Case Name: Jody STREFF and Kevin Streff, Plaintiffs and Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and State Farm Fire and Casualty Company, Defendants and Appellees
Court: South Dakota Supreme Court
Jurisdiction: South Dakota
Decision Date: 2017-12-13
Citations: 905 N.W.2d 319
Docket Number: 28009
Parties: Jody STREFF and Kevin Streff, Plaintiffs and Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and State Farm Fire and Casualty Company, Defendants and Appellees.
Judges: [¶18.] GILBERTSON, Chief Justice, and WILBUR, Retired Justice, concur.
Reporter: North Western Reporter 2d
Volume: 905
Pages: 319–327

Head Matter:
2017 S.D. 83
Jody STREFF and Kevin Streff, Plaintiffs and Appellants, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and State Farm Fire and Casualty Company, Defendants and Appellees.
28009
Supreme Court of South Dakota.
CONSIDERED ON BRIEFS ON APRIL 24, 2017
REASSIGNED ON SEPTEMBER 8, 2017
OPINION FILED 12/13/2017
RONALD A.. PARSONS, JR., A. RUSSELL JANKLOW of Johnson Janklow Abdallah, Reiter & Parsons LLP, Sioux Falls, South Dakota, Attorneys for plaintiffs and appellants.
HILARY L. WILLIAMSON, WILLIAM P. FULLER of Fuller & Williamson LLP, Sioux Falls, South Dakota, Attorneys for defendants and appellees.

Opinion:
SEVERSON, Justice
(on reassignment).
[¶1.] SDCL 58-11-9.4 requires underin-sured motorist (UIM) coverage in "motor vehicle liability polic[ies]" of insurance. Jody and Kevin Streff purchased a motor vehicle liability policy from one insurer. They also purchased a personal liability umbrella policy from a separate but related insurer. Both policies provided UIM coverage, but both excluded coverage for accidents caused by government vehicles. After Jody was' injured in an accident involving a government vehicle, a dispute arose concerning the enforceability of the exclusions. The circuit court ruled that the exclusion was not enforceable in the motor vehicle.liability policy but was- enforceable in the umbrella policy. The Streffs appeal the ruling regarding the umbrella policy. We reverse, holding that the South Dakota UIM statute is not limited to primary insurance policies and that the statute contemplates additional coverage. By extension, umbrella policies that include UIM coverage are subject to the same public policy prohibition on the exception of government vehicles from UIM coverage.
, Facts and Procedural History
[¶2.] The facts are not in dispute. The Streffs purchased a motor vehicle liability ^policy (auto policy) from State Farm Mutual Automobile Insurance Company. As required by SDCL 58-11-9.4, the auto policy included basic UIM coverage. The Streffs paid an additional premium for additional UIM coverage in the amount of $250,000 per person and $500,000 per accident.
• [¶3.] The Streffs also purchased a-separate $1 million personal liability umbrella policy (umbrella policy) from a related company — State Farm Fire and Casualty Company. The umbrella policy provided excess liability coverage for exposures relating to homes, watercrafts, and undesig-nated automobiles, The Streffs paid an additional premium to add excess UIM coverage to the umbrella policy. The umbrella policy's definitions and exclusions governed the nature and extent of the UIM coverage.
[114.] The umbreila policy's , definition of an "underinsured motor vehicle" excluded coverage for "land motor vehicle[s] . owned by, registered to, or rented to any government or any of its political subdivisions or agencies." The auto policy contained the same type of exclusion. Therefore, both policies excluded UIM coverage for accidents caused by government vehicles.
' [¶5.] In 2012, Jody was injured in an accident caused by a driver of a government owned vehicle. An Alamosa, Colorado police officer ran a red light, and his patrol vehicle collided with a second vehicle passing through the intersection. The second vehicle struck Jody, causing hér injuries.
[¶6.] The Streffs settled their personal injury claims with the Alamosa Police Department. At the time of the accident, Colorado law limited the amount of damages recoverable against a public entity or employee to $150,000. The Streffs notified State Farm that they were willing to accept a $120,000 settlement from the police department. They also notified State Farm they intended to make a claim for UIM benefits under both policies. State Farm waived its right of subrogation and gave the Streffs permission to accept the $120,000 settlement. However, State Farm advised the Streffs that it reserved its right to assert applicable policy provisions for any UIM claim.- The Streffs then filed this declaratory action to determine the enforceability of the government vehicle exclusion in both policies. The parties stipulated to the facts and filed cross-motions for summary judgment.
