Lead Opinion
[¶ 1] Chase Wisness (“Wisness”) appeals the district court summary judgment in favor of Nodak Mutual Insurance Company (“Nodak”) finding the Farm and Ranch Excess Liability Policy did not provide coverage for his claim. Wisness argues the district court erred by finding the insurance policy did not provide underin-sured motorist coverage. We affirm.
I
[¶ 2] On June 1, 2007, Wisness was a passenger in a vehicle driven by an unrelated third party. An accident occurred, and Wisness was injured and is now a paraplegic. At the time of the accident, Milo Wisness, Wisness’s father, owned a Nodak Mutual automobile insurance policy ■with underinsured motorist limits of $500,000. Milo Wisness also owned a Farm and Ranch Excess Liability Policy issued by Nodak. Wisness settled with Nodak for underinsured limits on the automobile policy and reserved the right to pursue a claim under the excess liability policy.
[¶ 3] On February 19, 2010, Wisness sued, alleging that Nodak wrongfully denied his claim under his excess liability policy because the policy provided underin-sured motorist coverage, that Nodak used bad faith when denying the claim and that Eric Mogen, Milo Wisness’s insurance agent, negligently counseled Milo Wisness about what insurance policy to buy. No-dak and Mogen denied the allegations.
II
[¶ 5] Wisness argues the district court erred by granting summary judgment in favor of Nodak because coverage existed for his claim. This Court has stated:
“Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.”
Johnson v. Taliaferro,
“Our goal when interpreting insurance policies, as when construing other contracts, is to give effect to the mutual intention of the parties as it existed at the time of contracting. We look first to the language of the insurance contract, and if the policy language is clear on its face, there is no room for construction. ‘If coverage hinges on an undefined term, we apply the plain, ordinary meaning of the term in interpreting the contract.’ While we regard insurance policies as adhesion contracts and resolve ambiguities in favor of the insured, we will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. We will not strain the definition of an undefined term to provide coverage for the insured. We construe insurance contracts as a whole to give meaning and effect to each clause, if possible. The whole of a contract is to be taken together to give effect to every part, and each clause is to help interpret the others.”
Id. (quoting State v. North Dakota State Univ.,
[¶ 6] Wisness asserts the plain language of the policy provides coverage for his claim. Nodak argues the policy does not cover the claim because the insuring language in the policy does not provide coverage. “When interpreting an insurance policy, we look first to the insurance contract itself.” Nationwide Mut. Ins. Cos. v. Lagodinski,
[¶ 7] Wisness asserts the portion of the excess liability policy insuring agreement providing coverage states:
“COVERAGE A. Bodily Injury and Property Damage Liability
1. Insuring Agreement
a. We will pay on behalf of the insured for ‘ultimate net loss’ in excess of the ‘retained limit’ because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.”
An “[ujltimate net loss” is defined in the policy as “the total amount of damages for which the insured is legally liable in payment of ‘bodily injury,’ ‘property damage,’ ‘personal injury,’ or ‘advertising injury.’ ”
[¶ 8] The language “pay on behalf of’ and “the amount ... the insured is legally liable in payment” indicate the policy provides only third-party coverage. See Kromer v. Reliance Ins. Co.,
[¶ 9] Wisness’s claim is for underin-sured motorist coverage to pay damages resulting from the injuries he sustained in an automobile accident. Underinsured motorist coverage “[pays] compensatory damages which an insured is legally entitled to collect for bodily injury, sickness, disease, including death resulting therefrom, of such insured, from the owner or operator of an underinsured motor vehicle arising out of the ownership, maintenance, or use of such underinsured motor vehicle.” N.D.C.C. § 26.1-40-15.3(1). “Un-derinsured motorist insurance is a first party coverage arrangement that entitles an insured to compensation for injuries from the insurer.” 3 Alan I. Widiss & Jeffrey E. Thomas, Uninsured and Un-derinsured Motorist Insurance § 32.1 n. 1 (3d ed.2005).
