted the historical treatment of “owned but not insured” exclusions to motor vehicle insurance coverage in this State, we turn our attention to the facts and circumstances of the instant appeal. In this case, like Imgrund and Bell, the plaintiff seeking to recover UM benefits was involved in an accident with an uninsured motorist. See Imgrund, 199 W. Va. at 188, 483 S.E.2d at 534; Bell, 157 W. Va. at 624, 207 S.E.2d at 148. Furthermore, Ms. Mitchell, who partly-owned the accident vehicle, like Imgrund, who wholly-owned the accident vehicle, recovered the full policy limits of UM benefits from the insurance company providing coverage for the vehicle involved in the collision. See Imgrund, 199 W. Va. at 189, 483 S.E.2d at 535. Unlike Imgrund, however, and more akin to the insurance facts of Bell, Ms. Mitchell also sought to collect benefits from her own policy of insurance which insured her separately-owned vehicle, but was precluded from doing so by the “owned but not insured” exclusion contained in that policy.21 See Bell, 157 W. Va. at 625-26, 207 S.E.2d at 149. As we have yet to consider this particular fact pattern in light of the Legislature‘s allowance of insurance policy exclusions pursuant to
In deciding whether a public policy violation is imminent, we consider both the facts and the law relevant to our inquiry. Stated otherwise, decision of a public policy issue is a legal query, but such a determination is made on a case-by-case basis: “““[i]t is a question of law which the court must decide in light of the particular circumstances of each case.““” Morris v. Consolidation Coal Co., 191 W. Va. 426, 433 n. 5, 446 S.E.2d 648, 655 n. 5 (1994) (quoting Cordle v. General Hugh Mercer Corp., 174 W. Va. at 325, 325 S.E.2d at 114 (quoting Allen v. Commercial Cas. Ins. Co., 131 N.J.L. 475, 477-78, 37 A.2d 37, 39 (1944) (citations omitted))). Where public policy issues are concerned,
“[t]he rule of law, most generally stated, is that ‘public policy’ is that principle of law which holds that ‘no person can lawfully do that which has a tendency to be injurious to the public or against public good . . .’ even though ‘no actual injury’ may have resulted therefrom in a particular case ‘to the public.’ . . .
“The sources determinative of public policy are, among others, our federal and state constitutions, our public statutes, our judicial decisions, the applicable principles of the common law, the acknowledged prevailing concepts of the federal and state governments relating to and affecting the safety, health, morals and general welfare of the people for whom government—with us—is factually established.”
Id. With these precepts in mind, then, we must carefully weigh the factual and legal components of the instant appeal.
At the center of the instant controversy is the policy of motor vehicle insurance provided by Anthem to Ms. Mitchell and containing a limitation to her UM coverage in the form
seeks to assure at least minimum relief from the consequences of a loss caused by an uninsured motorist. Because every citizen is exposed to the risk of loss, the Legislature has provided through the uninsured motorist statute that the burden of loss should be distributed among all owners of insured motor vehicles registered in West Virginia....
Bell, 157 W. Va. at 627, 207 S.E.2d at 150. Given that the purpose of UM insurance is to alleviate the financial burdens of West Virginia motorists who are involved in accidents with other motorists who are uninsured,23 we have specifically held that “[t]he uninsured motorist statute,
It is precisely this same UM statute upon which our prior decisions validating “owned but not insured” exclusions have based their rulings. See Syl. pt. 4, Imgrund, 199 W. Va. 187, 483 S.E.2d 533; Syl. pt. 3, Deel, 181 W. Va. 460, 383 S.E.2d 92. With specific regard to the public policy issue at hand, subsection (k) of
“‘The primary object in construing a statute is to ascertain and give effect to the intent of the Legislature.’ Syllabus point 1, Smith v. State Workmen‘s Compensation Commissioner, 159 W. Va. 108, 219 S.E.2d 361 (1975).” Syllabus point 6, State ex rel. ACF Industries, Inc. v. Vieweg, 204 W. Va. 525, 514 S.E.2d 176 (1999).
Syl. pt. 3, Daily Gazette Co., Inc. v. West Virginia Dev. Office, 206 W. Va. 51, 521 S.E.2d 543 (1999). Moreover, when we interpret a statutory provision, this Court is bound to apply, and not construe, the enactment‘s plain language. Syl. pt. 4, Daily Gazette Co., Inc. v. West Virginia Dev. Office, 206 W. Va. 51, 521 S.E.2d 543 (““A statutory provision which is clear and unambiguous and plainly expresses the legislative intent will not be interpreted by the courts but will be given full force and effect.” Syl. Pt. 2, State v. Epperly, 135 W. Va. 877, 65 S.E.2d 488 (1951).’ Syllabus point 1, State v. Jarvis, 199 W. Va. 635, 487 S.E.2d 293 (1997).“); DeVane v. Kennedy, 205 W. Va. 519, 529, 519 S.E.2d 622, 632 (1999) (“Where the language of a statutory provision is plain, its terms should be applied as written and not construed.” (citations omitted)). Although a provision‘s language may be plain, there nevertheless may arise circumstances in which the plain language does not speak completely on the subject to which it is addressed. Therefore,
“[t]hat which is necessarily implied in a statute, or must be included in it in order to make the terms actually used have effect, according to their nature and ordinary meaning, is as much a part of it as if it had been declared in express terms.” Syllabus point 14, State v. Harden, 62 W. Va. 313, 58 S.E. 715 (1907).
“[i]t is the duty of a court to construe a statute according to its true intent, and give to it such construction as will uphold the law and further justice. It is well the duty of a court to disregard a construction, though apparently warranted by the literal sense of the words in a statute, when such construction would lead to injustice and absurdity.” Syl. pt. 2, Click v. Click, 98 W. Va. 419, 127 S.E. 194 (1925).
Syl. pt. 2, Pristavec v. Westfield Ins. Co., 184 W. Va. 331, 400 S.E.2d 575 (1990).
