Petitioner USAA Casualty Insurance Company (USAA) seeks review of a court of appeals' decision that its automobile policy is ambiguous with respect to when it can charge an adjusted premium for newly acquired vehicles. We hold that the policy unambiguously permits USAA to adjust its premium to reflect a newly acquired vehicle as of the date of acquisition of the vehicle. Accordingly, we reverse.
I. Facts and Procedural History
In June 1998, Respondents Sean and Gwen Anglum (Insureds) obtained an automobile *1059 insurance policy through USAA. At the time, the policy covered two cars, a 1992 Ford Escort and a 1998 Mazda pickup. In October 1998, Insureds purchased a 1999 Volkswagen Beetle; in May 2001, Insureds purchased a 2001 Suzuki Grand Vitara. On each occasion, Insureds notified USAA of their acquisition within ten to fifteen days. Following each notification, USAA amended the declarations page of Insureds' policy to include the new vehicle and to reflect an increased premium calculated from the day after the Insureds acquired each vehicle.
Based on the increase in their premiums, Insureds filed a proposed class action against USAA for breach of contract, violation of the Colorado Consumer Protection Act, breach of the covenant of good faith and fair dealing, and declaratory relief. In the complaint, Insureds argued that USAA improperly charged additional premiums for newly acquired vehicles from the date of acquisition rather than from thirty days after the date of acquisition.
USAA moved to dismiss the case under C.R.C.P. 12(b)(5) for failure to state a claim upon which relief can be granted, arguing that the policy unambiguously permitted the calculation of premiums from the date of acquisition. At Insureds' request, the trial court allowed them a reasonable opportunity to conduct discovery before considering the merits of USAA's motion. After considering the parties' pleadings and discovery, the trial court granted USAA's motion to dismiss, holding that the policy unambiguously notified Insureds that they would be charged an additional premium for newly acquired vehicles calculated from the date of acquisition. Insureds appealed.
The court of appeals determined that "the policy [was] ambiguous as to the effective date of a change in exposure resulting from the acquisition of a new vehicle." Anglum v. USAA Prop. & Cas. Ins. Co.,
On rehearing, the court of appeals modified its opinion, holding that USAA could not charge an additional premium for newly acquired vehicles until after receiving notification of the acquisition or until thirty days after the date of acquisition, whichever came first. Anglum v. USAA Prop. & Cas. Ins. Co.,
We granted certiorari to determine whether USAA's policy is ambiguous with regard to when USAA can charge a premium on a newly acquired vehicle 1 We conclude that the policy unambiguously permits USAA to charge Insureds an additional premium from the date of acquisition. Therefore, we reverse the court of appeals' decision and remand with instructions to reinstate the trial court's ruling.
II. Legal Considerations
The interpretation of an insurance contract is a question of law that we review de novo. E.g., Cary v. United of Omaha Life Ins. Co.,
A policy is ambiguous if it is susceptible on its face to more than one reason
*1060
able interpretation. E.g., Cary,
III. - Analysis
We begin our analysis with an examination of the scope of USAA's coverage. The "Definitions" section in USAA's policy defines "your covered auto" to include "vehicles acquired by [insured] or a family member during the policy period, beginning on the date [insured] or a family member becomes the owner." The policy explains in greater detail that:
For such newly acquired vehicles, [USAA] will automatically provide the broadest coverage as is provided for any vehicle shown in the Declarations. If your policy does not provide Comprehensive and Colli-gion coverages, [USAA] will provide each with a $250 deductible. However, [USAA] will provide these coverages for only 30 days after the date you or a family member becomes the owner of the vehicle. If you wish to continue any coverage beyond the 30-day period, you must request it prior to the end of the 30-day period. 2
This provision, known in the insurance industry as an automatic coverage clause,
3
establishes that USAA will automatically cover newly acquired vehicles for up to thirty days, or until an insured procures permanent coverage, whichever comes first. Automatic coverage clauses are common practice in the insurance industry, and give insureds buying cars the convenience of having thirty days in which to secure permanent coverage for a vehicle, rather than having to arrange coverage before driving the vehicle off the lot. See Russ & Segalla, supra note 3, at § 117:2. Though courts have not addressed this specific issue, whether an insurer may charge an adjusted premium for automatic coverage of a newly acquired vehicle from the date of acquisition appears to depend upon the terms of the policy involved. Compare, eg., Ga. Mut. Ins. Co. v. Criterion Ins. Co.,
Insureds note, and USAA concedes, that the policy's automatic coverage clause is silent with regard to how the addition of a newly acquired vehicle affects the premium. Rather, the policy addresses the adjustment of premiums in a subsequent section containing "General Provisions":
CHANGES
A. The premium is based on information we have received from you and other sources. You agree to cooperate with us in determining if this information is correct and complete. You agree that if this information changes, or is incorrect or incomplete, we may adjust your premiums accordingly during the policy period.
