No. 81-226 IN THESUPREME COURTOF THE STATEOFMONTANA

HELENJACOBSONand ELVAJ. DIKE, PersonalRepresentativesof the Estate of SammyD. Harlan, Plaintiffand Respondent,

IMPLEMENTDEALERSMUTUAL INSURANCECO. AND KENNETH HEIMER, DefendantandAppellant.

Appeal from: DistrictCourt of theFourth JudicialDistrict, Inand for the County of Missoula HonorableJamesB. Wheelis,Judgepresiding. CounselofRecord: ForAppellant: Worden,Thane & Haines, Missoula, Montana RobertJ. Phillips, Missoula,Montana ForRespondent: Garlington,Lohn & Robinson, Missoula,Montana PaulC. Meesmer argued, Missoula,Montana

Filed: Submitted: December 1,1981 Decided: ~€8 1T

### gqMr. Justice GeneB. Dalydelivered thedpinion of the Court. This is an appeal from the District Court of the FourthJudicial District of theState 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 ofBig Timber, Montana,

on June 20, 1978, when the 1974 Peterbilt tractor-trailer unitwhich he owned andwasdriving 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 theaccident. Harlan had purchased apolicy of automobile liability insurance from IDM on a 1971 Ford pickup truck which he owned. Thispolicy provided for uninsured motorist coverage in the amountof $25,000. Thepolicy of insurance issued by IDIvl on the Ford pickup truck contained an exclusion whichread: "Thispol-icydoesnot 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 struckby suchanautomobile

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# .." Montana's mandatory uninsured motorist coverage statute, section 33-23-201, MCA, requires allmotor vehicle liability insurancepolicies issued inthis stateto include uninsured motorist coverageunless thenamed insured rejects suchcoverage. 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 lossresulting 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 isprovided 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 ofuninsured motor vehicles because ofbodily 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 ispresented to this Court on appeal: Did the District Court err in holding that the insurance policy's exclusion (a) was not a permissible limitationunder 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, 290N.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 GuideTo 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 isnoreason toprevent thewithholding ofcoverageby the insurer. Widiss, supra, at 30; see also, Rodriquez v. Plaryland Indemnity Insurance Co. (1975), 24 Ariz.App. 392, 539 P.2d 196;Bartonv. American Family Mutual InsuranceCo. (* 1972), 485S.W.2d 628. Regardlessof 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-auseis ineffective because it reduces the scope of coverage required by the statutory mandate. Mullis v. State Farm Mutual Automobile InsuranceCo. (Fla.1971), 252So.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, 563P.2d 815. InMullis, 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 -thanare 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 operatorsofmotor vehicles because ofbodily injury." 252So.2d at 233-234. The second,and equally sound, rationale is that theclause 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 thepolicyholders 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 isaviolationofpublic policy and Iqontana insurance law, and that it tries to limit the scope of coverage mandated by section33-23-201,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 isbased upon the additional risk which the insurance company incurs by the operationof 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 cannotbe calculated. Thearguments made by appellantmay 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 thatthe 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 coverageof such a sociallydesirable policy by allowing insurance companies topursue alleged 'business interests.' 

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. . 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. Inother words, the importanceor value of the imputed business purpose for this exclusion

seems tenuous as applied to thepurchaser who owns more than

onevehicl-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 isno requirement that the insured be occupying

an insured vehicle. Therefore, there is no connection between the insured and the automobile listed onthepolicy. 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. Thispoint was exemplifiedby the court in Bradleyv. 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. 

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. . 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 ona pogo stick." 294N.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 thatpresented here, stated: 

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# . . R.C.W. 48.22.030 mandates uninsured motorist coverage 'for the protection of persons insured' under thepolicy, 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 isdetermined that a person is an insured under the policy, that person is entitled to uninsured motorist coverage. Respondent isa named insured in F.A.I.'s policy. Exclusion (b)doesnot narrow the definition of insured so as to exclude from being an insured under the policy. Rather, the exclusion merely excludes coveragewhen 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." 563P.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 IDMpolicy 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 expresswaiver. The judgment of theDistrict Court is affirmed.



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We concur:

- - Chief Justice 

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