Reviewing the pertinent language of subsection (k), we are convinced that the language states, in plain and comprehensible terms, that an insurer may include in a policy of motor vehicle insurance an exclusion. See
At this juncture, we wish also to clarify our prior holdings, particularly in Deel and in Imgrund, wherein we found exclusions to policies of motor vehicle insurance to be statutorily permissible. See Syl. pt. 4, Imgrund, 199 W. Va. 187, 483 S.E.2d 533; Syl. pt. 3, Deel, 181 W. Va. 460, 383 S.E.2d 92. As is customary with the interpretation of legislative enactments, a finding that a particular provision is legally sound presupposes that the actor, whose conduct the statute was designed to govern, has satisfied the requirements thereof. Therefore, we hold further that when an insurer has failed to satisfy the statutory criteria of
Looking now to the facts with which we are confronted in the instant appeal, we are unable to locate in the appellate record any evidence that Anthem satisfied its statutory duty by adjusting Ms. Mitchell‘s policy premium to account for the inclusion of her “owned but not insured” exclusion. If such proof of a premium adjustment was, in fact, proffered to the lower court, the parties had a burden of preserving such evidence for appellate consideration. “The responsibility and burden of designating the record is on the parties, and appellate review must be limited to those issues which appear in the record presented to this Court.” Syl. pt. 6, In re Michael Ray T., 206 W. Va. 434, 525 S.E.2d 315 (1999). Absent proof of these facts, we cannot determine whether Anthem properly included the “owned but not insured” exclusion in Ms. Mitchell‘s policy of insurance.
Neither can we find in the appellate record any indication that the circuit court weighed the limitation of coverage with the corresponding policy premium in awarding Anthem summary judgment and declaratory judgment. As with facts not appearing in the record below, this Court is also limited in its ability to consider, for the first time on appeal, issues which a lower tribunal has not yet deliberated and decided.
““In the exercise of its appellate jurisdiction, this Court will not decide nonjurisdictional questions which were not considered and decided by the court from which the appeal has been taken.” Syllabus Point 1, Mowery v. Hitt, 155 W. Va. 103[, 181 S.E.2d 334] (1971).’ Syl. pt. 1, Shackleford v. Catlett, 161 W. Va. 568, 244 S.E.2d 327 (1978).” Syllabus point 3, Voelker v. Frederick Business Properties Co., 195 W. Va. 246, 465 S.E.2d 246 (1995).
Syl. pt. 7, In re Michael Ray T., 206 W. Va. 434, 525 S.E.2d 315. Given the lack of record evidence suggesting that the circuit court contemplated whether Anthem‘s exclusion correlated to the policy premiums it charged Ms. Mitchell, we cannot rule definitively on the propriety of the circuit court‘s decision to uphold the exclusion above the statutorily required minimum limits for UM coverage. Accordingly, we vacate the circuit court‘s order finding the “owned but not insured” exclusion to be valid above the statutory limits of UM coverage, in accordance with our prior holding in Syllabus point 4 of Imgrund v. Yarborough, 199 W. Va. 187, 483 S.E.2d 533, and remand this matter for further proceedings consistent with this opinion and pursuant to our instructions delineated below. Upon reconsideration of this matter, we direct the circuit court to base its determination of whether Anthem appropriately adjusted Ms. Mitchell‘s premium to reflect the “owned but not insured” exclusion contained in her policy, as well as its final decision regarding the exclusion‘s validity, upon the evidence already contained in the record of this case. In other words, we do not believe that special deference should be accorded to Anthem to permit it to make a new or more detailed record of its alleged premium adjustments when, pursuant to our holding in Syllabus point 7 of McMahon & Sons rendered over a decade ago, insurers have long been charged with the burden of proving facts necessary to permit the enforcement of their policy exclusions. See Syl. pt. 7, 177 W. Va. 734, 356 S.E.2d 488 (“An insurance company seeking to avoid liability through the operation of an exclusion has the burden of proving the facts necessary to the operation of that exclusion.“).
Before concluding our discussion herein, we would like to take this opportunity to speak on a matter that has troubled us during our decision of this case. Policies of insurance, including those providing coverage for motor vehicles, are regulated and ap-
[t]he commissioner shall disapprove any such form of policy, application, rider, or endorsement or withdraw any previous approval thereof:
(a) If it is in any respect in violation of or does not comply with this chapter.
(b) If it contains or incorporates by reference any inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract.
(c) If it has any title, heading, or other indication of its provisions which is misleading.
(d) If the purchase of such policy is being solicited by deceptive advertising.
(e) If the benefits provided therein are unreasonable in relation to the premium charged.
(f) If the coverages provided therein are not sufficiently broad to be in the public interest.
(Emphasis added). Thus, it is apparent that the Legislature has vested the Commissioner with sufficient authority to reject policy provisions which do not clearly and accurately inform the insured as to the coverage provided by such policy.
Despite the Commissioner‘s regulatory powers, we are mindful, from the policy language at issue in this case, that two marginally viable practices continue to accompany the incorporation of insurance policy exclusions. First, we observe that the “owned but not insured” exclusion in this case, though it was clearly designated as a limitation of the available UM coverage, most likely would not have been apparent to the majority of insurance consumers given its less-than-prominent placement in the appropriate policy endorsement. We previously have counseled insurance companies that
[a]n insurer wishing to avoid liability on a policy purporting to give general or comprehensive coverage must make exclusionary clauses conspicuous, plain, and clear, placing them in such a fashion as to make obvious their relationship to other policy terms, and must bring such provisions to the attention of the insured.
Syl. pt. 10, 177 W. Va. 734, 356 S.E.2d 488. Therefore, we urge the Commissioner to review proffered policies of insurance to ensure that coverage exclusions are not so incognito as to be deceptive or misleading as to the true scope of coverage available to the insured. See
Second, the Commissioner is obligated to uphold the law of this State and to reject any policy, endorsement, and the like “[i]f it is in any respect in violation of or does not comply with this chapter.”
