Title: Wadzinski v. Auto-Owners Ins. Co.
Citation: 2012 WI 75
Docket Number: 2009AP002752
State: Wisconsin
Issuer: Wisconsin Supreme Court
Date: July 5, 2012

2012 WI 75 
 
SUPREME COURT OF WISCONSIN 
 
 
 
 
 
CASE NO.: 
2009AP2752 
COMPLETE TITLE: 
 
Michelle B. Wadzinski, individually and as 
personal representative of the Estate of Steven 
M. Wadzinski, 
          Plaintiff-Appellant, 
     v. 
Auto-Owners Insurance Company, 
          Defendant-Respondent-Petitioner. 
 
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
Reported at: 332 Wis. 2d 379, 797 N.W. 2d 910 
(Ct. App. 2011 – Published) 
PDC No: 2011 WI App 47 
 
 
OPINION FILED: 
July 5, 2012   
SUBMITTED ON BRIEFS: 
        
ORAL ARGUMENT: 
January 10, 2012 
 
 
SOURCE OF APPEAL: 
 
 
COURT: 
Circuit   
 
COUNTY: 
Brown 
 
JUDGE: 
William M. Atkinson  
 
 
 
JUSTICES: 
 
 
CONCURRED: 
  
 
DISSENTED: 
BRADLEY, J., dissents (Opinion filed). 
ABRAHAMSON, C.J., joins dissent.      
 
NOT PARTICIPATING:         
 
 
 
ATTORNEYS: 
 
For the defendant-respondent-petitioner there were briefs 
filed by Arthur E. Kurtz, Timothy M. Barber and Axley Brynelson, 
LLP, Madison, and oral argument by Arthur E. Kurtz. 
 
For the plaintiff-appellant there were briefs filed by R. 
George Burnett and Liebmann, Conway, Olejniczak & Jerry, S.C., 
Green Bay, and oral argument by R. George Burnett. 
 
 
2012 WI 75
NOTICE 
This opinion is subject to further 
editing and modification.  The final 
version will appear in the bound 
volume of the official reports.   
No.   2009AP2752 
(L.C. No. 
2007CV1827) 
STATE OF WISCONSIN  
 
 
   : 
IN SUPREME COURT 
 
 
Michelle B. Wadzinski, individually and as 
personal representative of the Estate of Steven 
M. Wadzinski, 
 
          Plaintiff-Appellant, 
 
     v. 
 
Auto-Owners Insurance Company, 
 
          Defendant-Respondent-Petitioner. 
 
FILED 
 
JUL 5, 2012 
 
Diane M. Fremgen 
Clerk of Supreme Court 
 
 
 
 
 
REVIEW of a decision of the Court of Appeals.  Reversed.   
 
¶1 
PATIENCE DRAKE ROGGENSACK, J.   This is a review of a 
published decision of the court of appeals.1  That court reversed 
the decision of the circuit court,2 which had granted summary 
judgment in favor of Auto-Owners Insurance Company.  The sole 
question for review is whether a reasonable insured would read 
                                                 
1 Wadzinski v. Auto-Owners Ins. Co., 2011 WI App 47, 332 
Wis. 2d 379, 797 N.W.2d 910. 
2 The 
Honorable William M. Atkinson of Brown County 
presided. 
No. 
2009AP2752   
 
2 
 
the Executive Umbrella insurance policy at issue here to afford 
$2,000,000 of uninsured motorist (UM) coverage. 
¶2 
This case arose from a fatal motorcycle accident in 
which Steven Wadzinski was struck and killed by an uninsured 
motorist.  Mr. Wadzinski's wife, Michelle Wadzinski, seeks UM 
coverage under an umbrella insurance policy that Mr. Wadzinski's 
company carried on him at the time of his death.  The primary 
dispute centers on the meaning of an endorsement to the 
Executive Umbrella policy, and whether that endorsement causes 
contextual ambiguity such that a reasonable insured would expect 
$2,000,000 of UM coverage under the policy.  The circuit court 
held that the Executive Umbrella policy was clearly intended to 
provide only third-party liability coverage and granted summary 
judgment in favor of Auto-Owners.  The court of appeals reversed 
the circuit court, concluding that the Executive Umbrella policy 
was contextually ambiguous, and therefore, the policy should be 
construed in favor of the insured to afford coverage. 
¶3 
We conclude that the Executive Umbrella policy at 
issue does not afford first-party UM coverage.  The policy's 
grant of coverage unambiguously provides only excess third-party 
liability coverage.  Further, the language and structure of the 
endorsement to the Executive Umbrella policy demonstrate that 
the endorsement reaffirms the umbrella policy's exclusion of 
first-party coverage.  Additionally, an exception to that 
exclusion clarifies that the exclusion is not intended to 
interfere 
with 
first-party 
coverage 
in 
other 
Auto-Owners 
policies that are referred to in Schedule A.  Accordingly, we 
No. 
2009AP2752   
 
3 
 
conclude that the circuit court's summary judgment in favor of 
Auto-Owners was proper, and therefore, we reverse the decision 
of the court of appeals. 
I.  BACKGROUND3 
¶4 
On August 3, 2006, Steven Wadzinski was struck and 
killed by 
an 
uninsured motorist while he was riding a 
motorcycle.  At the time of the accident, Mr. Wadzinski was the 
Chief Executive Officer of Pecard Chemical Company, Inc., which 
had purchased multiple insurance policies through Auto-Owners.  
In the Commercial Auto Insurance policy (No. 41-321-013-00), 
Pecard Chemical is the named insured.  That policy's grant of 
coverage provides $1,000,000 in third-party automobile liability 
coverage, 
as 
well 
as 
first-party 
coverage 
for 
UM 
and 
underinsured motorist (UIM) benefits.  Each line of coverage (UM 
& UIM) affords $150,000 per person or $300,000 per occurrence of 
first-party coverage.  The total premium for the Commercial Auto 
policy is $1,371.84.4  Pecard Chemical is also the named insured 
under the Commercial Umbrella policy (No. 96-886-558-00), which 
policy's grant of coverage provides up to $5,000,000 in third-
party liability coverage.  The annual premium for the Commercial 
                                                 
3 The underlying facts of this case are not in dispute. 
4 The Commercial Auto policy also includes other types of 
coverage not relevant here. 
No. 
2009AP2752   
 
