No. 81-226 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

HELEN JACOBSON and ELVA J. DIKE, 

Personal Representatives of the Estate 

of Sammy D. Harlan, 

Plaintiff and Respondent, 

IMPLEMENT DEALERS MUTUAL INSURANCE CO. 

AND KENNETH HEIMER, 

Defendant and Appellant. 

Appeal from: District Court of the Fourth Judicial District, 

In and for the County of Missoula 

Honorable James B. Wheelis, Judge presiding. 

Counsel of Record: 

For Appellant: 

Worden, Thane & Haines, Missoula, Montana 

Robert J. Phillips, Missoula, Montana 

For Respondent: 

Garlington, Lohn & Robinson, Missoula, Montana 

Paul C. Meesmer argued, Missoula, Montana 

Filed: 

Submitted: December 1, 1981 

Decided: ~€8 1 T gq 
Mr. Justice Gene B. Daly delivered the dpinion of the Court. 

This is an appeal from the District Court of the 

Fourth Judicial District of the State of Montana, in and for 

the County of Missoula, the Honorable James B. Wheelis 

presiding. Plaintiffs are the personal representatives of 

the estate of Sammy D. Harlan, deceased. They commenced 

this action in District Court to enforce the uninsured 

motorist coverage of an insurance policy issued by defendant 

and appellant, Implement Dealers Mutual Insurance Company 

(hereinafter IDM), to the plaintiffs1 decedent (Harlan). 

Both parties moved for a summary judgment on the issue of 

the availability of uninsured motorist coverage. The 

District Court granted summary judgment in favor of the 

plaintiffs. IDM appeals from the summary judgment and 

requests that this Court reverse the District Court and 

grant judgment in its favor on the basis that there is no 

coverage available in this case. 

Sammy D. Harlan died as a result of a motor vehicle 

accident two and one-half miles east of Big Timber, Montana, 

on June 20, 1978, when the 1974 Peterbilt tractor-trailer 

unit which he owned and was driving was involved in a collision with a motor vehicle driven by Kenneth Heimer. By 

stipulation of counsel, Heimer is deemed to be at fault in 

Sammy D. Harlan's death. Heimer had no liability insurance 

coverage at the time of the accident. 

Harlan had purchased a policy of automobile liability 

insurance from IDM on a 1971 Ford pickup truck which he 

owned. This policy provided for uninsured motorist coverage 

in the amount of $25,000. The policy of insurance issued by 

IDIvl on the Ford pickup truck contained an exclusion which 
read: 

"This pol-icy does not apply under Part IV: 

"(a) to bodily injury to an insured while 

occupying an automobile (other than an 

insured automobile) owned by the named 

insured or a relative, or through being 

struck by such an automobile . . ." 

Montana's mandatory uninsured motorist coverage 

statute, section 33-23-201, MCA, requires all motor vehicle 

liability insurance policies issued in this state to include 

uninsured motorist coverage unless the named insured rejects 

such coverage. 

The statute in question, section 33-23-201, MCA, 

provides: 

"Motor vehicle liability policies to include 

uninsured motorist coverage -- rejection by 

insured. (1) No automobile liability or 

motor vehicle liability policy insuring 

against loss resulting from liability imposed 

by law for bodily injury or death suffered by 

any person arising out of the ownership, 

maintenance, or use of a motor vehicle shall 

be delivered or issued for delivery in this 

state, with respect to any motor vehicle 

registered or principally garaged in this 

state, unless coverage is provided therein or 

supplemental thereto, in limits for bodily 

injury or death set forth in 61.-6-103, under 

provisions filed with and approved by the 

commissioner, for the protection of persons 

insured thereunder who are legally entitled 

to recover damages from owners or operators 

of uninsured motor vehicles because of bodily 

injury, sickness, or disease, incl-uding 

death, resulting therefrom. 

"(2) The named insured shall have the right 

to reject such coverage. Unless the named 

insured requests such coverage in writing, 

such coverage need not be provided in or 

supplemental to a renewal policy where the 

named insured had rejected the coverage in 

connection with the policy previously issued 

to him by the same insurer." 

One issue is presented to this Court on appeal: Did 

the District Court err in holding that the insurance 

policy's exclusion (a) was not a permissible limitation 
under lqontana insurance law? 

Appellant contends exclusion (a) is not invalidated 

by section 33-23-201, MCA. pllore specifically, appellant 

argues that because there is no express provision in the 

statute which prohibits this type of exclusion, it is 

thereby valid. Further, it is arguea that if the legislature wished to proscribe this type of exclusion, it would 

have done so. Finally, appellant contends that in the 

interest of public policy, the exclusion should be held to 

be valid. 