[¶7.] The circuit court granted both parties partial summary judgment. The court granted the Streffs' motion with respect to the auto policy. The court ruled that the government vehicle exclusion in the auto policy violated South Dakota public policy and was unenforceable because SDCL 58-11-9.4 required UIM coverage in "motor vehicle liability policies]." However, the court granted State Farm's motion with respect to the umbrella policy. The court ruled that the same exclusion was enforceable in the umbrella policy because SDCL 58-11-9.4 did not require UIM coverage in such policies.
[¶8.] State Farm did not appeal the court's ruling, and it paid the Streffs $100,000 in UIM benefits under the auto policy (the difference between the $150,000 the Streffs were deemed to have recovered from the underinsured driver and the policy's UIM limits of $250,000). The Streffs now appeal the circuit court's decision upholding the government vehicle exclusion in the umbrella policy.
Decision
[¶9.] The question on appeal is whether the public policy recognized by this Court regarding UIM coverage obtained in a "motor vehicle liability policy," see SDCL 58-11-9.4, extends to the insured's request for "additional [UIM] coverage" as indicated in SDCL 58-11-9.4. In other words, if our public policy dictates that an insurer cannot exclude UIM coverage in a "motor vehicle liability policy" for accidents involving government vehicles, does not that same public policy apply when, under SDCL 58-11-9.4, the insured requests additional UIM coverage through a supplemental umbrella policy? Although insurance coverage is generally a matter of contract, UIM coverage is mandated under this State's public policy as set forth in SDCL 58-11-9.4.
No motor vehicle liability policy of insurance may be issued or delivered in this state with respect to any motor vehicle registered or principally garaged in this state, except for snowmobiles, unless un-derinsured motorist coverage is provided therein at a face amount equal to the bodily injury limits of the policy. However, the coverage required by this section may not exceed the limits of one hundred thousand dollars because of bodily injury to or death of one person in any one accident and, subject to the limit for . one person, three hundred thousand dollars because of bodily injury to or death of two or more persons in any one accident, unless additional coverage is requested by the insured. Any policy insuring government owned vehicles may not be required to provide underinsured motorist coverage.
Id. To determine whether the Streffs' umbrella policy can validly exclude UIM coverage for government vehicles, we concentrate on the statutory language expressing the legislative intent underlying South Dakota's uninsured motorist statute.
[¶10.] To assist in this analysis, we find instructive the cases decided by the Kansas Supreme Court: Bartee v. R.T.C. Transportation Inc., 245 Kan. 499, 781 P.2d 1084 (1989), and the Supreme Court of Vermont: Insurance Co. of Pennsylvania v. Johnson, 186 Vt. 435, 987 A.2d 276 (2009). In Bartee, a family had two different policies with the same insurer: an automobile liability policy and a personal liability umbrella policy covering additional losses of up to $1 million. 781 P.2d at 1091. After the defendants' insurer became insolvent, Bartee filed a UIM claim on the family's automobile liability policy and personal liability umbrella policy. Id. at 1085-86. The Kansas Supreme Court considered whether Kansas's underinsured motorist statute required an umbrella policy to include UIM coverage. Id. at 1091; see also Kan. Stat. Ann. § 40-284(a) (West 2017).
[¶11.] The Kansas court reasoned that "[rjather than classifying the decisions of other jurisdictions as a majority or minority rule . differing decisions stem from the policy considerations and legislative intent underlying each state's uninsured motorist statutes." Bartee, 781 P.2d at 1092. Concentrating on the different policy rationales of different jurisdictions, the court posited that:
[sjtates which have statutes designed to provide a minimum level of recovery hold that the umbrella policies do not fall within the uninsured motorist statute, while states that have statutes designed to provide full recovery hold that the umbrella policy does fall within the uninsured motorist statute and must offer uninsured motorist coverage.
Id. at 1093.
[1112.] In Johnson, the Supreme Court of Vermont reviewed the distinction in UIM statutory language between state statutes requiring "minimum" coverage and the other states' statutory language requiring "full recovery." 987 A.2d at 284-86. The court determined that based on the language of Vermont's UIM statute, "the limits of UM/UIM coverage 'shall be the same' as those of the insured's basic liability coverage . " Id. at 286 (quoting 23 V.S.A. § 941(c) (West 2017)).