In conclusion, we charge the West Virginia Insurance Commissioner to be ever vigilant in safeguarding the rights of insurance consumers in this State while upholding the law permitting insurers to incorporate exclusions to coverage.
IV. CONCLUSION
For the foregoing reasons, the April 15, 1998, order of the Circuit Court of Raleigh County is hereby vacated, and this matter is hereby remanded to that court for further proceedings consistent with this opinion.
Vacated and Remanded.
STARCHER, Justice, concurring.
(Filed April 21, 2000)
I concur with the majority‘s analysis of our uninsured motorist insurance statute. I agree that the statute requires an insurance carrier to demonstrate that it has “appropriately adjusted” the premiums for an automobile insurance policy (which ostensibly provides comprehensive coverage) to reflect that the coverage has in fact been reduced or eliminated through an exclusion buried in the policy. Our insurance laws plainly require insurance companies to ensure that any exclusion written into an automobile insurance policy be “consistent with the premium charged,” and to also tell the consumer in plain language when an “exception or condition” in any type of insurance policy limits the general coverage which the consumer assumes they are purchasing.
This case is another example of the axiom that “what the big print giveth, the small print taketh away.” As former Justice Neely eloquently stated, “In most insurance cases, the plaintiffs pay for and believe they have insurance, to discover only after disaster strikes, no insurance. The insurer has the plaintiff‘s money and after the disaster—fire, death or accident—informs the plaintiffs that no insurance covers the fire, death or accident.” Keller v. First National Bank, 184 W. Va. 681, 684, 403 S.E.2d 424, 427 (1991).
The problem in most insurance cases lies in the fact that, unlike most consumer purchases, what consumers believe they are buying is not the product that the insurance company actually sells and delivers. The insurance company markets its product through brochures and advertisements that assure the consumer they will be in “good hands.” The insurance consumer buys the
I firmly believe that insurance companies can define the risks they are insuring against by using exclusions and conditions in insurance policies. However, I also believe, as the majority opinion recognizes, that insurance companies have an affirmative duty to advise consumers of the existence of such limiting exclusions and conditions in a policy, and to advise consumers—before litigation occurs—that the company has adjusted the premiums so that the policy reflects the reduction or elimination of coverage caused by an exclusion.
The majority‘s focus in this case was on the fundamental unfairness of the Anthem “owned but not insured” exclusion. The record from the circuit court contains little evidence of the circumstances surrounding Mary Mitchell‘s purchase of insurance from Anthem, and little evidence of how Anthem communicated the exclusion to Mary Mitchell. There is absolutely no evidence in the appellate record regarding whether Anthem reduced its premiums to reflect the exclusion, and if so, whether that reduction was communicated to Mary Mitchell.
As best I can tell from the record, Mary Mitchell never asked for the exclusion, never bargained for the exclusion, and never knew it existed until after she (and later her estate) sought coverage. Mary Mitchell bought $300,000 in coverage. Anthem refused to pay anything at all. Only after months of litigation did Anthem even agree to pay a mere $20,000 in coverage.
The briefs of the attorneys for the parties inadequately discussed the statutes, case law, and public policy surrounding how we should interpret
I write separately to emphasize the impact that the majority‘s opinion will have on the future handling of insurance claims in West Virginia. Surprising a policyholder, after a fire, death or accident, with an exclusion that no rational, honest person would expect to find in a comprehensive insurance policy is fundamentally unfair. The majority‘s opinion crafts a framework for how an insurance company bears the burden of eliminating that policyholder surprise by (1) telling the policyholder, up front, before they make a claim, that their policy contains exclusions and that “there is no coverage for this, this, and that;” and (2) telling the policyholder how much it has reduced their premiums because of the exclusions.1
I write to fill in the framework built in the majority‘s opinion.
In simple terms, the Court‘s decision is based on the premise that consumers do not read (and even if they do read, cannot understand) the terms that insurance companies use in insurance policies. Insurance companies give consumers the impression that they have full coverage under a comprehensive policy, and routinely fail to tell the consumer in plain English of the existence and the meaning of the legalistic exclusions that the insurance company has buried in a policy. So, when an insurance company seeks to
A. Consumers neither Read nor Understand Insurance Policies
A fundamental precept of our insurance statutes and our case law is the recognized fact that insurance consumers do not, repeat, DO NOT, read insurance policies.
In the average, non-insurance contract case, courts will not excuse a party‘s failure to read the contract. Nevertheless, insurance contracts are treated differently by courts, in part because they are not freely negotiated agreements between the insurance carrier and the policyholder. Also, the policyholder‘s decision to purchase insurance is often not entirely voluntary. For example, West Virginia law requires vehicle owners to purchase liability and uninsured motorist coverage, and banks require people who borrow money to buy property insurance to insure their new home or comprehensive and collision coverage to insure their new car.
Furthermore, a policyholder buys a policy as a completed “product,” a standardized “fill-in-the-blanks” contract form that is essential to our system of mass production and distribution. By using these standardized forms, an insurance company simplifies the insurance purchasing process, and thereby reduces the overall costs of insurance. Consumers who buy a standard form insurance policy know that they cannot have the product changed or customized, and must take what they are given.2 Hence, both the insurance agent and the policyholder know that it would be pointless for the policyholder to scrutinize the specific language and terms of the policy. The drafters of the Restatement of Contracts (Second), in their discussions regarding contracts of adhesion like an insurance policy, recognized that:
A party who makes regular use of a standardized form of agreement does not ordinarily expect his customers to understand or even to read the standard terms. One of the purposes of standardization is to eliminate bargaining over details of individual transactions, and that purpose would not be served if a substantial number of customers retained counsel and reviewed the standard terms. Employees regularly using a form often have only a limited understanding of its terms and limited authority to vary them. Customers do not in fact ordinarily understand or even read the standard terms. They trust to the good faith of the party using the form and to the tacit representation that like terms are being accepted regularly by others similarly situated. But they understand that they are assenting to the terms not read or not understood, subject to such limitations as the law may impose.
