NO. 92-416 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

BONNIE LYNN ALDERINK BENNETT. 

Plaintiff and Respondent, 

-vsSTATE FARM MUTUAL AUTOMOBILE 

INSURANCE COMPANY, 

Defendant and Appellant. 

ORIGINAL PROCEEDING 

COUNSEL OF RECORD: 

For Appellant: 

Pamela A. okano (argued) and William R. Hickman; 

Reed McClure Law Firm. Seattle. Washinaton 

Allen P. ~anning; ~onklin, ~ybb and ~eljeque, Great 

Falls, Montana 

For Respondent: 

Lyman H. Bennett (argued) ; Morrow, Sedivy & Bennett, 

Bozeman, Montana 

For Amicus Curiae: 

Michael D. Cok (argued); Cok & Wheat, Bozeman, 

Montana (for Montana Trial Lawyers) 

Patrick R. Sheehy; Halverson, Sheehy & Plath, 

Billings, Montana (for Montana Trial Lawyers) 

Peter F. Habein and Mary E. Duncan; Crowley, 

Haughey, Hanson, Toole & Dietrich, Billings, 

Montana (for Farmers Insurance Exchange) 

Filed: 

Submitted: May 6, 1993 

Decided: November 4, 1993 
Justice John Conway Harrison delivered the Opinion of the Court. 

This case is before us on a question certified to this Court 

by the United States Court of Appeals for the Ninth Circuit. We 

accepted certification by order dated August 27, 1992. 

Respondent Bonnie Alderink Bennett (Bennett) brought an action 

in the Eighteenth Judicial District Court, Gallatin County, 

Montana, seeking a declaration that she was entitled to the 

cumulative amount of the flunderinsured motorist coverageu provided 

by two automobile insurance policies issued to Bennett and her 

husband by State Farm Mutual Automobile Insurance Company (State 

Farm). State Farm removed the case to the United States District 

Court for the District of Montana. 

On February 14, 1991, the Honorable Paul G. Hatfield entered 

declaratory judgment in Bennett s favor, holding that State Farm is 

required, under the terms of the underinsured motorist endorsements 

in the two contracts of insurance between it and the Bennetts, to 

extend coverage to Bennett in the amount of $100,000 for each 

policy. Bennett v. State Farm Mutual Automobile Insurance Co. (D. 

Monk. 1991), 758 F.Supp. 1388. State Farm appealed, 

The Ninth Circuit heard oral argument on July 8, 2992, and 

subsequently issued its order certifying the following question to 

this Court: 

Is an "other insurance" clause which prohibits stacking 

of underinsured motorist coverage provided by separate 

policies from the same insurer void as against public 

policy? 

Bennett was a pedestrian crossing East Babcock Street in 
Bozeman, Montana, on October 6, 1986, when she was struck by a 

pickup truck operated by Lloyd A. Wind. She sustained bodily 

injury with damages alleged to be in excess of $200,000. Wind had 

liability insurance with Allstate Insurance Company and on his 

behalf Allstate paid Bennett $100,000 on May 7, 1987. 

At the time of the accident Bennett was insured under two 

separate policies issued by State Farm in 1984. The first policy 

was issued to her husband, Lyman H. Bennett 111, and covered a 1981 

Chrysler. The second policy was issued to Bennett and covered a 

1976 Oldsmobile. Both policies included "Coverage W," for damage 

caused by an underinsured vehicle. 

Coverage W defines an underinsured motor vehicle as one Igwhose 

limits of liability for bodily injury liability are less than the 

amount of the insured's darnages.I1 Each of the Bennettsl policies 

limited State Farm's liability under Coverage W to $100,000 per 

person and $300,000 per accident. The Bennetts paid separate 

premiums for Coverage W on each policy. 

On June 12, 1987, State Farm paid Bennett and her husband 

$100,000, State Farm asserts that the following "other insurancew 

clause in Coverage W limits its liability to $100,000: 

If the insured sustains bodily injury as a pedestrian and 

other underinsured motor vehicle coverage applies: 

a. the total limits of liability under all such 

coverages shall not exceed that of the coverage with the 

highest limit of liability; and 

b. we are liable only for our share. Our share is that 

per cent of the damages that the limit of liability of 

this coverage bears to the total of all underinsured 

motor vehicle coverage applicable to the accident. 
This court has consistently invalidated insurance contract 

clauses that limit the insurer's liability for uninsured motorist 

coverage. Grier v. Nationwide Insurance Co. (1991) , 248 Mont. 457, 

812 P.2d 347. For example, we held in Kemp v. Allstate Insurance 

Co. (1979), 183 Mont. 526, 601 P.2d 20, that where separate 

premiums have been charged and collected on each vehicle for 

uninsured motorist coverage, the insured is entitled to recover up 

to the aggregate sum of the coverages on all the vehicles so 

insured. Consistent holdings appear in Sullivan v. Doe (1972) , 159 

Mont. 50, 495 P.2d 193; Chaffee v. U.S. Fidelity & Guaranty Co. 

(1979), 181 Mont. 1, 591 P.2d 1102: and Sayers v. Safeco Insurance 

Co. (l981), 192 Mont. 336, 628 P.2d 659. The public policy 

embodied in these decisions is that an insurer may not place in an 

insurance policy a provision that defeats coverage for which the 

insurer has received valuable consideration. 