[1113.] The court also agreed with conclusions made by the Supreme Court of Indiana, in that a UIM statute requiring
UM/UIM coverage equal to liability coverage . ; "manifest[ed] an intent by [the] legislature to give insureds the opportunity for full compensation for injuries inflicted by financially irresponsible motorists. . To hold that an umbrella policy which by its terms covers risks above those insured in an underlying automobile policy does not apply to the underlying uninsured or underinsured motorist coverage would contravene that intent."
Id. at 284 (quoting United Nat'l Ins. Co. v. DePrizio, 705 N.E.2d 455, 461 (Ind. 1999)). The court concluded Vermont's UIM statute "by its terms, does apply to excess or umbrella policies that provide coverage against liability arising out of the ownership, maintenance, or use of a motor vehicle." Id. at 286.
[¶14.] Likewise, here, SDCL 58-11-9.4 manifests South Dakota's public policy as expressed by the Legislature to give insureds the opportunity for full compensation for injuries inflicted by financially irresponsible motorists. Again, the statute states, in pertinent part:
No motor vehicle liability policy of insurance may be issued . unless underin-sured motorist coverage is provided therein at a .face amount equal to the bodily injury limits of the policy.
However, the coverage required by this section may not exceed the limits of one hundred thousand dollars because of bodily injury to or death of one . unless additional coverage is requested by the insured.
SDCL 58-11-9.4 (emphasis added). The statute allows for UIM coverage to exceed $100,000 if "additional coverage is requested by the insured." Id. Further, the statute calls for "coverage . at a face amount equal to the bodily injury limits of the policy." Id. Therefore, the statute also contemplates the inclusion of additional coverage.requested by the insured,
[¶15.] In this-case,, the Streffs requested additional UIM coverage within a supplemental umbrella policy. Thus, the Streffs opted for additional coverage as- allowed by the statute. They requested and paid a separate premium to obtain primary coverage under their auto insurance policy in the amount of $250,000. .per person and $500,000 per accident. Then, they requested and paid a separate premium to purchase additional UIM coverage under the umbrella policy in the amount of $1 million. Under SDCL 58-11-9.4, they were allowed to do this to obtain additional protection for damages done unto them by uninsured motorists.
[¶16.] The Streffs were cautious enough to purchase additional coverage to protect themselves if damaged by an uninsured or underinsured motorist beyond their underlying policy limit of $250,000 per person and $500,000 per accident. They also paid additional premiums to cover such an event'through their umbrella policy, up to $1 million. Because SDCL 58-11-9.4 does not limit UM/UIM coverage to primary policies and contemplates additional UM/ UIM' coverage, the statute contemplates umbrella policies that include UM/UIM coverage. Therefore, umbrella policies are subject to the same public policy prohibition invalidating an exception from coverage for accidents involving government owned vehicles. Indeed, had the Streffs been struck by a privately owned, vehicle instead of a government owned vehicle, they would have unquestionably been further compensated by the additional uninsured motorist coverage obtained in their umbrella policy.
[¶17.] For these reasons, we reverse.
[¶18.] GILBERTSON, Chief Justice, and WILBUR, Retired Justice, concur.
[¶19.] ZINTER, Justice, and KERN, Justice, dissent.
[¶20.] JENSEN, Justice, not having been a member of the Court at the time this action was submitted to the Court, did not participate.
. This government vehicle exclusion must be distinguished from the government owned vehicle exception in SDCL 58-11-9.4. The exclusion is a contractual provision that limits the nature of UIM coverage actually provided in a policy. The exception is a statutory provision permitting insurers to exclude UIM coverage in policies insuring government owned vehicles. See id. ("Any policy insuring government owned vehicles may not be required to provide underinsured motorist coverage.").
. Although $120,000 was only 80% of the maximum recovery permitted under Colorado law, the Streffs agreed that their UIM claim would be treated as though they had recovered $150,000 from the underinsured driver.
. Because the facts are not in dispute, "our review is limited to determining whether the trial court correctly applied the law." De Smet Ins. Co. of S.D. v. Pourier, 2011 S.D. 47, ¶ 4 n.1, 802 N.W.2d 447, 448 n.1 (quoting Kobbeman v. Oleson, 1998 S.D. 20, ¶ 4, 574 N.W.2d 633, 635). "Statutory construction and insurance contract interpretation are questions of law reviewable de novo." Id. (quoting Demaray v. De Smet Farm Mut. Ins. Co., 2011 S.D. 39, ¶ 8, 801 N.W.2d 284, 287).