4 
 
Umbrella policy is $2,923.  The Commercial Umbrella policy 
specifically excludes UM and UIM coverage.5 
¶5 
In a third Auto-Owners policy, the Executive Umbrella 
policy, Mr. Wadzinski is the named insured.  The Executive 
Umbrella policy shares a policy number with the Commercial 
Umbrella policy under which Pecard Chemical is the named 
insured.  The Executive Umbrella policy, whose language is now 
at issue, provides $2,000,000 in excess coverage over the 
underlying policies that are listed in Schedule A.  Those 
underlying policies are a Comprehensive Personal Liability 
policy (not at issue here) and an Automobile Liability policy 
with a $500,000 minimum coverage requirement.  The annual 
premium for the Executive Umbrella policy is $234. 
¶6 
After 
Mr. 
Wadzinski's 
death, 
Auto-Owners 
paid 
Wadzinski's estate the limits of the Commercial Auto policy's UM 
coverage, $150,000.  When Auto-Owners refused the estate's claim 
for payment of $2,000,000 of UM benefits under the Executive 
Umbrella policy, Mrs. Wadzinski, individually and as the 
representative of Mr. Wadzinski's estate, brought suit against 
Auto-Owners. 
                                                 
5 The Commercial Umbrella policy's UM exclusion provided 
that coverage under the policy did not apply to "[b]odily injury 
or 
property 
damage 
arising 
out 
of 
uninsured 
motorist, 
underinsured motorist, automobile no-fault, personal injury 
protection or any other similar law."  The parties do not 
dispute that this exclusion precludes recovery of payments for 
UM coverage under the Commercial Umbrella policy. 
No. 
2009AP2752   
 
5 
 
¶7 
The provision in the Executive Umbrella policy at the 
center of the parties' dispute is an endorsement captioned 
"Exclusion of Personal Injury to Insureds Following Form."  That 
endorsement provides as follows:  "We do not cover personal 
injury to you or a relative.  We will cover such injury to the 
extent that insurance is provided by an underlying policy listed 
in Schedule A."  The policies listed in Schedule A were issued 
by Auto-Owners.   
¶8 
The parties brought competing motions for summary 
judgment on the issue of UM coverage under the Executive 
Umbrella policy.  Auto-Owners asserted that the Executive 
Umbrella 
policy 
"clearly 
and 
unambiguously 
excludes 
an 
additional claim for UM coverage."  Wadzinski argued that the 
Executive Umbrella policy, when read as a whole, is ambiguous 
and that a reasonable insured would expect $2,000,000 in UM 
coverage under the policy.  After briefing and argument, the 
Brown County Circuit Court granted summary judgment in favor of 
Auto-Owners.  The court concluded that it was "[o]bviously[,] 
blatantly, unambiguously clear" that the Executive Umbrella 
policy provided only third-party liability coverage and no 
first-party coverage.  Wadzinski appealed. 
¶9 
The court of appeals reversed the circuit court's 
grant of summary judgment.  Wadzinski v. Auto-Owners Ins. Co., 
2011 WI App 47, ¶1, 332 Wis. 2d 379, 797 N.W.2d 910.  The court 
of appeals concluded that the Executive Umbrella policy was 
contextually ambiguous, and therefore, an insured reading the 
policy and endorsements could reasonably expect the policy to 
No. 
2009AP2752   
 
6 
 
afford $2,000,000 of first-party UM coverage.  Auto-Owners 
petitioned this court for review, which we granted. 
II.  DISCUSSION 
A.  Standard of Review 
¶10 The circuit court interpreted the insurance contract 
and granted Auto-Owners' motion for summary judgment on the 
question of whether the Executive Umbrella policy affords 
coverage for losses caused by uninsured motorists.  Insurance 
contract interpretation is a question of law that we review 
independently of decisions of the circuit court and court of 
appeals, while benefitting from their analyses.  Acuity v. 
Bagadia, 2008 WI 62, ¶12, 310 Wis. 2d 197, 750 N.W.2d 817.  
Whether an insurance contract is ambiguous is also a question of 
law for our independent determination.  Id., ¶13.  When 
reviewing summary judgment, we apply the same methodology as the 
circuit court to determine whether, under Wis. Stat. § 802.08(2) 
(2009-10),6 the moving party is entitled to judgment as a matter 
of law.  Green Spring Farms v. Kersten, 136 Wis. 2d 304, 315, 
401 N.W.2d 816 (1987). 
B.  Insurance Policy Interpretation 
¶11 An insurance policy is a contract, and a court's 
primary purpose in interpreting a contract for insurance is to 
give effect to the intentions of the parties.  Folkman v. 
Quamme, 2003 WI 116, ¶12, 264 Wis. 2d 617, 665 N.W.2d 857.  The 
                                                 
6 All subsequent references to the Wisconsin Statutes are to 
the 2009–10 version unless otherwise indicated. 
No. 
2009AP2752   
 
7 
 
parties' intentions are presumed to be expressed in the language 
of the policy.  Id., ¶¶12–13.  We construe the policy language 
from the perspective of a reasonable insured, giving the words 
used their common and ordinary meaning.  Stubbe v. Guidant Mut. 
Ins. Co., 2002 WI App 203, ¶8, 257 Wis. 2d 401, 651 N.W.2d 318.  
On the other hand, where the policy language at issue "is 
susceptible to more than one reasonable construction," it is 
ambiguous.  Id.  Where ambiguity exists in a grant of coverage, 
we will construe the policy against the drafter, and in favor of 
the reasonable expectations of the insured.  Folkman, 264 
Wis. 2d 617, ¶¶16–17. 
¶12 However, 
the principle that ambiguities will be 
construed in favor of the insured is not without limits.  
Primarily, this rule of construction applies to determine the 
breadth of initial grants of coverage.  Accordingly, ambiguities 
in a grant of coverage are construed broadly in favor of 
affording coverage.  Acuity, 310 Wis. 2d 197, ¶13.  This 
benefits the insured.  Ambiguities in exclusions to a grant of 
coverage are construed narrowly, thereby limiting the exclusion.  
Frost v. Whitbeck, 2001 WI App 289, ¶9, 249 Wis. 2d 206, 638 
N.W.2d 325.  This also favors the insured.  However, a 
reasonable insured is presumed to understand that an exclusion 
in an insurance policy limits, rather than confers, coverage.  
Bulen v. W. Bend Mut. Ins. Co., 125 Wis. 2d 259, 263, 371 N.W.2d 
392 (Ct. App. 1985).  Stated otherwise, clauses of exclusion 
subtract from coverage, rather than add to coverage.  Id. 
No. 
2009AP2752   
 