While it is true that courts in several states have 

upheld the validity of exclusion clauses similar to exclusion (a), the majority of courts have held similar exclusion clauses are in conflict with the uninsured motorist 

statutes. See, State Farm Automobile Insurance Co. v. 

Reaves (1974), 292 Ala. 218, 292 So.2d 95; Mullis v. State 

Farm Mutual Automobile Ins. Co. (Fla. 1971), 252 So.2d 229; 

Bass v. State Farm Mut. Auto. Ins. Co. (1973), 128 Ga.App. 

285, 196 S.E.2d 485, modified, 231 Ga. 269, 201 S.E.2d 444; 

Doxtater v. State Farm Mutual Automobile Insurance Co. 

(1972), 8 Ill.App.3d 547, 290 N.E.2d 284; State Farm Mutual 

Automobile Ins. Co. v. Robertson (1973), 156 1nd.App. 149, 

295 N.E.2d 626; Cannon v. American Underwriters, Inc. 

(1971), 150 1nd.App. 21, 275 N.E.2d 567; Elledge v. Warren 

(La.App. 1972), 263 So.2d 912; Nygaard v. State Farm Mutual 

Automobile Ins. Co. (1974), 301 Minn. 10, 221 N.W.2d 151; 

State Farm Mutual Automobile Ins. Co. v. Hinkel (1971), 87 

Nev. 478, 488 P.2d 1151; Bell v. State Farm Mut. Auto. Ins. 

Co. (W. Va. 1974), 207 S.E.2d 147; hidiss, A Guide To 

Uninsured Motorist Coverage, 82.9 at 31 (1981). 
The discussions upholding the validity of exclusion 

clauses do so on the grounds that if a statute is silent 

there is no reason to prevent the withholding of coverage by 

the insurer. Widiss, supra, at 30; see also, Rodriquez v. 

Plaryland Indemnity Insurance Co. (1975), 24 Ariz.App. 392, 

539 P.2d 196; Barton v. American Family Mutual Insurance Co. 

(* 1972), 485 S.W.2d 628. Regardless of this rationale, 16 mo. ftqp. 

this Court elects to follow the majority position. 

There are two equally sound positions adopted by the 

majority of courts holding this type of exclusion clause to 

be invalid. First, the exclusionary cl-ause is ineffective 

because it reduces the scope of coverage required by the 

statutory mandate. Mullis v. State Farm Mutual Automobile 

Insurance Co. (Fla. 1971), 252 So.2d 229; Allstate Insurance 

Company v. Meeks (1967), 207 Va. 897, 153 S.E.2d 222; 

Federated American Ins. Co. v. Raynes (1977), 88 Wash.2d 

439, 563 P.2d 815. In Mullis, the court stated: 

"The public policy of the uninsured motorist 

statute (Section 627.0851) is to provide 

uniform and specific insurance benefits to 

members of the public to cover damages for 

bodily injury caused by the negligence of 

insolvent or uninsured motorists and such 

statutorily fixed and prescribed protection 

is not reducible by insurers' policy exclusions and exceptions any more -than are the 

benefits provided for persons protected by 

automobile liability insurance secured in 

compliance with the Financial Responsibility 

Law. 

"Insurers or carriers writing automobile 

liability insurance and reciprocal uninsured 

motorist insurance are not permitted by law 

to insert provisions in the policies they 

issue that exclude or reduce the liability 

coverage prescribed by law for the class of 

persons insured thereunder who are legally 

entitled to recover damages from owners or 

operators of motor vehicles because of bodily 

injury." 252 So.2d at 233-234. 

The second, and equally sound, rationale is that the 
clause is contrary to tile public policy embodied in the 

statute. Phillips v. Midwest Mutual Insurance Company 

(1971), 329 F.Supp. 853. The policy behind the statute is 

to protect the policyholders from uninsured motorists in all 

instances. 

In this case, when exclusion (a) is analyzed under 

either or both of the above rationales, it is clear that the 

exclusion is a violation of public policy and Iqontana insurance law, and that it tries to limit the scope of coverage 

mandated by section 33-23-201, MCA. 

Appellant alleges that there is a connection between 

the automobile which is insured and the uninsured motorist 

coverage. It is contended that the connection is based upon 

the additional risk which the insurance company incurs by 

the operation of the insured vehicle. Also, it is contended 

that the risk of a party being injured by an uninsured 

motorist increases when a person is operating a motor 

vehicle. Therefore, appellant concludes that an insurer 

must attempt to exclude from its coverage any activity 

involving a risk for which it cannot toll-ect a premium or 

for which the premium cannot be calculated. 