Restatement of Contracts (Second), § 211, comment b [1981] (emphasis added).
In sum, how insurance companies sell insurance policies dictates how those policies will be interpreted by the courts.
“[O]nly by acknowledging that the conditions of an insurance contract are for the most part dictated by the insurance companies and that the insured cannot ‘bargain’ over anything more than the monetary amount of coverage purchased, does our analysis approach the realities of an insurance transaction.”
Collister v. Nationwide Life Ins. Co., 479 Pa. 579, 593, 388 A.2d 1346, 1353 (1978).3 Be-
Another corollary problem with interpreting insurance contracts is the knowledge of the parties to the contract. An insurance company drafts insurance policy language in light of the statutes of dozens of different states, and in light of the varying interpretations by courts of the statutes and policy language. Policy language is also drafted to reflect the types of claims that are filed by policyholders. The policyholder lacks such knowledge, and therefore lacks an understanding of the factual and legal context into which the insurance company designs a policy provision to fit.4
Another important consideration is that most insurance consumers do not even see—repeat, DO NOT EVEN SEE—the policy that they purchased until after they have paid the premiums.5 It is therefore unfair to
B. Reasonable Expectations of the Policyholder
Professor Keeton, in his seminal article on the interpretation of insurance contracts, says that courts routinely, implicitly acknowledge that insurance policies are contracts of adhesion, and that insurance consumers do not read, and if they did would not understand, insurance policies. In response to this acknowledged problem, courts often act to prohibit insurance companies from having any unfair or unconscionable advantage in insurance transactions. Additionally, courts interpret insurance contracts in a way that will honor the reasonable expectations of policyholders and beneficiaries, regardless of the details of the policy language. R. Keeton, “Insurance Law Rights at Variance with Policy Provisions,” 83 Harv. L. Rev. 961 [1970]. Professor Keeton suggests that courts have used a number of strategies to achieve these goals, including finding policy language to be ambiguous, or invoking contractual theories of detrimental reliance or unconscionability.
When a policy is read by a court against an insurance company in a manner that is at variance with the technical language of the insurance policy, observers often shrug, explaining the court‘s decision with “the ambivalent, suggestive, and wholly unsatisfactory aphorism: ‘It‘s an insurance case.‘” Id.
To give meaning to decades of conflicting court decisions, Professor Keeton distilled a fundamental principle that underlies most insurance cases, and “that insurance law ought to [openly] embrace.” 83 Harv. L. Rev. at 967. The principle he distilled is this:
The objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have gone to negated those expectations.
Id.
Seventeen years later, this Court followed Professor Keeton‘s suggestion and embraced this legal principle. In Syllabus Point 8 of National Mut. Ins. Co. v. McMahon & Sons, Inc., 177 W. Va. 734, 356 S.E.2d 488 (1987), we held that:
With respect to insurance contracts, the doctrine of reasonable expectations is that the objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations.
Our Legislature has established by law a similar rule as the public policy of this State. Our insurance laws state that an insurance carrier may not issue an insurance policy which contains “exceptions or conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract.”
An insurance company‘s statutory responsibility to fully convey to a policyholder the effect that an exception or condition will have upon the risk purported to be assumed by the general coverage of the policy is parallel to its obligation of fulfilling the reasonable expectations it has created in its policyholders.
“The rule of reasonable expectations applies if there is a dispute as to the existence of insurance coverage.” Tynan‘s Nissan, Inc. v. American Hardware Mut. Ins. Co., 917 P.2d 321 (Colo. Ct. App. 1995). The doctrine exists to insure that the insurance consumer‘s reasonable expectations are fulfilled—every consumer has a right to expect they will receive something of comparable value in return for the premiums they have paid.
A contract to provide insurance should be interpreted and applied as a layman would understand the contract, based upon the entire insurance purchasing transaction, and not according to an after-the-fact interpretation given by sophisticated underwriters and lawyers. The expectations of the average consumer should be enforced regardless of any ambiguity in the policy language.8
When the actions of the insurance company and its agents (through their advertisements, brochures, statements, applications, policies, conditional receipts, or whatever) give a consumer a reasonable expectation that insurance coverage for an event has been purchased, then courts should enforce that reasonable expectation, regardless of the policy language.
Courts should also keep alert to the fact that the expectations of the insured are in large measure created by the insurance industry itself. Through the use of lengthy, complex, and cumbersomely written applications, conditional receipts, riders, and policies, to name just a few, the insurance industry forces the insurance consumer to rely upon the oral representations of the insurance agent. Such representations may or may not accurately reflect the contents of the written document and therefore the insurer is often in a position to reap the benefit of the insured‘s lack of understanding of the transaction. . . . Courts must examine the dynamics of the insurance transaction to ascertain what are the reasonable expectations of the consumer. Collister v. Nationwide Life Ins. Co., 479 Pa. 579, 594-95, 388 A.2d 1346, 1353-54 (1978).
Thus, in a situation in which the public may reasonably expect coverage, an exclusion must be conspicuous, plain and clear. Ninety years ago one court recognized that insurance consumers do not read policies and exclusions, and usually could not understand their implications if they did. That court suggested that as a solution, before a policy exclusion would be enforced, the insurance company would be required to bring the provision to the attention of the insurance consumer. The court stated, when discussing whether to enforce an exclusion:
It is a matter almost of common knowledge that a very small percentage of policy holders are actually cognizant of the provisions of their policies and many of them are ignorant of the names of the companies issuing the said policies. The policies are prepared by the experts of the companies, they are highly technical in their phraseology, they are complicated and voluminous—the one before us covering thirteen pages of the transcript—and in their numerous conditions and stipulations furnishing what sometimes may be veritable traps for the unwary. The insured usually confides implicitly in the agent securing the insurance, and it is only just and equitable that the company should be required to call specifically to the attention of the poli-
cy holder such provisions as the one before us.
Raulet v. Northwestern National Ins. Co. of Milwaukee, 157 Cal. 213, 230, 107 P. 292, 298 (1910).