8 
 
¶13 Further, where an insurance policy's initial grant of 
a type of coverage is clear, a court will not interpret an 
ambiguity in an exception to an exclusion to operate as a grant 
of an additional type of coverage.  See Jaderborg v. Am. Family 
Mut. Ins. Co., 2000 WI App 246, ¶17, 239 Wis. 2d 533, 620 N.W.2d 
468 ("Coverage cannot be established by an exception to an 
exclusion.") (citing Arnold P. Anderson, Wisconsin Insurance Law 
§ 1.9B (4th ed. 1998)).  An exclusion must be read in 
conjunction with the policy's initial grant of coverage because 
it is on that initial grant of coverage that the exclusion 
operates.  An "'exception to an exclusion [from coverage] does 
not, standing alone, create coverage unless the claim is 
cognizable under the general grant of coverage.'"  Jaderborg, 
239 Wis. 2d 533, ¶17 (citation omitted). 
¶14 These principles simply reflect the traditional three-
part inquiry into questions of insurance coverage.  When 
determining whether a policy provides coverage, a court first 
looks to the initial grant of coverage.  See Estate of Sustache 
v. Am. Family Mut. Ins. Co., 2008 WI 87, ¶22, 311 Wis. 2d 548, 
751 N.W.2d 845.  "If the court determines that the policy was 
not intended to cover the claims asserted, the inquiry ends."  
Id.  If the court determines that the initial grant of coverage 
does cover the type of claim presented, the second step requires 
the court to examine the policy's exclusions to determine 
whether coverage has been withdrawn by an exclusion.  See Am. 
Family Mut. Ins. Co. v. Am. Girl, Inc., 2004 WI 2, ¶24, 268 
Wis. 2d 16, 673 N.W.2d 65.  Third, if coverage for the claim has 
No. 
2009AP2752   
 
9 
 
been 
withdrawn 
by 
an 
exclusion, 
the 
court 
examines 
any 
exceptions to that exclusion that might reinstate coverage for 
the claim.  See id. 
¶15 Two 
aspects 
of 
this 
established 
inquiry 
are 
particularly relevant here.  First, a policy's initial grant of 
coverage is a separate analysis that precedes examination of a 
policy exclusion and exceptions to the exclusion.7  Second, when 
we examine exclusions and their exceptions, we do so with a 
slightly modified focus because the analysis of whether an 
exclusion or an exception applies presumes that the claim comes 
within the initial grant of coverage.  Under this method of 
inquiry, exclusions are construed narrowly.  Additionally, an 
exception to an exclusion cannot create coverage where the 
policy's initial grant of coverage does not provide that type of 
coverage.  See id. 
¶16 Furthermore, although we will resolve coverage and 
exclusion ambiguities in favor of an insured's reasonable 
expectations, this interpretive method does not require us to 
"simply adhere to any interpretation that is grammatically 
plausible and creates coverage for insureds."  State Farm Mut. 
Auto. Ins. Co. v. Langridge, 2004 WI 113, ¶47, 275 Wis. 2d 35, 
683 N.W.2d 75.  A term that is potentially ambiguous when read 
in isolation may be clarified by reference to the policy as a 
                                                 
7 This corresponds to the logical and objectively reasonable 
inquiry in which an insured will engage when examining his or 
her policy:  Is there coverage under this policy? Is coverage 
somehow excluded? Are there any exceptions to that exclusion 
that might reinstate coverage? 
No. 
2009AP2752   
 
10 
 
whole, and we will, therefore, examine the effect of individual 
terms within the context of the entire policy when resolving 
claimed ambiguities.  See Blum v. 1st Auto & Cas. Ins. Co., 2010 
WI 78, ¶20, 326 Wis. 2d 729, 786 N.W.2d 78.   
¶17 In addition to the language used in the policy, we 
will look to the purpose of the particular insurance and the 
kind of coverage that a reasonable person in the insured's 
position would expect under the policy.8  See id., ¶¶23–28.  
Accordingly, where one potential interpretation of an allegedly 
ambiguous term or phrase would contravene the purpose of the 
insuring agreement or would expand coverage beyond the kind of 
coverage contemplated in the policy, such interpretation will be 
rejected as unreasonable.  See id., ¶¶31–32. 
¶18 Language in an insurance policy's grant of coverage 
may be ambiguous such that an insured may reasonably expect the 
terms to mean that coverage is provided for the claim, or that 
an exclusion from coverage is inapplicable.  See Vandenberg v. 
Cont'l Ins. Co., 2001 WI 85, ¶40, 244 Wis. 2d 802, 628 N.W.2d 
876.  Alternatively, language that is seemingly clear may be 
made ambiguous in the context of the policy as a whole.  
                                                 
8 Although the factor of policy cost will not be dispositive 
in ascertaining the parties' intentions, the amount paid for 
coverage may lend support to the conclusion that potentially 
ambiguous terms should be construed one way rather than another.  
Cf. Gen. Star Indem. Co. v. Bankr. Estate of Lake Geneva Sugar 
Shack, Inc., 215 Wis. 2d 104, 120-21, 572 N.W.2d 881 (Ct. App. 
1997) (relatively low premium for insurance policy buttressed 
conclusion that parties did not contemplate policy to cover more 
substantial risks). 
No. 
2009AP2752   
 
11 
 
Folkman, 264 Wis. 2d 617, ¶19.  This "contextual ambiguity" 
arises when a policy provision that may at first seem 
unambiguous becomes susceptible to more than one reasonable 
meaning when read in the context of other policy language.  Id., 
¶21.  Asserted contextual ambiguities also may be disproved by 
examination of the policy as a whole.  See Blum, 326 Wis. 2d 
729, ¶32. 
¶19 For example, under the "Coverages" section of the 
Executive Umbrella policy, only one type of coverage is 
afforded:  third-party liability.  The policy states that Auto-
Owners "will pay on behalf of the insured the ultimate net loss 
in excess of the retained limit which the insured becomes 
legally obligated to pay as damages because of personal injury 
or property damage."9   
¶20 UM coverage is first-party coverage; it is a different 
type of coverage than third-party liability coverage.10  First-
                                                 