B. If during the policy period, the risk exposure changes for any of the following reasons, the necessary premi- *1061 wm adjustments will be made effective the date of change in exposure. You agree to give us notice of such exposure changes as soon as is reasonably possible.
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3. Replacement, deletion, or addition of any vehicle You must request coverage for a newly acquired vehicle within 30 days from the date the vehicle is acquired if you wish to continue any coverage. See DEFINITIONS-your covered auto 4
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C. We will make any calculations or adjustments of your premium using the applicable rules, rate, and form as of the effective date of the change.
(underline emphasis added).
Part A of the "Changes" provision notifies insureds that USAA may adjust the premium "during the policy period" if the information contained in the policy changes. Part B specifies that if the risk exposure changes, adjustments to the premium are effective the date of change in risk exposure. The "addition of any vehicle" results in a change in risk exposure. If an insured acquires a new vehicle, Part B requires the policyholder to notify USAA of any changes "as soon as is reasonably possible," but also clarifies that the addition of a vehicle need only be reported within thirty days if the insured wishes to continue coverage beyond thirty days. Because the "Changes" provision alludes to automatic coverage, it cross-references the definition of "your covered auto," where automatic coverage is explained in more detail. Finally, Part C provides that an adjustment of the premium will be effective the date of change in risk exposure. In sum, the "Changes" provision unambiguously permits USAA to increase Insureds' premium to reflect a newly acquired vehicle as of the date that Insureds acquire the vehicle.
Insureds argue, and the court of appeals agreed, that the "Changes" provision is ambiguous. In support of this assertion, Insureds first argue that the provision is ambiguous because it does not define the "effective date of the change" in exposure. However, a term is not ambiguous solely because it is not defined in the policy. Heller v. Fire Ins. Exch.,
Insureds also contend that the "covered auto" reference in the "Changes" provision introduces ambiguity into the policy because the definition of "your covered auto" says nothing about adjustments of the premium for additional vehicles. As a corollary, Insureds note that USAA easily could have provided for an adjusted premium in the definition of "your covered auto."
This argument is contrary to the rules of contract interpretation, which require us to construe the policy as a whole. E.g., Houtz,
Finally, Insureds argue, and the court of appeals held, that the phrase "to continue" in the "Changes" provision and the definition of "your covered auto," suggests that "coverage of a new vehicle is included in the initial premium for a period of thirty days after its acquisition." However, the phrase "to continue" refers solely to the extension of permanent insurance coverage after automatic coverage ends. It has no bearing on whether USAA may charge an adjusted premium from the date of acquisition of the vehicle, and does not render the "Changes" provision ambiguous.
Though we need not look beyond the plain language of the contract to support our conclusion that USAA's policy is unambiguous, we note that the interpretation advocated by Insureds and adopted by the court of appeals is inequitable because it has the effect of punishing those insureds who give early notification to USAA of newly acquired vehicles. Furthermore, because the court of appeals' holding creates an incentive for insureds to wait thirty days to notify USAA of newly acquired vehicles, it renders meaningless the requirement that insureds "give [USAA] notice of such exposure changes as soon as is reasonably possible."
Because the "Changes" provision unambiguously authorizes USAA to charge an increased premium for newly acquired vehicles from the date of acquisition, we reverse the court of appeals and remand with instructions to reinstate the trial court's order dismissing Insureds' complaint.
Notes
. We granted certiorari on the following issue:
Whether the court of appeals erred in holding an automobile insurer cannot adjust its premium to reflect a newly acquired vehicle as of the date of acquisition, but instead must insure the vehicle at the original premium rate from the date of acquisition until the date the insured notifies the insurer of the new vehicle.
. This language is from the USAA policy that was in effect in October 1998. The corresponding language from the policy that was in effect in May 2001 reads as follows:
For such newly acquired vehicles, [USAA] will automatically provide the broadest coverages as are provided for any vehicle shown in the Declarations. If your policy does not provide Comprehensive and - Collision - coverages, [USAA] will provide each with a $250 deductible. However, [USAA] will not provide any coverage for more than 30 days after the date you or a family member becomes the owner of the vehicle. If you wish to continue any coverage beyond the 30-day period, you must request it prior to the end of the 30-day period.
. See 8 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 117:1 (3d ed. Supp.1997).
. The policy lists five additional reasons for a change in risk exposure, none of which is relevant here.