Ricky Rister was killed when the pickup truck in which he was a passenger collided with a gasoline transport. The plaintiffs are his widow and minor children. They are insureds under the uninsured motor vehicle provisions of two policies issued by State Farm Mutual Insurance Company (State Farm). The plaintiffs recovered a judgment аgainst State Farm under that coverage in the amount of $40,000. State Farm’s appeal presents a unique question. One of the policy definitions of uninsured motor vehicle is a “motor vehicle insured ... for bodily injury liability ... but the insuring company denies coverage or is or has become insolvent.” The question is whether or not that definition is applicable when the insurer under a liability policy pertaining to the pickup initially declined coverage, but before the judgment entered into an agreed settlement with the plaintiffs for $35,000.
The following is a summary of the facts presenting that question. Ricky Rister, Bill Rister and George Rutledge were emрloyed by Delta Paint and Drywall Company. On February 22, 1982 they were apparently on their way to work in the pickup owned by Delta and driven by Rutledge. The pickup collided with a gasoline transport owned by Wisdom Oil Company and driven by its employee Jerry Terry.
American Casualty Company as insurer of Delta had in forcе a liability insurance policy applicable to the pickup. The limits of liability were not disclosed. State Farm, as insurer of Ricky Rister, had in force two policies of automobile insurance. Each policy provided uninsured motor vehicle insurance in the amount of $50,000 upon customary terms. The plaintiffs were insureds under that coverage. By that insurance, State Farm agreed to pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle. As noted, the definition of uninsured motor vehicle included a “motor vehicle insured ... for bodily injury liability ... but the insuring company denies coverage or is or has become insolvent.”
By their petition, the plaintiffs initially sought a judgment for $5,000,000 for the wrongful death of their decedent against Wisdom Oil Company, Jerry Terry and the defendant ad litem for George Rutledge, deceased. It was the position of American Casualty that the liability coveragе of its *134 policy was not applicable to the claims of the plaintiffs because of the “fellow employee” exclusion of its liability coverage. By letter, it so advised the defendant ad litem. Nonetheless, American Casualty provided a defense to the defendant ad litem under a “reservation of rights” as set forth in that letter. By amendment, the plaintiffs added State Farm as a defendant. They sought recovery against State Farm by reason of the uninsured motor vehicle insurance referred to above.
The morning of the trial, before the testimony commenced, the plaintiffs were permitted to dismiss without prеjudice as to defendants Wisdom Oil Company and Jerry Terry. The plaintiffs had reached a settlement agreement with them for $125,000. Thereafter, again before the testimony commenced, counsel for the defendant ad litem, employed by American Casualty, made a cryptic announcement. He said, “I want the Court to know on the record that we stand ready now, before this jury is impaneled, to settle and pay at least two times the uninsured motorist coverage for an indemnifying release from Mrs. Rister.” In view of subsequent developments, the possible import of this statement need not be considered.
Near the end of thе testimony, counsel for the defendant ad litem announced he wanted to make an offer. Counsel for the plaintiffs then moved to dismiss without prejudice as to the defendant ad litem. There was a discussion off the record apparently setting forth the terms of the offer and its acceptance. Then, on the record, counsel for the defendant ad litem made an offer of $35,000 upon agreement by the plaintiffs to indemnify American Casualty for any apportionment claim and any claim by State Farm. The defendant ad litem was then dismissed without prejudice. The case was submitted to the jury against State Farm as the sole defendant under instructions patterned upon MAI 31.-11 and 4.11. The jury returned a verdict against State Farm and a determination the plaintiffs’ damages were $200,000. The trial court credited that amount with $160,000 and entered judgment against State Farm for $40,000. The plaintiffs’ settlement was later approved by the court and they acknowledged the receipt of the $35,000. It is not clear that the documents evidencing the settlement were before the court when the $40,000 judgment was entered. However, the parties have regarded that settlement as completed and it will be so considered by this court. While its impact is obscured by the numerous points rаised, by its motions for a directed verdict and after trial motions, State Farm has preserved its basic contention the evidence does not establish “the insuring company denies coverage.”
Section 379.203.1 mandates coverage for the protection of insureds “who are legally entitled to recоver damages from owners or operators of uninsured motor vehicles.” However, that statute does not fully define “uninsured motor vehicles.” Nor does it fully declare the terms and conditions upon which uninsured motor vehicle insurance must be extended. In any given ease, whether or not uninsured motor vehicle insurance is applicable, in the first instance, is a matter of construction of the insurance contract.
Harrison v. MFA Mut. Ins. Co.,
The basic provision of most statutes and policies extends protection to insureds entitled to recover damages from owners or
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operators of “uninsured motor vehicles” without further definition of those terms. Under such provisions, many cases have dealt with the issue of whether or not such protection is available when a liability poliсy is applicable to the tort feasor’s motor vehicle, but, with or without justification, the liability insurer denies coverage for the claim of an uninsured motor vehicle insured.