9 As applicable here, the definition of "retained limit" 
provides 
that 
Auto-Owners' 
liability 
under 
the 
Executive 
Umbrella does not arise until "the limits of liability . . . for 
each policy listed or insurance described in Schedule A" are 
exceeded.  Again, this is an affirmation of third-party 
liability coverage. 
10 As early as 1987, the Wisconsin Insurance Commissioner 
exempted umbrella policies from the statutory requirement that 
all automobile liability policies afford UM coverage.  See Wis. 
Admin. Code § INS 6.77(4)(a) (Jan. 2012); see also Wis. Stat. 
§ 632.32(1) and (4)(a)1. (2005–06) (requiring that all auto 
policies include UM coverage, "[e]xcept as otherwise provided," 
Wis. Stat. § 632.32(1) (2005-06)).  Wadzinski does not assert 
here that UM coverage was required in umbrella policies at the 
time of the accident, and we therefore do not address the issue 
further. 
No. 
2009AP2752   
 
12 
 
party coverage does not come within the policy's statement that 
it will pay that "which the insured becomes legally obligated to 
pay as damages," because the phrase describes only third-party 
liability coverage.  Furthermore, first-party coverage requires 
a specific grant of that type of coverage in order to add to the 
third-party 
liability 
coverage 
initially 
granted. 
 
See 
Muehlenbein v. W. Bend Mut. Ins. Co., 175 Wis. 2d 259, 266-67, 
499 N.W.2d 233 (Ct. App. 1993) (concluding that a court first 
considers the type of coverage afforded).  Auto-Owners' grant of 
coverage unambiguously, and exclusively, provides third-party 
coverage.11 
¶21 The question then becomes whether the endorsement that 
contains an exception to an exclusion of first-party coverage 
provides a grant of an additional type of coverage, i.e., first-
party coverage.  As we have explained above, the initial grant 
                                                 
11 The Executive Umbrella policy's "Insuring Agreement" 
provides general guidance in interpreting the policy.  It 
states: 
 
We agree to provide insurance subject to all the 
terms of this policy.  In return, you must pay the 
premium and comply with all the policy terms. 
 
This 
policy applies to personal injury and 
property damage which occur during the policy period 
as shown in the Declarations.  The limits of our 
liability and the premium are also shown in the 
Declarations. 
Accordingly, the Insuring Agreement's references to the relevant 
policy provisions affirm that the policy provides coverage for 
injuries or property damage suffered by third-parties, not 
injuries or property damage suffered by the insured. 
No. 
2009AP2752   
 
13 
 
of coverage in the Executive Umbrella policy is for third-party 
liability coverage; on that point, there is no dispute between 
the parties.12  If the policy did not include an endorsement 
captioned "Exclusion of Personal Injury to Insureds Following 
Form" and its exception to that exclusion, there would be no 
argument made that the policy affords more than third-party 
liability coverage.   
¶22 Accordingly, we begin by examining the words used in 
the endorsement's exclusion and the exclusion's exception.  We 
do so in the context of the policy in which they appear: 
EXCLUSION OF PERSONAL INJURY TO INSUREDS 
FOLLOWING FORM 
We do not cover personal injury to you or a relative.  
We will cover such injury to the extent that insurance 
is provided by an underlying policy listed in Schedule 
A. 
(Emphasis added.) 
¶23 The caption to the endorsement gives notice that what 
is to follow is an exclusion from coverage for the insured's 
                                                 
12 The policy's grant of coverage states that Auto-Owners 
"will pay on behalf of the insured the ultimate net loss in 
excess of the retained limit which the insured becomes legally 
obligated to pay as damages because of personal injury or 
property damage."  This is an unambiguous statement of third-
party liability coverage. 
No. 
2009AP2752   
 
14 
 
first-party personal injury claims.13  However, interpretation of 
an insurance policy cannot rest on a caption alone; the entire 
policy provision must be considered.  See Ott v. All-Star Ins. 
Corp., 99 Wis. 2d 635, 645, 299 N.W.2d 839 (1981).   
¶24 The statements in the endorsement about what "we do 
not cover" or what "we will cover" are statements of Auto-
Owners' obligations under the Executive Umbrella policy and 
Auto-Owners' obligations under the additional policies listed in 
Schedule A.  Stated otherwise, the "Comprehensive Personal 
Liability" policy and the "Automobile Liability" policy, listed 
in Schedule A of the Executive Umbrella policy, were issued by 
Auto-Owners.  Therefore, no other vendor of insurance has any 
impact on the interpretation of the endorsement at issue here 
and no other vendor will make payments under either of the 
underlying policies described in Schedule A.   
¶25 The language of the endorsement is helpful in other 
ways too.  The first sentence of the endorsement provides that, 
"We do not cover personal injury to you or a relative."  The 
Executive Umbrella policy defines "we":  "'We,' 'us' or 'our' 
means the Company providing this insurance."  A reasonable 
insured would therefore understand that "we" refers to Auto-
                                                 
13 Including an endorsement to clarify the limited scope of 
coverage is a valid and permissible use of an endorsement.  
Muehlenbein v. W. Bend Mut. Ins. Co., 175 Wis. 2d 259, 268–69, 
499 N.W.2d 233 (Ct. App. 1993).  A provision that simply 
reaffirms existing coverage is not rendered meaningless by its 
repetition; rather, the reiteration serves to strengthen the 
conclusion that first-party UM coverage was not afforded under 
the Executive Umbrella policy.  See id. 
No. 
2009AP2752   
 
15 
 
Owners.  There can be no misunderstanding that first-party 
coverage 
is 
not 
created 
by 
the 
first 
sentence 
of 
the 
endorsement. 
¶26 The second sentence of the endorsement provides, "We 
will cover such injury to the extent that insurance is provided 
by an underlying policy listed in Schedule A."  Again, "We" 
refers to Auto-Owners.  "Such injury" refers back to "personal 
injury to you or a relative" in the first sentence.  By so 
referring, the phrase assures that the first sentence does not 
interfere 
with 
an 
independent 
obligation 
for 
first-party 
coverage that was undertaken in a policy listed in Schedule A 
and issued by Auto-Owners.14  The nature of that independent 
obligation is explained as:  "to the extent that insurance is 
provided by an underlying policy listed in Schedule A."  
Accordingly, any obligation that Auto-Owners has for first-party 
                                                 