[¶ 10] Wisness collected under-insured motorist benefits from the underlying automobile policy and is currently trying to collect additional underinsured
[¶ 11] Reading the terms of the insurance contract as we must, the policy language relied on by Wisness covers damages an insured becomes legally liable to pay. However, Wisness is making a first-party claim for underinsured motorist benefits rather than a claim for damages the insured is legally liable in payment. Thus, plain language of the excess liability insurance policy does not provide coverage for Wisness’s claim because his claim is not covered in the insuring agreement.
B
[¶ 12] Wisness urges us to find the policy’s underinsured motorist exclusion creates an ambiguity that must be interpreted to provide coverage. Nodak asserts the policy is unambiguous.
[¶ 13] “Ambiguity in [policy] language exists when the language can be reasonably construed as having at least two alternative meanings[.]” Emp’rs Reinsurance Corp. v. Landmark,
“ ‘Exclusions from coverage in an insurance policy must be clear and explicit and are strictly construed against the insurer.’ Grinnell Mut. Reinsurance Co. v. Center Mut. Ins. Co.,2003 ND 50 , ¶ 10,658 N.W.2d 363 (citing Western Nat’l Mut. Ins. Co. v. Univ. of North Dakota,2002 ND 63 , ¶ 7,643 N.W.2d 4 ). Although this Court construes exclusionary provisions strictly, we do not automatically construe every insurance exclusion provision against an insurer and in favor of coverage for the insured. This Court will not rewrite a contract to impose liability on an insurer if the policy unambiguously precludes coverage. Northwest G.F. Mut. Ins. Co. v. Norgard,518 N.W.2d 179 , 181 (N.D.1994). The insured still must prove he falls within an exception to the exclusion in order to benefit from coverage.”
Nationwide Mut. Ins. Cos.,
[¶ 14] The exclusion Wisness relies on states:
“This insurance does not apply to:
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d. Liability imposed on the insured or the insured’s insurer, under any of the following laws:
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(2) Any uninsured motorists, underin-sured motorists, or automobile no-fault or first party ‘bodily injury’ or ‘property damage’ law[.]”
Wisness argues the exclusion creates an ambiguity because an exclusion in an insurance policy must remove coverage that existed in the first place. Nodak asserts we should follow a Wisconsin Court of Appeals ruling that an exclusion does not create insurance coverage. See Muehlenbein v. West Bend Mut. Ins. Co.,
[¶ 15] We first note Wisness narrowly contends in this part of his argument that Nodak’s Exclusion 2d(2) creates an ambiguity requiring recognition of coverage under the excess policy where coverage otherwise does not exist. He does not allege his claim falls within an exception to the exclusion, thereby requiring coverage. See Nationwide Mut. Ins. Cos.,
[¶ 16] Consistent with our rules for interpretation of insurance policies, one noted treatise comments:
“The order of analysis employed by courts is to first examine the coverages provided by the policy. If and only if a coverage provision applies to the harm at issue will the court then examine the policy’s exclusions and limitations of coverage. An exclusionary provision, or the absence of one, cannot be read to provide coverage that does not otherwise exist. Similarly, non-operative clauses, such as a policy’s “Whereas’ clauses, cannot produce coverage that is not provided by the policy’s operative coverage provisions.”
1 Robert D. Goodman, John C. Dockery & Matthew S. Hackell, New Appleman Law of Liability Insurance § 1.04[1] (2d ed.2011) (citations omitted). See also Sony Computer Entm’t Am., Inc. v. Am. Home Assurance Co.,
[¶ 17] We agree with the Appleman treatise and the subsequently cited cases. Here, the Farm and Ranch Excess Liability Policy provides only third-party liability coverage. The words underinsured motorist coverage appear only in an exclusion to the policy. The exclusion does not make the policy ambiguous, nor does the exclusion provide coverage where coverage does not otherwise exist. We therefore reject Wisness’s claim Exclusion 2d(2) creates an ambiguity or that it provides underinsured motorist coverage under Nodak’s excess liability policy.