State Farm contends that this public policy applies only to 

uninsured motorist coverage, which a Montana insurer is required by 

33-23-201, MCA, to offer to all its customers. As Bennett has no 

statutory right to underinsured motor vehicle coverage, State Farm 

argues, the "other insurance" clause in her policy does not defeat 

public policy. 

We disagree. The purpose of underinsured motorist coverage is 

to provide a source of indemnification for accident victims when 

the tortfeasor does not provide adequate indemnification. State 

Farm Mutual Automobile Insurance Co. v. Estate of Braun (1990), 243 

Mont. 125, 793 P. 2d 253. The public policy expressed in Braun, and 
in the earlier cases cited above, favors adequate compensation for 

accident victims. The absence of a statutory requirement is 

irrelevant, for the public policy considerations that invalidate 

contractual vtanti-stackinglr provisions in an uninsured motorist 

endorsement also support invalidating those provisions in an 

underinsured motorist endorsement. 

State Farm's second argument is that an insured cannot 

reasonably expect dual coverage, and that each of the Bennetts had 

paid for only $100,000 worth of underinsured motorist protection, 

not for $200,000 worth. A reasonable insured buying a policy on a 

second car does not expect to increase the limits of coverage on 

the car that he or a family member has already insured, State Farm 

argues, but instead expects the limits of coverage on the new 

policy to apply only to the car that policy insures. 

This argument might be persuasive if it were not for the clear 

and unambiguous language of State Farm's insurance policy, which 

states in Coverage W that I1[w]e will pay damages for bodily injury 

an insured is legally entitled to collect from the owner or driver 

of an underinsured motor vehicle." This statement makes 

underinsured motorist coverage personal to the insured; coverage 

does not depend on the insured person occupying an insured vehicleSee Chaffee, 591 P.2d at 1104, in which we reached the same 

conclusion with regard to uninsured motorist coverage. Thus, 

Bennett could reasonably expect to recover damages up to the limit 

of both policies under which she was an insured and for which 

separate premiums had been paid. 
In Transamerica Insurance Co. v. Royle (1983), 202 Mont. 173, 

656 P.2d 820, we invalidated a "household exclusion" clause in an 

automobile liability policy because it did not honor the reasonable 

expectations of the insured. We reaffirmed that decision in 

Wellcome v. Home Insurance Co. (Mont. 1993), 849 P.2d 190, 193, 50 

St.Rep. 305, 307, stating that the 9treasonable expectation doctrine 

is in accord with our strong public policy that insurance is 

intended to serve a fundamental protective purpose.If We affirm it 

again here. Montana citizens should have a reasonable expectation 

that when they purchase separate policies for underinsured motorist 

coverage, they will receive adequate compensation for losses caused 

by an underinsured motorist, up to the aggregate limits of the 

policies they have purchased. 

We answer the certified question as follows: An Ifother 

insuranceIt clause that prohibits stacking of underinsured motorist 

coverage provided by separate policies from the same insurer is 

void as against Montana public policy. 

We concur: 
of the District Court, sitting 

with the Court in the seat made 

vacant by the retirement of 

Justice R.C. McDonough 
Justice Fred J. Weber specially concurs as follows: 

I concur with the majority conclusion because I believe that 

is required under previous Montana decisions. However, I wish to 

express grave concerns with regard to the theory of the case: 

As pointed out in the majority opinion, this Court has 

invalidated insurance contract clauses which limited the insurer's 

liability for uninsured motorist coverage. Those cases followed 

the 1967 enactment of 5 40-4403, RCM (1947), the predecessor to 5 

33-23-2 01, MCA, which expressed the limitation that no motor 

vehicle liability policy should be issued unless coverage was 

provided for those who are legally entitled to recover damages from 

operators of uninsured motor vehicles. That public policy was 

clearly defined and adopted by the Montana Legislature. It was 

appropriate that such public policy as determined by the 

Legislature should be enforced by this Court. However, that theory 

does not apply to the present case. 

Here we have an underinsured motorist coverage question. The 

Montana Legislature has not made a declaration of public policy 

covering underinsured motorist coverage. The majority opinion has 

reached the following conclusion: 

Montana citizens should have a reasonable expectation 

that when they purchase separate policies for 

underinsured motorist coverage, they will receive 

adequate compensation for losses caused by an 

underinsured motorist, up to the aggregate limits of the 

policies they have purchased. 

Unfortunately that conclusion directly contradicts the very clear 

provision of the insurance policy itself. Principles of contract 

law which are applied in other cases are not considered here. 
Instead we have injected a "reasonable expectation" standard with 

which we justify a nullification of clear contract provisions. 

In the absence of a legislative policy declaration, I question 

that this Court has a basis to define the nature of the "reasonable 

expectationsw of the purchasers of insurance policies. If we are 

free to effectively cancel contract provisions on an underinsurance 

theory, can that analysis on our part be applied to a cancellation 

of any and all other provisions in insurance contracts? Can a 

similar theory be applied to other contract instruments which come 

before us, such as notes, mortgages, contracts for deed, and 

similar instruments? I suggest that we have now proceeded beyond 

the reasonable bounds of judicial discretion. 

It may now be appropriate that the Legislature examine this 

area and set forth its views of policies regarding such insurance 

contracts.