When an exclusion is not brought to the attention of a policyholder, it would be unjust to apply the unknown provision to void the coverage which the policyholder fully and justifiably expects to be provided by the policy. As another California appeals court stated, nearly 30 years ago:
It is now firmly settled that insurance contracts are contracts of adhesion between parties not equally situated. Consequently, the insurer, as the dominant and expert party in the field, must not only draft such contracts in unambiguous terms but must bring to the attention of the insured all provisions and conditions which create exceptions or limitations on the coverage.
Young v. Metropolitan Life Ins. Co., 272 Cal. App. 2d 453, 460-61, 77 Cal. Rptr. 382, 387 (1969). Another court suggested that “verbal vacuity” could not “serve as clear and plain notice to the insured of noncoverage.” Steven v. Fidelity and Casualty Co. of New York, 58 Cal. 2d 862, 872, 27 Cal. Rptr. 172, 178, 377 P.2d 284, 290 (1962). From these precedents, a later court gleaned a general principle of public policy:
In the case of standardized insurance contracts, exceptions and limitations on coverage that the insured could reasonably expect, must be called to his attention, clearly and plainly, before the exclusions will be interpreted to relieve the insurer of liability or performance.
Logan v. John Hancock Mut. Life Ins. Co., 41 Cal. App. 3d 988, 995, 116 Cal. Rptr. 528, 532 (1974).9
As the majority opinion states, an insurance carrier bears the burden of dispelling a policyholder‘s reasonable expectations. The insurance company must prove that a policyholder has been affirmatively apprised of all exclusions in a policy that limit any “general coverage” that a policyholder has purchased and reasonably expects will exist to indemnify against a particular loss. We discussed this duty of an insurance carrier in National Mut. Ins. Co. v. McMahon & Sons, Inc., supra, where we stated at Syllabus Point 10 that “An insurer wishing to avoid liability on a policy purporting to give general or comprehensive coverage . . . must bring such [exclusionary] provisions to the attention of the insured.”
The doctrine of reasonable expectations thus limits an insurance carrier‘s use of exclusions in one portion of a policy to eliminate a broad grant of coverage in another portion of the policy. In other words, an insurance company may not give with the big print and take away with the small print, when the big print reasonably gave the purchaser of the policy an expectation of coverage. An insurance company has an affirmative duty to inform an insurance consumer what they are purchasing; it is not the duty of the consumer to seek out exclusions, limitations and conditions which are not plainly revealed to him or her.
If an insurance company wishes to avoid liability on an insurance policy through the operation of an exclusion or other policy condition, it must do so in clear and unequivocal language. Furthermore, the insurance company must call such limiting conditions to the attention of the insured, and explain the effect of the condition. Absent such a disclosure, the policy coverage will be deemed to be that which could be expected by the ordinary lay person.
C. Conclusion
On remand, the circuit court should consider whether Mary Mitchell had a reasonable expectation of uninsured motorist coverage. Additionally, the circuit court should determine whether Anthem brought the “owned but not insured” exclusion to Mrs. Mitchell‘s attention, and told her the premiums for the policy had been reduced along with her coverage.
I see nothing in the existing record to suggest that Anthem directed Mary Mitchell‘s attention to the exclusion they assert is controlling in her insurance policy. “The law expects an insurance salesman to tell an insurance consumer that an insurance product does not do what the consumer would expect it to do.” Kelly v. Painter, 202 W. Va. 344, 349, 504 S.E.2d 171, 176 (1998) (Starcher, J., concurring).
Mary Mitchell bought $300,000 of insurance to protect her against uninsured motorists like Anthony Broadnax. Anthem should not be permitted to surprise Mary Mitchell with an exclusion of which she was not aware and for which she did not bargain. If Anthem never told her of the exclusion, and never explained its effect, and never told her it cut her premiums by a few dollars to account for the exclusion, then Anthem should not be allowed, after-the-fact, to try to rely on the exclusion to avoid its responsibilities under the policy.10
The result reached by the circuit court, in enforcing the exclusion, was patently unfair.
I therefore concur.
MCGRAW, Justice, concurring in part, and dissenting in part.
(Filed Oct. 20, 2000)
While I agree that the circuit court‘s award of summary judgment must be reversed in this case, I do so without joining the majority in embracing the logic of Imgrund v. Yarborough, 199 W. Va. 187, 483 S.E.2d 533 (1997), or its precursor, Deel v. Sweeney, 181 W. Va. 460, 383 S.E.2d 92 (1989). Although both of these cases work from the premise that policy exclusions must not conflict with the “spirit and intent” of the uninsured and underinsured motorist statutes, Deel, 181 W. Va. at 463, 383 S.E.2d at 95, neither appears to recognize that the “owned-but-not-insured” exclusion is, in fact, wholly at odds with the basic requirements of
In Bell, the Court held that the owned-but-not-insured exclusion was void as against public policy because it conflicted with the requirements of § 33-6-31(b) & (c). Specifically, the Bell Court looked at both language from subsection (b), requiring that all automobile insurance policies must contain “provisions undertaking to pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle,” (emphasis added), and the corresponding definition of an “insured” contained in subsection (c), then defined to mean “the named insured and, while resident of the same household, the spouse of any such named insured, and relatives of either, while in a motor vehicle or otherwise.” The Court noted that the statute makes “no distinctions with regard to an owned but not insured motor vehicle, as the coverage applies to use or occupancy of ‘a motor vehicle or otherwise,‘” Bell, 157 W. Va. at 627, 207 S.E.2d at 149-50 (emphasis in original), and went on to hold that “because the [owned-but-not-insured] exclusionary clause[ ][is] more restrictive than the uninsured motorist statute or add[s] requirements not authorized by the uninsured motorist statute, [it is] repugnant to the statute and therefore void,” id. at 627, 207 S.E.2d at 150.