14 Additionally, 
Wadzinski 
argues 
that 
Wis. 
Stat. 
§ 632.32(6)(b) prohibits Auto-Owners from disclaiming coverage 
for its own insured under the Executive Umbrella policy because 
that statute forbids an insurer from excluding from coverage 
"[A]ny person who is a named insured."  As discussed above, the 
Insurance Commissioner exempted umbrella policies from the 
requirement of affording UM coverage, so an umbrella policy that 
does not afford UM coverage will not be in violation of 
§ 632.32(6)(b) because no such coverage need be provided under 
an umbrella policy. 
Moreover, Wis. Stat. § 632.32(6)(b)'s prohibition against 
excluding named insureds from coverage further supports our 
reading of the endorsement as merely reaffirming Auto-Owners' 
obligation to maintain UM coverage in its underlying policy.  
Without the second sentence of the endorsement, the policy might 
be interpreted as running afoul of § 632.32(6)(b)'s prohibition; 
that sentence, however, clarifies that Auto-Owners honors its 
obligations in the underlying policy and under the statute. 
No. 
2009AP2752   
 
16 
 
coverage under a policy that it issued and that is listed in 
Schedule A will be honored, notwithstanding the lack of first-
party coverage in the Executive Umbrella.   
¶27 It follows then that the statement, "We will cover 
such injury to the extent that insurance is provided by an 
underlying 
policy 
listed 
in 
schedule 
A," 
is 
reasonably 
interpreted as Auto-Owners' assurance to its insured that even 
though the Executive Umbrella policy does not provide first-
party coverage, that lack of coverage for first-party claims 
does not interfere with Auto-Owners' agreed–upon coverage for 
first-party claims when such coverage is afforded by a policy 
listed in Schedule A of the Executive Umbrella policy.  The 
exception can have no other meaning and remains consistent with 
the grant of $2,000,000 third-party liability coverage in the 
Executive Umbrella policy while also maintaining Auto-Owners' 
obligation in Auto-Owners' Automobile Liability policy listed in 
Schedule A.   
¶28 Wadzinski argues that it would be illogical for the 
Executive Umbrella policy to require the insured to keep the 
underlying Automobile Liability policy "in full effect" unless 
the full panoply of coverage under the Commercial Auto policy, 
including UM coverage, were afforded under the Executive 
Umbrella policy.  In particular, Wadzinski relies on the 
endorsement caption's use of the phrase "following form" to 
suggest that the endorsement could reasonably be interpreted as 
No. 
2009AP2752   
 
17 
 
incorporating the UM coverage from the Commercial Auto policy.15  
Therefore, we examine the meaning of "following form" and its 
use in the Executive Umbrella policy. 
¶29 "Following form" is an insurance industry term of art 
that is typically understood by insurance professionals to 
suggest that an excess or umbrella policy incorporates the terms 
of another underlying policy.  See 23 Eric Mills Holmes, Holmes' 
Appleman on Insurance § 145.1 (2d ed. interim vol. 2003) 
[hereinafter Holmes' Appleman § 145.1].  Following form policies 
are typically very short, in that they simply state their 
adoption of underlying policy terms, usually without much else.  
See Johnson Controls, Inc. v. London Mkt., 2010 WI 52, ¶34 & 
n.7, 325 Wis. 2d 176, 784 N.W.2d 579, reconsid. denied, 2011 WI 
1, 330 Wis. 2d 443, 793 N.W.2d 71 (citing Holmes' Appleman 
§ 145.1).  This practice is intended to ensure that the same 
terms of coverage are maintained between primary and excess 
levels of insurance.  See 15 Lee R. Russ & Thomas F. Segalla, 
Couch on Insurance § 220:32 n.31 (3d ed. 2005 & Supp. 2011).  
Nonetheless, following form policies regularly include terms and 
provisions that afford distinct coverage or exclusions from 
                                                 
15 Wadzinski points to numerous other provisions in the body 
of the Executive Umbrella policy as supporting the argument that 
the policy and endorsement are contextually ambiguous and that 
first-party coverage should, therefore, be afforded.  As 
discussed above, we conclude that the provisions in the 
unendorsed body of the policy clearly and exclusively provide 
third-party coverage.  We focus, therefore, on the Personal 
Injury endorsement as the only provision that could potentially 
upset the contextually clear grant of third-party coverage in 
the Executive Umbrella policy. 
No. 
2009AP2752   
 
18 
 
those provided in the underlying policy.  See Holmes' Appleman 
§ 145.1. 
¶30 A "stand-alone" policy may be contrasted with a 
"following form" policy.  "A stand-alone excess policy is an 
independent insuring agreement."  Id.  Accordingly, the terms 
"stand-alone" and "following form" refer to the type of insuring 
agreement as a whole, rather than to a method of defining terms 
within the policy.  See id.  Here, there is no question that the 
Executive Umbrella policy is a stand-alone policy, not a 
following form policy.  However, Wadzinski argues that the 
endorsement is a following form endorsement.  This makes little 
sense, as the term is one that is applied to policies as a 
whole, not to endorsements to a stand-alone policy.   
¶31 Furthermore, the use of "following form" in the 
caption to the endorsement does not create a contextual 
ambiguity.  First, as we have noted, without the contested 
endorsement, only third-party coverage is afforded in the 
Executive Umbrella policy.  Second, the exclusionary language of 
the 
Personal 
Injury 
endorsement 
reaffirms 
the 
Executive 
Umbrella's limited third-party liability coverage, rather than 
granting a new type of coverage.  See Muehlenbein, 175 Wis. 2d 
at 269.  
¶32 Wadzinski 
also 
points 
to 
the 
"Maintenance 
of 
Underlying Insurance" provision in the Executive Umbrella policy 
as support for the argument that "following form" is intended to 
incorporate such underlying coverage wholesale.  This argument 
misperceives the nature of umbrella coverage and ignores the 
No. 
2009AP2752   
 
