Case Name: PAUL DELOS REYES et al., Plaintiffs-Appellants, v. THE TRAVELERS INSURANCE COMPANIES, Defendant-Appellee
Court: Illinois Appellate Court
Jurisdiction: Illinois
Decision Date: 1988-09-21
Citations: 175 Ill. App. 3d 169
Docket Number: No. 87-0960
Parties: PAUL DELOS REYES et al., Plaintiffs-Appellants, v. THE TRAVELERS INSURANCE COMPANIES, Defendant-Appellee.
Judges: 
Reporter: Illinois Appellate Court Reports, Third Series
Volume: 175
Pages: 169–176

Head Matter:
PAUL DELOS REYES et al., Plaintiffs-Appellants, v. THE TRAVELERS INSURANCE COMPANIES, Defendant-Appellee.
First District (3rd Division)
No. 87—0960
Opinion filed September 21, 1988.
McNAMARA, J., dissenting.
Topper & Weiss, Ltd., of Chicago (Barry Weiss, of counsel), for appellants.
Raymond R. Cusack and Nancy Tordai O’Shaughnessy, both of Johnson, Cusack & Bell, Ltd., of Chicago (Thomas H. Fegan, of counsel), for appellee.

Opinion:
PRESIDING JUSTICE WHITE
delivered the opinion of the court:
In this case we confront a question of the proper interpretation of an insurance contract. Plaintiffs Paul délos Reyes and Priscilla délos Reyes sued for a judgment declaring that the coverage limit pertinent to this case is $25,000, under the policy in which defendant, The Travelers Insurance Companies (Travelers), agreed to cover the driver responsible for the automobile accident which caused plaintiffs' injuries. The trial court granted Travelers' motion for summary judgment and plaintiffs appeal.
On August 18, 1984, plaintiff Paul délos Reyes was a passenger in his own truck, which his brother Remar was driving, when they were involved in an accident in Indiana. Primary coverage for the accident, was provided by the Reyes' insurance company. Travelers provided excess insurance coverage under a policy issued in Massachusetts to Paul's sister, Aquilina Panaligan, which included Remar as an additional insured and provided coverage for bodily injury limited to $10,000 per person. The policy states:
"[W]e will pay damages to people injured or killed in accidents if you or a household member is legally responsible for the accident. * '
If the accident occurs in any * state [other than Massachusetts] * your policy will automatically apply to that accident as follows:
If the state * has:
1. A financial responsibility law or similar law specifying limits of liability for bodily injury or property damage higher than the limits you have purchased, your policy will provide the higher specified limits.
2. A compulsory insurance or similar law requiring your auto to have insurance whenever it is used in that state *, your policy will provide at least the required minimum amounts and types of coverage."
The Indiana Motor Vehicle Safety Responsibility and Driver Improvement Act, in effect at the time of the accident, provided:
"Proof of financial responsibility shall mean proof of ability to respond in damages for liability thereafter incurred, arising out of the * use of a motor vehicle, in the amount of twenty-five thousand dollars ($25,000) because of bodily injury to or death of any one (1) person *." (Ind. Code Ann. §9—2—1—15 (West 1979 & Supp. 1987).)
Travelers offered plaintiffs $10,000. Plaintiffs rejected the offer and brought this action for a judgment declaring that in the words of the policy this accident did occur in a State other than Massachusetts, to wit, Indiana, and that that State did have a financial responsibility law specifying limits higher than $10,000, to wit, $25,000, and therefore the policy's coverage limit for the accident is $25,000.
Compulsory automobile insurance laws, which are in effect in
a majority of the 50 States, require automobile owners to prove their ability to respond in damages, through either a liability bond, a certificate of self-insurance, or a policy of liability insurance, as a prerequisite to registering the automobile. Financial responsibility laws, in contrast, do not provide prerequisites for registration; the laws apply only after the automobile owner has had an accident. (12A G. Couch, Insurance pars. 45:679, 45:721 (2d ed. rev. 1981).) "A financial responsibility law effectively allows a motorist one 'free' accident." (Field v. Western Preferred Casualty Co. (La. App. 1983), 437 So. 2d 344, 346; see 8 A.L.R.Sd 388, 390 (1966).) Indiana has a financial responsibility law which "does not require a resident or non-resident to carry motor vehicle liability insurance * until after the first accident occurs." (Grimes v. Government Employees Insurance Co. (Ind. App. 1980), 402 N.E.2d 50, 52.) Thus, the parties agree that the Indiana law does not directly apply to the accident at issue in this case. However, plaintiffs argue that the Indiana law does "specify! ] limits of liability," within the meaning of the contract, of $25,000.