At the core of Bell is a comprehension that the statute‘s use of the phrase “while in a motor vehicle or otherwise” requires that uninsured motorist coverage attach to persons, not to particular insured vehicles.1 Significantly, following the Court‘s decision in Bell, the Legislature amended subsection (c) to provide that an “insured” would further be defined to encompass “any person ... who uses, with the consent, expressed or implied, of the named insured, the motor vehicle to which the policy applies.” 1979 W. Va. Acts ch. 61. Rather than repudiating Bell‘s interpretation of subsection (c) as necessitating “person-oriented” coverage, the Legislature in fact embraced this distinction, since the amendment tethered coverage for non-householders to use of the insured vehicle.
Notably, Bell is in accord with decisions from other jurisdictions, which have held that similar statutory language, focused as it is upon securing uninsured motorist coverage for the “insured” rather than a particular insured vehicle, makes such coverage “person oriented” and not “vehicle oriented.”2
As the Michigan Supreme Court stated in Bradley v. Mid-Century Ins. Co., 409 Mich. 1, 24, 294 N.W.2d 141, 145 (1980), “[t]he coverage is portable: The insured and family members are covered not only when occupying the covered vehicle, but also when in another automobile, and when on foot, on a bicycle or even sitting on a porch.”
The status of the named insured and his relatives as persons insured against negligent uninsured motorists is not altered by there being other family vehicles having no uninsured motorist coverage. They acquire their insured status when coverage is purchased for any household vehicle. Thereafter, they are insured no matter where they are injured. They are insured when injured in an owned vehicle named in the policy, in an owned vehicle not named in the policy, in an unowned vehicle, on a motorcycle, on a bicycle, whether afoot or on horseback or even on a pogo stick. Id. at 38, 294 N.W.2d at 152.
What is so striking about Imgrund and Deel is the fact that neither so much as even acknowledges this most basic aspect of the Court‘s prior holding in Bell. Importantly, the term “insured,” defined in § 33-6-31(c) and interpreted by Bell, was employed in the 1982 amendments to subsection (b) of the statute, which require insurers to offer the prescribed uninsured and underinsured coverages. 1982 W. Va. Acts ch. 106. By using consistent terminology, the Legislature obviously intended that the scope of these “optional” coverages would be no less broad than what had previously been determined in Bell to apply to mandatory uninsured coverage.
Both Imgrund and Deel contain statements to the effect that there is some distinction to be drawn between mandatory coverages that must be provided without exception (i.e., mandated minimum uninsured coverage), and other coverages that need only be offered to the insured (“optional” uninsured and underinsured coverages). Imgrund, 199 W. Va. at 192-93, 483 S.E.2d at 538-39; Deel, 181 W. Va. at 463, 383 S.E.2d at 95. This is, however, a wholly irrelevant distinction from the standpoint of the policyholder: while the insured may have the option of accepting or declining the non-mandatory coverages set forth in § 33-6-31(b), the fact remains that automobile insurers are bound by law to offer them. I simply fail to see how the Legislature was any less determined to provide the public with meaningful “optional” coverages, than it was to mandate a minimal level of uninsured coverage.
Finally, this case, as did Imgrund and Deel before it, misapprehends the effect of subsection (k) of § 33-6-31. That subsection provides as follows:
Nothing contained herein shall prevent any insurer from also offering benefits and limits other than those prescribed herein, nor shall this section be construed as pre-
venting any insurer from incorporating in such terms, conditions and exclusions as may be consistent with the premium charged.
Subsection (k) was added to the statute in 1979, after the Court‘s decision in Bell. The first clause of the subsection straightforwardly permits insurers to “offer[] benefits and limits other than those prescribed [in § 33-6-31].” This language obviously permits an automobile insurer to “offer” any type of coverage (together with particular policy limits) that it chooses.3 It is therefore easily conceivable that an insurer could offer, in addition to the required offerings set forth in subsection (b) of the statute, other forms of coverage, including alternative uninsured or underinsured protection. What this language clearly does not sanction, however, is an automobile insurer failing in the first instance to present consumers with the prescribed optional coverages.
The more crucial question in interpreting subsection (k) is whether the second clause of the statute merely applies to the subject of the first clause—to the “benefits and limits other than those prescribed herein“—or whether it instead has freestanding significance such that insurers have broad authority to impose exclusions upon all motor vehicle coverages, even the “optional” uninsured and underinsured coverages required under subsection (b). The Deel Court apparently chose the latter construction.
Deel misconstrued the second clause of subsection (k), an error that has been repeated in subsequent cases.4 This result is perhaps explained in no small part by the fact that the Deel Court misapprehended the relevant statutory language. The opinion, in fact, misquotes the second clause of subsection (k), by omitting the crucial word “in.” Deel, 181 W. Va. at 463, 383 S.E.2d at 95. Although not a model of textual clarity, the word “in” was plainly intended to be synonymous with “therein,” which in effect limits the second clause to the subject of the first. Subsection (k) therefore merely permits an insurer to impose “terms, conditions and exclusions” upon “benefits and limits other than those prescribed herein.” In other words, the statute allows an insurer to impose limitations or exclusions on offerings that are otherwise not specified in the statute. There is simply nothing in this language that could, by any stretch of the imagination, be construed to permit an insurance company to corrupt or curtail the coverages specifically prescribed in subsection (b), regardless of whether those coverages are mandatory or optional to the policyholder.
The construction of subsection (k) that I put forward here is certainly no less plausible than that placed upon it by Deel and its progeny. As the Court stated in syllabus point 7 of Perkins v. Doe, 177 W. Va. 84, 350 S.E.2d 711 (1986), “[t]he uninsured motorist statute,
Any other construction would, in effect, render the provisions of subsection (b) nugatory, since an automobile insurer would otherwise be free to disregard, through the inclusion of onerous policy exclusions, even those coverages specifically required by the statute. See Brooks v. City of Weirton, 202 W. Va. 246, 256, 503 S.E.2d 814, 824 (1998) (“‘It is always presumed that the legislature will not enact a meaningless or useless statute.‘“) (quoting Syl. pt. 4, State ex rel. Hardesty v. Aracoma-Chief Logan No. 4523, Veterans of Foreign Wars of the United States, 147 W. Va. 645, 129 S.E.2d 921 (1963)). Indeed, if the Court is to continue construing subsection (k) as giving insurers the ultimate trump card, there is no logical reason for not overruling Bell to the extent that even mandatory uninsured coverage may be subject to nullifying exclusions.