C
[¶ 18] Arguments were presented about an endorsement to Nodak’s 2007 Farm and Ranch Excess Liability Policy. The 2007 policy was issued by Nodak after the events giving rise to this lawsuit. The parties agree Milo Wisness was not covered by the 2007 policy when the claim arose. Nor was the 2007 policy in the record. However, the 2007 policy is not relevant because we do not look outside the language in the policy at issue to find an ambiguity. See Dundee Mut. Ins. Co. v. Marifjeren,
Ill
[¶ 19] The district court judgment finding the insurance policy does not provide coverage for Wisness’s claim is affirmed.
Concurrence Opinion
concurring in the result.
[¶ 21] I concur in the result reached by the majority. I am of the opinion the exclusion in Wisness’s excess liability policy, stating the insurance does not apply to “[[liability imposed on the insured or the insured’s insurer, under ... [a]ny uninsured motorists, underinsured motorists, or automobile no-fault or first party ‘bodily injur/ or ‘property damage,’ ” is unambiguous and clearly removes coverage for uninsured and underinsured motorist benefits. I, therefore, agree with the majority that there is no coverage under this policy for an underinsured motorist claim. I write separately, however, only to point out that an excess policy, umbrella policy or any other policy which does not provide primary insurance coverage can provide underinsured motorist coverage by its terms or through endorsements. Each policy must be read on its own to determine if underinsured coverage is provided. The fact that the policy generally is construed as a “third party” liability policy does not end the inquiry.
[¶ 22] We have consistently held that “insurance policies are to be interpreted as a whole so as to give effect to all of the provisions of the policy if reasonably practicable.” Haugen v. Auto-Owners Ins. Co.,
[¶ 23] The function of the insuring agreement is to provide what kinds of losses are covered under the policy. See 1 Jeffrey E. Thomas & Francis J. Mootz, III, New Appleman on Insurance Law § 1.07[5] (2010) (defining insuring agreement). The function of an exclusion, on the other hand, is to eliminate coverage initially provided by the insuring agreement. See id. § 1.07[6] (explaining an exclusion removes coverage otherwise provided under the policy’s insuring agreement). Therefore, an exclusion takes away coverage granted by the insuring agreement, but an exclusion cannot create or expand coverage. An endorsement is a document attached to a policy that changes the coverage provided by the policy and can add coverage, subtract coverage, or otherwise modify the policy. See id. § 1.07[8], Therefore, to look only to the insuring agreement and not to the entire policy to interpret coverage is error.
[¶ 24] The majority cites Muehlenbein v. West Bend Mut. Ins. Co.,
[¶ 25] The majority also relies on Jaderborg v. Am. Family Mut. Ins. Co.,
[¶ 27] I note that the majority never acknowledges that there is a split of authority on this coverage issue and that other jurisdictions have concluded umbrella/excess policies do provide uninsured or underinsured motorist coverage. See generally Lisa K. Gregory, Annotation, “Excess" or “Umbrella" Insurance Policy as Providing Coverage for Accidents with Uninsured or Underinsured Motorists,
No insurer is required to offer, provide, or make available coverage conforming to sections 26.1-40-15.1 through 26.1-40-15.7 in connection with any excess policy, umbrella policy, or any other policy which does not provide primary motor vehicle insurance for liabilities arising out of the ownership, maintenance, operation, or use of a specifically insured motor vehicle.
However, an insurance policy can grant more coverage by its terms, but not less than required by statute. Sandberg v. American Family Ins.,
[¶ 28] Finally, I also do not agree with the majority’s analysis regarding the endorsement adding excess underinsured motorist coverage offered by Nodak Mutual in 2007 to its insureds. The accident in this case occurred in June 2007. The endorsement was first available in January 2007. A copy of this endorsement, Endorsement EL-76, was provided by Nodak Mutual in a letter to Wisness’s attorney as part of Nodak Mutual’s reason for why Wisness’s policy had no underinsured motorist coverage. Nodak explains in the letter that there was no uninsured motorist or underinsured motorist coverage be
[¶ 29] Accordingly, I concur in the result.