19 
 
plain meaning of the "Maintenance of Underlying Insurance" 
provision in the Executive Umbrella policy. 
¶33 The "Maintenance of Underlying Insurance" provision 
instructs the insured that "You must keep each policy described 
in Schedule A in full effect during the term of this 
policy. . . .  If you fail to do so, we shall be liable only to 
the extent we would have been liable had you complied."  The 
provision did not require that Wadzinski maintain any amount of 
UM coverage in the Executive Umbrella policy.  Rather, the 
provision requires that an insured maintain the type of coverage 
actually contemplated under the umbrella, i.e., third-party 
liability coverage, not necessarily all conceivable types of 
coverage.   
¶34 The argument that the underlying insurance provision 
mandates UM benefits also is circular.  It assumes that the 
extent to which Auto-Owners "would have been liable" already 
includes coverage for UM benefits.  For example, if Wadzinski 
had decreased the UM coverage under the Commercial Auto policy, 
but 
maintained 
the 
separate 
$1,000,000 
in 
comprehensive 
liability coverage under the Commercial Auto policy, it seems 
that the "Maintenance of Underlying Insurance" provision would 
have been complied with as to the third-party coverage under the 
Executive Umbrella policy.  See Etter v. State Farm Mut. Auto. 
Ins. Co., 2008 WI App 168, ¶¶13–15, 314 Wis. 2d 678, 761 N.W.2d 
26 (concluding that the requirement that underlying liability 
insurance be maintained did not require insured to maintain UM 
coverage where the umbrella policy did not otherwise contemplate 
No. 
2009AP2752   
 
20 
 
UM coverage).  Accordingly, we cannot conclude that the 
requirement 
of 
underlying 
insurance 
contributes 
to 
any 
contextual ambiguity in regard to first-party coverage.    
¶35 Accordingly, 
although 
the 
meaning 
of 
the 
term 
"following form" has been artfully argued by Wadzinski, such 
argument does not have sufficient force to contravene the plain 
language that specifies the type of coverage afforded under the 
endorsed Executive Umbrella policy.  See Holmes' Appleman 
§ 145.1.   
¶36 Wadzinski also relies on Stubbe, wherein the court of 
appeals concluded that the umbrella policy at issue did afford 
first-party UIM coverage.  The court of appeals reasoned that 
because the umbrella policy made multiple explicit references to 
the underlying UIM coverage, including showing that it was a 
covered provision on the declarations page, the policy was 
ambiguous as to the initial grant of coverage.  Stubbe, 257 
Wis. 2d 401, ¶¶10-12.  That ambiguity caused the court to 
conclude that the insured was entitled to coverage.  Id., ¶15.  
The Executive Umbrella policy, however, makes no references to 
UM coverage.  Therefore, Stubbe provides no support for the 
position Wadzinski takes, given the terms of the Executive 
Umbrella policy that we are called upon to interpret.   
¶37 Our interpretation of the Executive Umbrella policy 
rests on established analyses for determining whether an 
insurance policy is contextually ambiguous.  See Folkman, 264 
Wis. 2d 617, ¶29.  In Folkman, we stated that "any contextual 
ambiguity in an insurance policy must be genuine and apparent on 
No. 
2009AP2752   
 
21 
 
the face of the policy, if it is to upset the intentions of an 
insurer 
embodied 
in 
otherwise 
clear 
language." 
 
Id.  
Accordingly, an insurance policy will not be deemed contextually 
ambiguous "simply because the insured has offered a remotely 
possible second interpretation."  Id., ¶31 (quoting Hause v. 
Bresina, 2002 WI App 188, ¶8, 256 Wis. 2d 664, 649 N.W.2d 736 
(internal quotation and citation omitted).16  We hold to these 
principles here.  
¶38 Our construction of the Executive Umbrella policy and 
its endorsement also is supported by interpretations of similar 
insurance provisions in multiple cases before the court of 
appeals.  Collectively, these cases provide that an unambiguous 
initial grant of third-party coverage will not be undone by an 
exclusion, see Jaderborg, 239 Wis. 2d 533, ¶17; that an 
endorsement that includes both an exclusion and an exception to 
the exclusion will not be read to overcome the initial grant of 
coverage, see Muehlenbein, 175 Wis. 2d at 265-66; and that the 
requirement 
of 
maintaining 
underlying 
automobile 
liability 
insurance does not translate into a corresponding requirement 
that UM coverage be maintained, see Etter, 314 Wis. 2d 678, 
¶¶13-15. 
                                                 
16 In its opening brief to this court, counsel for Wadzinski 
stated that "Ambiguous policies always create coverage," citing 
Kaun v. Indus. Fire & Cas. Ins. Co., 148 Wis. 2d 662, 669, 436 
N.W.2d 321 (1989).  While the cited case spoke broadly of the 
rule of construing ambiguous insurance policies in favor of 
coverage, the proposition counsel has stated is not a correct 
statement of the law, as we have explained above. 
No. 
2009AP2752   
 
22 
 
¶39 In accordance with these principles, we conclude that 
the Executive Umbrella policy's grant of coverage provides only 
one type of coverage:  excess third-party liability coverage.  
Read in context, neither the exclusion of first-party coverage 
nor 
its 
exception 
that 
reaffirms 
Auto-Owners' 
underlying 
obligations can be read to rewrite the umbrella policy's 
unambiguous grant of third-party coverage.  Accordingly, we 
conclude that Wadzinski's Executive Umbrella policy cannot 
reasonably be construed to afford $2,000,000 of UM coverage. 
III.  CONCLUSION 
¶40 We conclude that the Executive Umbrella policy at 
issue does not afford first-party UM coverage.  The policy's 
grant of coverage unambiguously provides only excess third-party 
liability coverage.  Further, the language and structure of the 
endorsement to the Executive Umbrella policy demonstrate that 
the endorsement reaffirms the umbrella policy's exclusion of 
first-party coverage.  Additionally, an exception to that 
exclusion clarifies that the exclusion is not intended to 
interfere 
with 
first-party 
coverage 
in 
other 
Auto-Owners 
policies that are referred to in Schedule A.  Accordingly, we 
conclude that the circuit court's summary judgment in favor of 
Auto-Owners was proper, and therefore, we reverse the decision 
of the court of appeals. 
By the Court.—The decision of the court of appeals is 
reversed. 
 