I would therefore reverse the circuit court‘s award of summary judgment on the basis that there is nothing in the record showing that Anthem made such offers of proof. Because the analytical approach taken by the majority only compounds fundamental errors already evident in this Court‘s past treatment of this subject, I concur only in the basic result reached in this case.
Dorothy CZAJA (now Wright), Plaintiff Below, Appellant, v. Mark CZAJA, Defendant Below, Appellee (Three Cases).
Nos. 27316-27318.
Supreme Court of Appeals of West Virginia.
Submitted June 7, 2000. Decided July 11, 2000.
Notes
J. Calamari, “Duty to Read: A Changing Concept,” 43 Fordham L. Rev. 341 (1974). See, e.g., Martin v. Midwestern Group Ins. Co., 70 Ohio St. 3d 478, 639 N.E.2d 438 (1994) (“other owned vehicle” exclusion was unenforceable; uninsured motorist statute mandates coverage to protect persons, not vehicles); Monteith v. Jefferson Ins. Co. of New York, 159 Vt. 378, 618 A.2d 488 (1992) (“the essence of UM/UIM coverage under § 941 is its portability. The statute does not allow insurers to condition coverage on the location of the insured nor the insured‘s status as a motorist, a passenger in a private or public vehicle, or as a pedestrian.“); Farmers Ins. Co., Inc. v. Gilbert, 14 Kan. App. 2d 395, 791 P.2d 742, aff‘d, 247 Kan. 589, 802 P.2d 556 (1990) (uninsured motorist coverage protects a named insured “no matter where the named insured may be at the time of injury“); Chaffin v. Kentucky Farm Bureau Ins. Co., 789 S.W.2d 754 (Ky. 1990) (uninsured motorist coverage is mandated by statute and has a “personal nature;” coverage cannot be made illusory by exclusions, so exclusion is contrary to public policy and void); Calvert v. Farmers Ins. Co. of Arizona, 144 Ariz. 291, 697 P.2d 684 (1985) (relying on a “majority” of 26 jurisdictions that rejected “other vehicle” exclusions, court concluded that uninsured motorist statute established public policy “that every insured is entitled to recover damages he or she would have been able to recover if the uninsured had maintained a policy of liability insurance in a solvent company.“); Jacobson v. Implement Dealers Mut. Ins. Co., 196 Mont. 542, 640 P.2d 908 (1982) (statute requires all automobile insurance policies contain uninsured motorist coverage; citing to cases making coverage “person oriented,” court held exclusion void because it[I]n the current era of mass marketing, a party may reasonably believe that he is not expected to read a standardized document and would be met with impatience if he did. In such circumstances an imputation that he assents to all of the terms in the document is dubious law. An assertion that he is bound by them would place a premium upon an artful draftsman who is able to put asunder what the salesman and the customer have joined together.
Bowler v. Fidelity Casualty Co. of New York, 53 N.J. 313, 326, 250 A.2d 580, 587 (1969). Professor Keeton, in his seminal law review article discussing the doctrine of reasonable expectations, also discussed the need for judicial protection of policyholders that is caused by the one-sided nature of insurance policies:Insurance policies are unipartite in nature. They are prepared by the company‘s experts, men learned in the law of insurance who serve its interests in exercising their art of draftsmanship. The resulting document with its many clauses is given to the insured upon the payment of the premium. There is no arm‘s length bargaining such as characterizes negotiations between equals in the marketplace. Consequently courts in their quest for justice for the insured, universally give him the benefit of any construction of the language which can be said fairly to represent the protection extended to him.
R. Keeton, “Insurance Law Rights at Variance with Policy Provisions,” 83 Harv. L. Rev. 961 (1970). Of course, automobile insurers are not free to offer any lesser form of uninsured coverage than that mandated in the first clause of § 33-6-31(b).Insurance contracts continue to be contracts of adhesion, under which the insured is left little choice beyond electing among standardized provisions offered to him, even when the standard forms are prescribed by public officials rather than insurers. Moreover, although statutory and administrative regulations have made increasing inroads on the insurer‘s autonomy by prescribing some kinds of provisions and proscribing others, most insurance policy provisions are still drafted by insurers. Regulation is relatively weak in most instances, and even the provisions prescribed or approved by legislative or administrative action ordinarily are in essence adoptions, outright or slightly modified, of proposals made by insurers’ draftsman.
In other words, if the Insurance Commissioner does nothing and lets the insurance documents collect dust on a corner of his or her desk for 60 days, the documents are automatically deemed to be “approved” as valid under West Virginia law. Because of this administrative loophole, courts allow citizens to fill this regulatory void through actions to enforce the reasonable expectations of coverage created by insurance carriers.At the expiration of such sixty days, the form so filed shall be deemed approved unless prior thereto it has been affirmatively approved or disapproved by the commissioner.
As discussed in the text, a policyholder may therefore seek to have a policy declared as void when the insurance policy contains “inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract.”Any person injured by the violation of any statute may recover from the offender such damages as he may sustain by reason of the violation, although a penalty or forfeiture for such violation be thereby imposed, unless the same be expressly mentioned to be in lieu of such damages.