We apply general principles of contract construction in determining the meaning of insurance policies. (Wisdom v. Stonewall In surance Co. (1986), 139 Ill. App. 3d 1082, 1084, 487 N.E.2d 1289.) Where the terms of an insurance policy are clear and unambiguous, the court must give effect to those terms. (Wisdom, 139 Ill. App. 3d at 1084.) The court must interpret each provision in light of the entire policy. (Western Casualty & Surety Co. v. Brochu (1985), 105 Ill. 2d 486, 493, 475 N.E.2d 872.) Any ambiguous terms in the insurance agreement will be construed against the insurer as the party who prepared the agreement. Kirk v. Financial Security Life Insurance Co. (1978), 75 Ill. 2d 367, 371, 389 N.E.2d 144.
The accident in this case occurred in Indiana. Therefore, the policy "automatically applies] to that accident" its provision incorporating the limits of liability specified in Indiana's financial responsibility law. Indiana has a financial responsibility law which provides that certain drivers must be able to prove that they have $25,000 worth of insurance for bodily injury caused by the use of a motor vehicle. Ind. Code Ann. §9—2—1—15 (West 1979 & Supp. 1987).
Travelers contends that the policy provides the higher limits only if the financial responsibility law requires the owner to have such coverage at the time of the accident. The policy provision regarding compulsory insurance applies only when the law "requir[es]" certain amounts of coverage. However, the policy states on its face that the financial responsibility provision applies whenever the law of the State in which the accident occurs "specifpes]," not requires, higher limits. Since the contract does not define the term "specifying," we look to its common meaning. (Robinson v. Hertz Cory. (1986), 140 Ill. App. 3d 687, 688, 489 N.E.2d 332.) According to Webster's Third New International Dictionary 2187 (1971), "specify" means "[t]o mention or name in a[n] * explicit manner: tell or state precisely or in detail." The Indiana Motor Vehicle Safety Responsibility and Driver Improvement Act mentions explicitly, and states precisely, the amount of $25,000 as the minimum limit of liability for bodily injury.
Travelers relies on Wisdom, Grimes, and Green v. State Farm Mutual Automobile Insurance Co. (1976), 168 Ind. App. 434, 343 N.E.2d 828, to support a more restrictive interpretation of the policy. However, the policies interpreted in those cases included strikingly different words from the policy at issue herein, and therefore those cases do not support the result Travelers seeks. In Wisdom, the policy stated: " 'If an insured person becomes subject to the financial responsibility law * of another state * we will interpret this [policy] to provide any broader coverage required * by those laws *.'" (Emphasis added.) (Wisdom, 139 Ill. App. 3d at 1083.) Travelers limited the application of its compulsory insurance provision to circum stances in which the law required such insurance; by the express terms of its policy, in clear contrast, it stated that the financial responsibility provision applied whenever State law specified a higher limit. Again in Grimes the policy provided coverage beyond the shown policy limits "[i]f, under the provision of the motor vehicle financial responsibility law of any state * a non-resident [insured] is required to maintain insurance" in excess of the policy's coverage. (Emphasis added.) Grimes, 402 N.E.2d at 51.
In Green the policy stated that it "is certified as proof of financial responsibility for the future under the provisions of the motor vehicle financial responsibility law of any state." (Emphasis added.) (Green, 168 Ind. App. at 436, 343 N.E.2d at 829.) Since financial responsibility laws apply only after the owner has had an accident, the provision that the policy is proof of responsibility for the future clearly restricts its own operation, clarifying that the clause does not pertain to the first accident. The provision at issue in the case at bar does not similarly restrict its application. It clearly provides increased coverage when there are financial responsibility laws "specifying," rather than "requiring," coverage in excess of the policy amounts.
Travelers asks us to interpret the contract as though it said that the policy would apply higher limits if the State in which the accident occurred has a "financial responsibility law or similar law [which is applicable to the accident] specifying limits of liability." We will not read into a contract terms which the parties did not include (Walsh v. State Farm Mutual Automobile Insurance Co. (1968), 91 Ill. App. 2d 156, 164, 234 N.E.2d 394), especially when the added terms would serve to restrict coverage. National Discount Shoes, Inc. v. Royal Globe Insurance Co. (1981), 99 Ill. App. 3d 54, 60, 424 N.E.2d 1166.
We find that under the clear and unambiguous terms of the insurance' agreement, Travelers agreed to provide coverage of up to $25,000 per person for bodily injury caused by any accident in Indiana, including the accident at issue in this case. Accordingly, we reverse the trial court order granting Travelers' motion for summary judgment and we grant plaintiffs' motion for summary judgment.
Reversed.
FREEMAN, J., concurs.