 
No.  2009AP2752.awb 
 
1 
 
¶41 ANN WALSH BRADLEY, J.   (dissenting).  The issue in 
this case is whether the umbrella insurance policy provides 
uninsured motorist (UM) coverage.  The parties' arguments center 
on the meaning of an endorsement, which provides in full: 
 
Exclusion of Personal Injury to Insureds  
Following Form 
We do not cover personal injury to you or a relative.  
We will cover such injury to the extent that insurance 
is provided by an underlying policy listed in Schedule 
A. 
¶42 Both parties agree that the first sentence, standing 
alone, would operate to exclude UM coverage.1  However, the first 
sentence does not stand alone, and the parties disagree about 
the meaning of the second sentence, "We will cover such injury 
to the extent that insurance is provided by an underlying policy 
listed in Schedule A."  It is undisputed that UM insurance is 
provided by one of the underlying policies listed in Schedule A. 
¶43 In arriving at its conclusion that there is no 
coverage here, the majority invents a novel approach to the 
interpretation of insurance policies, generally.  Its approach 
is erroneous because it: (1) evinces a misunderstanding of how 
policies are written; (2) is inconsistent with how courts 
heretofore have approached the interpretation of policies; and 
(3) is based on a nonsensical premise that an endorsement in an 
                                                 
1 The parties appear to agree that the endorsement's 
reference to "personal injury to you or a relative" relates to 
first-party UM coverage.  No argument has been made that the 
endorsement is instead intended to address an insured's third-
party liability for injury caused to another insured.       
No.  2009AP2752.awb 
 
2 
 
umbrella policy could ever negate coverage in an underlying 
policy. 
¶44 I conclude that, at the very least, the policy is 
contextually ambiguous and should be construed in favor of 
coverage.  Accordingly, I respectfully dissent.    
I 
¶45 The majority correctly asserts that a court begins its 
interpretation of an insurance policy by looking to the grant of 
coverage.  Majority op., ¶14.  However, it appears to believe 
that the only place a grant of coverage can be made is in the 
section of the policy labeled "Coverages."  Id., ¶¶19-20.  The 
majority reads the "Coverages" section of the umbrella policy in 
isolation, and it determines that this policy unambiguously 
provides only third-party coverage.  Id., ¶¶19-20.  Based on 
this premise, the majority asserts that the endorsement at issue 
is an "exclusion" rather than a grant of coverage.  Id., ¶21. 
¶46 Without 
specifically 
mentioning 
or 
discussing 
Wadzinski's interpretation, the majority further contends that 
there can be only one reasonable interpretation of the second 
sentence of the endorsement.  It concludes that the phrase "we 
will cover" refers not only to Auto-Owners' obligations under 
the umbrella policy, but also its obligations under the 
underlying policies.  Id., ¶24.  It asserts that the second 
sentence is meant to clarify that the first sentence does not 
negate any coverage provided by an underlying policy.  Id., 
¶¶26-27. 
II       
No.  2009AP2752.awb 
 
3 
 
¶47 The majority's approach evinces a misunderstanding of 
how insurance policies are written.  "An endorsement is a 
written document attached to an insurance policy that modifies 
the policy by changing the coverage provided by the policy."  1 
Jeffrey E. Thomas, New Appleman on Insurance Law Library Edition 
§ 1.07[8] (2009) (emphasis added).  Often, endorsements are used 
by an insurer to tailor a standard policy to the needs of a 
particular 
insured 
or 
the 
regulatory 
requirements 
of 
a 
particular state.  Id.   
¶48 Although the majority focuses exclusively on the 
"Coverages" section to define the grant of coverage, a grant of 
coverage may also be found in an endorsement.  Just as much as 
an endorsement may "limit or subtract coverage," an endorsement 
may also "add coverage for acts or things not covered by the 
original 
policy." 
 
Id. 
 
Accordingly, 
endorsements 
can 
significantly alter the scope of coverage.2  
¶49 Given that endorsements can alter the scope of 
coverage, one leading treatise recommends reading a policy by 
starting with the endorsements: 
Because endorsements change the basic policy form, 
reading a Commercial General Liability ("CGL") policy, 
or any insurance policy, is unlike reading anything 
else.  Put simply, the reader should not start from 
page one. . . . It is necessary to begin with the 
                                                 
2 See 
Muehlenbein 
v. 
West 
Bend 
Mut. 
Ins. 
Co., 
175 
Wis. 2d 259, 
265, 
499 
N.W.2d 233 
(Ct. 
App. 
1993) 
("An 
endorsement is a provision added to an insurance contract 
altering its scope or application that takes precedence over 
printed portions of the policy in conflict therewith."); Stubbe 
v. Guidant Mut. Ins. Co., 2002 WI App 203, ¶13, 257 Wis. 2d 401, 
651 N.W.2d 318 (same). 
No.  2009AP2752.awb 
 
4 
 
endorsements because they can change any part or 
provision of an insurance policy, no matter how 
fundamental to the policy. 
3 Thomas, supra, § 21.01[1].  The majority errs by failing to 
consider that a grant of coverage may be found in an 
endorsement.     
III 
¶50 Not only does the majority's approach evince a 
misunderstanding of how policies are written, its approach is 
also inconsistent with the way in which insurance policies are 
interpreted by courts.  To determine what is covered under a 
policy and whether a policy provision is ambiguous, courts read 
individual provisions in the context of the whole policy, rather 
than isolating a small part of the policy language.  Folkman v. 
Quamme, 2003 WI 116, ¶21, 264 Wis. 2d 617, 665 N.W.2d 857; State 
Farm Mut. Auto. Ins. Co. v. Bailey, 2007 WI 90, ¶27, 302 
Wis. 2d 409, 734 N.W.2d 386.   
¶51 The approach adopted by the majority was explicitly 
rejected by the court of appeals in Stubbe v. Guidant Mutual 
Insurance Co., 2002 WI App 203, 257 Wis. 2d 401, 651 N.W.2d 318.  
In that case, an umbrella policy's statement of coverage was 
similar to the "Coverages" section here in that it exclusively 
granted third-party liability coverage.3  The insurer, Guidant, 
argued that the statement of coverage was unambiguous, and 
                                                 
3 In relevant part, the statement of coverage provided: "We 
will pay the ultimate net loss that any covered person becomes 
legally obligated to pay because of personal injury or property 
damage to which the insurance applies occurring during the 
policy period."  Stubbe, 257 Wis. 2d 401, ¶9. 
No.  2009AP2752.awb 
 
5 
 
therefore, that the policy did not provide any first-party 
coverage.   
¶52 The Stubbe court noted that "the policy must be read 
as a whole," id., ¶10, and it rejected Guidant's "view of the 
umbrella policy [which] focuse[d] almost exclusively on the 
policy's statement of coverage," id., ¶9.  Rather, because of 
the interaction between an exclusion, an endorsement, and the 
schedule of underlying insurance limits, the court of appeals 
found the umbrella policy to be contextually ambiguous, and it 
construed it in favor of coverage.  Id., ¶15 n.4.  
¶53 The 
majority should not tinker with established 
methods of interpretation.  This case and Stubbe are on all 
fours.  In both cases, the statement of coverage does not 
include first-party claims.  In both cases, other provisions of 
the policy, including the endorsements, can be read to grant UM 
coverage.  The majority should follow Stubbe's analysis, rather 
than overruling Stubbe sub silencio.4  
                                                 