The arguments made by appellant may be true, and they 

are certainly reflective of sound business judgment. However, they fail to address the underlying purpose and scope 

of the uninsured motorist statute. The court in Elledge v. 

barren (La.App. 1972), 263 So.2d 912, when discussing the 

purpose of its uninsured motorist statute, stated: 

"The purpose of the statute is to protect 

completely, those willing to accept its 

protection, from all harm, whatever their 

status--passenger, driver, pedestrian--at the 

time of injury, produced by uninsured 

~notorists. The only restrictions are that 
the plaintiff must be an insured, the defendant motorist uninsured, and that plaintiff 

be legally entitled to recover. We will not 

enlarge upon these qualifications and restrict the coverage of such a socially desirable policy by allowing insurance companies 

to pursue alleged 'business interests.' 

". . . An insurance company may not create 

irrational and illusory 'business interests' 

and interpose them as a bar to the comprehensive coverage required by our statute." 

263 So.2d at 918-919. 

Appellant's argument that premiums for uninsured 

motorist coverage are somehow risk-related is unfounded. 

The type of premium charged for uninsured motorist protection illustrates the coverage afforded. The rate is a flat 

rate, and coverage is available to everyone at the same 

rate. The rate is not related to risk. In this instance, 

the fact that Harlan had purchased uninsured motorist 

coverage for only one vehicle and paid a premium on this 

vehicle does not give rise to the exclusion of coverage on 

any other owned vehicles. In other words, the importance or 

value of the imputed business purpose for this exclusion 

seems tenuous as applied to the purchaser who owns more than 

one vehicl-e. Acquisition of insurance for a second vehicle, 

especially with premiums that are not risk-related, is 

relatively inexpensive; therefore, permitting the insurer to 

withhold coverage for the small return seems of dubious 

merit. Widiss, supra, S2.9 at 29. 

There is no requirement that the insured be occupying 

an insured vehicle. Therefore, there is no connection 

between the insured and the automobile listed on the policy. 

The named automobile merely illustrates that the person has 

satisfied the legal requirement of purchasing insurance and 

has uninsured motorist coverage unless expressly waived. 
Montana's uninsured motorist coverage is personal and portable. This point was exemplified by the court in Bradley v. 

Mid-Century Ins. Co. (Mich. 1980), 294 N.W.2d 141, when it 

held : 

"We conclude that once uninsured motorist 

coverage is purcl~ased, the insured and his 

relatives insured for liability have 

uninsured motorist protection under all 

circumstances. Uninsured motorist coverage, 

like no-fault coverage, is personal and 

portable. 

". . . 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." 294 N.W.2d at 152. 

It must be emphasized that all waivers of uninsured 

motorist coverage are not improper. The waiver must be 

expressed by the insured in a manner that is clear, concise 

and equitable to both parties involved in the insurance 

contract. The exclusion clause in question in this case 

does not satisfy this requirement. The Washington Supreme 

Court, in Federated American Ins. Co. v. Raynes (1977), 88 

Wash.2d 439, 563 P.2d 815, when discussing an exclusion 

clause similar to that presented here, stated: 

". . . R.C.W. 48.22.030 mandates uninsured 

motorist coverage 'for the protection of 

persons insured' under the policy, unless the 

named insured rejects such coverage. . . the 

parties may agree to a narrow definition of 

insured so long as that definition is applied 

consistently throughout the policy, but once 

it is determined that a person is an insured 

under the policy, that person is entitled to 

uninsured motorist coverage. Respondent is a 

named insured in F.A.I.'s policy. Exclusion 

(b) does not narrow the definition of insured 

so as to exclude from being an insured under 

the policy. Rather, the exclusion merely 

excludes coverage when the insured is injured 

in a certain situation, i.e., occupying a car 

owned by him but not insured by F.A.I. This 

attempt to exclude coverage for an insured is 

impermissible under R.C.W. 48.22.030." 563 
P.2d at 818. 

See also, Chaffee v. USF&G (1979), 181 ivlont. 1, 591 P.2d 

1102, 36 St.Rep. 398. 

The exclusion clause in the IDM policy is lost in the 

myriad of verbage that makes up the insurance contract. This 

particular exclusion clause would be unnoticeable by the 

average policyholder and can, therefore, never constitute an 

express waiver. 

The judgment of the District Court is affirmed. 

.'" Justice / QA~ 

We concur: 

- - 

Chief Justice .