More recent statutes and policy provisions, such as the provisiоns of the State Farm policy in question, by definition include a motor vehicle insured for bodily injury, but the insuring company denies coverage. Such provisions have been construed and applied in reference to several issues raised thereby. The possible distinction between a denial and a disclaimer оf coverage has been noted. “To
deny coverage
is to take the position that for some reason or other the policy does not encompass the particular accident_ A
disclaimer of liability
usually arises where there is coverage, but because of some action on the part of the insured, the company refuses to respond.”
Seabaugh v. Sisk,
While there are decisions to the contrary, under such provisions it is generally held to make no difference whether the withholding of liability coverage results from a denial or a disclaimer. Annot., Insurance—“Uninsured” Motorist,
When the liability insurer has expressly denied or disclaimed coverage, it is generally held that a claimant under such uninsured motor vehicle insurance need not prove the denial or disclaimer was valid.
State Farm Mutual Automobile Ins. Co. v. Talley,
No authority directly dealing with the question raised has been cited to the court. None has been found by independent research. It has been observed “[n]o decisions have been found which have given this definition other than its normal and presumably obvious import, insofar as its effect on the situation where the insurer does deny coverage is concerned.” Annot.,
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Uninsured Motorist,
It has been held that an initial denial by a liability insurer does not create an unconditional obligation on the part of the uninsured motor vehicle insurer. In
Lumbermens Mutual Cas. Co. v. Harleysville Mut. Cos. Co.,
While he may at first have been an uninsured ... because of State Farm’s immediate denial of coverage, this initial result simply accorded Southern a conditional claim against Harleysville_ However, since Ray has been declared an insured, this contingent responsibility of Harleysville disappeared, the contingency never ripening. Merely because Har-leysville’s potential responsibility was once raised, it was not thereby unalterably and irrevocably established. Subsequent developments have laid that liability to rest. Lumbermens Mutual Cas. Co. v. Harleysville Mut. Cas. Co., supra, at 255. (Emphasis added).
It is obvious the same result would follow when a liability insurer expressly and unconditionally withdraws an initial denial. When a liability insurer, after an initial denial of coverage, extends an оffer in settlement, it may be said it has only conditionally withdrawn its denial. However, when such an offer is accepted, the liability insurer no longer denies coverage. In this case, when the $35,000 was offered and accepted, American Casualty no longer denied liability coverage. It paid $35,000 by reason of that coverage. The plaintiffs were not entitled to recover upon the uninsured motor vehicle insurance in the State Farm policies.
In so holding, the court has considered the general policy of the law to encourage compromise or settlement of disputes.
Brizendine v. Central Life Ins. Co.,
To construe “the insuring company denies coverage” in this manner, is consistent with the policy prohibition against the insured entering into a settlement withоut the consent of the uninsured motor vehicle insurer. That prohibition has been held to be against public policy in reference to settlements with third parties.
Lebs v. State Farm Mut. Auto. Ins. Co.,
Such a construction is also consistent with, if not required by, another principle of law. That principle has frequently beеn referred to as the election of remedies. 25 Am.Jur.2d Election of Remedies § 7 (1966). However, it is more appropriately recognized as the choice between alternative rights or the inconsistent assertion of facts upon which a right depends.
Metroflight, Inc. v. Shaffer,
A legal right to recover under the uninsured motor vehicle insurance and a legal right to recover against the liability carrier cannot coexist. They are mutually exclusive. The insured’s were not barred from pursuing their claims in the alternative nor from reaching a simultaneous сompromise agreement with both insurers. However, to affirm the judgment in this case would be to give judicial sanction to the insured’s successfully maintaining inconsistent claims. Such sanction could, under other circumstances, form the basis for collusive imposition of liability upon an uninsured motor vehicle insurer. It would amount to the creation of uninsured motorist insurance when none exists according to the plain language of the insurance contract. “Where language in an insurance policy is unambiguous and does not offend against public policy it must be accorded its plain meaning and it must be enforced as written.” Brake v. MFA Mutual Insurance Company, supra, at 112.
The provisions of the uninsured motor vehicle insurance of the State Farm policy, as so interpreted, do not contravene § 379.203. That statute recognizes the right of an insurer to define an uninsured motor vehicle in a manner not inconsistent therewith.
Harrison v. MFA Mut. Ins. Co.,
supra. The purpose of the statute is to give uninsured motor vehicle insurеds coverage parallel to that they would have had if the accident had been caused by a vehicle that had the required liability coverage.
Zink v. Allis,
In view of the foregoing, it is not necessary to consider the other contentions of State Farm. Those contentions include the following. The contention the action of American Casualty was not a denial of coverage, but merely providing the insurance purchased by its insurer. Compare
Dairyland Ins. Co. v. Hogan,
supra;
Harrison v. MFA Mut. Ins. Co.,
supra, and
Aetna Casualty and Surety Company v. Kellam,
supra. Nor the contention the action of the plaintiffs constitutes a violаtion of the prohibition against settlement with the alleged uninsured motorist. See
Benson v. Farmers Ins. Co., Inc.,