* * * * * * Moreover, the principle of resolving ambiguities against the draftsman is simply an inadequate explanation of the results of some cases. The conclusion is inescapable that courts have sometimes invented ambiguity where none existed, then resolved the invented ambiguity contrary to the plainly expressed terms of the contract document. To extend the principle of resolving ambiguities against the draftsman in this fictional way not only causes confusion and uncertainty about the effective scope of judicial regulation of contract terms but also creates an impression of unprincipled judicial prejudice against insurers. 83 Harv. L. Rev. at 968, 972. Any reading of McMahon & Sons or Robertson v. Fowler as suggesting a requirement of specific language ambiguity before the reasonable expectations of a policyholder may be enforced is, therefore, simply wrong.[I]nsurers ought not to be allowed to use qualifications and exceptions from coverage that are inconsistent with the reasonable expectations of a policyholder having an ordinary degree of familiarity with the type of coverage involved. This ought not to be allowed even though the insurer‘s form is very explicit and unambiguous, because insurers know that ordinarily policyholders will not in fact read their policies.... Moreover, the normal processes for marketing most kinds of insurance do not ordinarily place the detailed policy terms in the hands of the policyholder until the contract has already been made.... Thus, not only should a policyholder‘s reasonable expectations be honored in the face of difficult and technical language, but those expectations should prevail as well when the language of an unusual provision is clearly understandable, unless the insurer can show that the policyholder‘s failure to read such language was unreasonable.
Tynan‘s Nissan, Inc. v. American Hardware Mut. Ins. Co., 917 P.2d 321, 324 (Colo. Ct. App. 1995). See also, Peters v. Boulder Insurance Agency, Inc., 829 P.2d 429 (Colo. Ct. App. 1991); Leland v. Travelers Indemnity Co., 712 P.2d 1060 (Colo. Ct. App. 1985). Louisiana has a very simple rule: “Insurance policy exclusions are not valid unless clearly communicated to the insured.” Sims v. Insurance Unlimited of West Monroe, 669 So. 2d 709, 711 (La. Ct. App. 1996). “Notice of any exclusionary provisions is essential because the insured will otherwise assume the desired coverage exists.” Louisiana Maintenance Services, Inc. v. Certain Underwriters at Lloyd‘s of London, 616 So. 2d 1250, 1252 (1993). Idaho has also stated its rule in simple terms: “It is the duty of the insurer to inform the insured of what he is obtaining; it is not the duty of the insured to seek out exclusions and limitations not revealed to him.” Featherston v. Allstate Ins. Co., 125 Idaho 840, 843, 875 P.2d 937, 940 (1994). See also, Barrette v. Casualty Co. of America, 79 N.H. 59, 60, 104 A. 126, 127 (1918) (“[T]he company did absolutely nothing to notify [policyholder] Dubray [of the exclusion] ... [W]hen the company‘s local agent delivered the policy, he gave Dubray to understand that it protected him from all liability ... It cannot be said that Dubray was in fault for relying on the agent‘s representation, or that the ordinary man in his situation would have read the policy to ascertain whether it evidenced the contract he made with the company[.]“); General Motors Acceptance Corp. v. Martinez, 668 P.2d 498, 501 (Utah 1983) (“Utah appellate courts have consistently held that exclusions from coverage under an insurance policy, even if clear, are ineffective unless they are communicated to the insured in writing.“); Moore v. Energy Mutual Ins. Co., 814 P.2d 1141, 1143 (Utah Ct. App. 1991) (“[E]xclusions from coverage must use ‘language which clearly and unmistakably communicates to the insured the specific circumstances under which the expected coverage will not be provided.‘“)[A]n insurer who wishes to avoid liability must do so in clear and unequivocal language and must call such limiting conditions to the attention of the insured. Absent such disclosure, coverage will be deemed to be that which could be expected by the ordinary lay person.
Syl. pt. 4, Imgrund v. Yarborough, 199 W. Va. 187, 483 S.E.2d 533 (1997). The only evidence I can find in the record regarding Mary Mitchell‘s interaction with an insurance agent consists of the policy and the application. The application completed by Mary Mitchell in 1992 states that she was, at that time, a 74-year-old housewife seeking coverage on her 1981 Buick. She purchased liability coverage of $300,000 per person, per occurrence; $300,000 in property damage coverage; and $300,000 in bodily injury coverage per person, per occurrence, and for property damage caused by an uninsured and underinsured motorist. She also bought towing and rental insurance. The application shows that Mary Mitchell had been insured through the same insurance agency for 21 years (since May 1971) and that the agent recommended she be approved for the Anthem policy because she was an “excellent insurance client.”An “owned but not insured” exclusion to uninsured motorist coverage is valid and enforceable above the mandatory limits of uninsured motorist coverage required by
W. Va. Code §§ 17D-4-2 (1979) (Repl. Vol. 1996) and33-6-31(b) (1988) (Supp. 1991). To the extent that an “owned but not insured” exclusion attempts to preclude recovery of statutorily mandated minimum limits of uninsured motorist coverage, such exclusion is void and ineffective consistent with this Court‘s prior holding in Syllabus Point 2 of Bell v. State Farm Mutual Automobile Insurance Company, 157 W. Va. 623, 207 S.E.2d 147 (1974).
(b) Nor shall any such policy or contract [of motor vehicle insurance] be so issued or delivered unless it shall contain an endorsement or provisions undertaking to pay the insured all sums which he shall be legally entitled to recover as damages from the owner or operator of an uninsured motor vehicle, within limits which shall be no less than the requirements of section two, article four, chapter seventeen-d of this code, as amended from time to time
Shannon M. McDonough, Note, Exclusions for Owned but not Insured in Uninsured Motorist Provisions—What are States really Driving at in their Decisions?, 43 Drake L. Rev. 917, 918 (1995) (footnote omitted).an owned but not insured exclusion in an uninsured motorist policy generally excludes uninsured motorist coverage for bodily injury sustained by a person covered under the policy while occupying a motor vehicle owned by an insured or relative living in the same household, but not insured for uninsured motorist coverage under the policy.
[a]ny insurance policy, rider, or endorsement hereafter issued and otherwise valid which contains any condition or provision not in compliance with the requirements of this chapter, shall not be thereby rendered invalid but shall be construed and applied in accordance with such conditions and provisions as would have applied had such policy, rider, or endorsement been in full compliance with this chapter.