4 The majority's discussion evinces a number of additional 
misunderstandings about how insurance policies are interpreted 
which are not specifically addressed in this dissent.  For 
instance, it asserts that the rule of construing ambiguities in 
favor of coverage applies "primarily" when determining the 
breadth of the grant of coverage.  Majority op., ¶12.  Yet, in 
the very same paragraph, it acknowledges that exclusions are 
construed narrowly.  The consequence of construing an exclusion 
narrowly is that the policy is construed in favor of coverage. 
No.  2009AP2752.awb 
 
6 
 
IV 
¶54 Because 
it 
isolates 
the 
"Coverages" 
section 
to 
determine the scope of the grant of coverage, the majority 
presumes without analysis that the endorsement at issue in this 
case must be an exclusion.  It then jumps to the conclusion that 
the second sentence of the endorsement must be an exception to 
the exclusion, and it adopts a strained interpretation of the 
endorsement based on a nonsensical premise.    
¶55 The majority interprets the first sentence, "we do not 
cover personal injury to you or a relative," to mean that there 
is no UM coverage.  Majority op., ¶25.  It advances that the 
role of the second sentence, "[w]e will cover such injury to the 
extent that insurance is provided by an underlying policy listed 
in Schedule A," is to clarify that this fact will not negate any 
UM coverage provided by Auto-Owners in an underlying policy.  
Id., ¶¶26-27.  It contends that the second sentence of the 
endorsement "assures [Wadzinski] that the first sentence does 
not interfere with an independent obligation for first-party 
                                                                                                                                                             
Additionally, the majority sets forth a number of related, 
overbroad "principles" that likewise do not comport with the way 
in which courts interpret insurance policies.  For example, at 
¶38, it states: "an unambiguous initial grant of third-party 
coverage 
will 
not 
be 
undone 
by 
an 
exclusion, . . . an 
endorsement that includes both an exclusion and an exception to 
the exclusion will not be read to overcome the initial grant of 
coverage, . . . and 
that 
the 
requirement 
of 
maintaining 
underlying automobile liability insurance does not translate 
into 
a 
corresponding 
requirement 
that 
UM 
coverage 
be 
maintained."  A court's interpretation of an insurance policy is 
not dependent on rigid rules.  Rather, it depends upon the 
language of the policy.     
No.  2009AP2752.awb 
 
7 
 
coverage that was undertaken [by Auto-Owners] in [an underlying] 
policy listed in Schedule A[.]"  Id., ¶26.   
¶56 The premise that a provision in an umbrella policy can 
interfere with or negate coverage provided in an underlying 
policy is nonsensical.  As the court of appeals said, "we 
question why an insurer or anyone else would believe that an 
exclusion in an umbrella policy could have any effect on 
coverage in an underlying policy."  Wadzinski v. Auto-Owners 
Ins. Co., 2011 WI App 47, ¶16, 332 Wis. 2d 379, 797 N.W.2d 910.  
An insured purchases an umbrella policy to receive additional 
protection.  The majority's interpretation rests on the false 
premise that there is a danger of paying an additional premium 
but receiving less coverage.  Any insurance customer would be 
surprised to learn that the coverage it purchased in an 
underlying policy could be wiped away by the insured's purchase 
of an umbrella policy.        
¶57 Further, the majority's construction relies on an 
unreasonable interpretation of the phrase "we will cover such 
injury."  The policy defines "we" as "the company providing this 
insurance."  (Emphasis added.)  It is unreasonable to interpret 
the phrase "we will cover such injury" as a reference to Auto-
Owners' promise to cover a risk under a different policy.   
¶58 The problem with the majority's interpretation of that 
phrase is illustrated by imagining a different scenario.  Here, 
it happens to be Auto-Owners that provided both the umbrella 
policy and the underlying policy.  "Generally, however, excess 
insurance is purchased from an insurer different from that 
No.  2009AP2752.awb 
 
8 
 
providing the underlying insurance."  Michael A. Knoerzer, 
Practicing Law Institute, Introduction to Excess Insurance, 629 
PLI/Lit 181, 187 (2000).  If the underlying insurance were 
provided by XYZ Mutual instead of Auto-Owners, the majority's 
interpretation 
would 
render 
the 
second 
sentence 
of 
the 
endorsement meaningless.   
V 
¶59 In contrast to the majority's strained interpretation, 
I conclude that, at the very least, the policy is contextually 
ambiguous and thus should be construed in favor of providing 
coverage.  As stated above, the text of the endorsement 
provides: "We do not cover personal injury to you or a relative.  
We will cover such injury to the extent that insurance is 
provided by an underlying policy listed in Schedule A."  This 
text is preceded by a caption that reads: "Exclusion of Personal 
Injury to Insureds Following Form." 
¶60 Wadzinski argues that the endorsement means that 
personal injury for an insured will be excluded if and only if 
it is not covered by an underlying policy issued in Schedule A.  
If it is covered by an underlying policy, Wadzinski asserts, 
then the umbrella policy will "follow form" and cover it as 
well.   
¶61 This interpretation comports with the text of the 
endorsement.  The phrase "we will cover such injury" appears to 
be a grant of coverage under this policy, and the phrase "to the 
extent that coverage is provided by an underlying policy listed 
in Schedule A" can reasonably be interpreted to mean if and only 
No.  2009AP2752.awb 
 
9 
 
if coverage is provided by an underlying policy listed in 
Schedule A.   
¶62 Further, Wadzinski's interpretation is consistent with 
the use of the term "following form" in the caption.  In the 
insurance industry, that term means that an excess policy will 
incorporate terms in an underlying policy to provide coextensive 
coverage.  See Johnson Controls, Inc. v. London Mkt., 2010 WI 
52, ¶34, 325 Wis. 2d 176, 784 N.W.2d 579.  Auto-Owners chose to 
use 
the 
term 
"following 
form" 
in 
the 
caption 
of 
this 
endorsement, and it must be given some meaning.5   
¶63 The majority dismisses Wadzinski's interpretation of 
the term "following form" without providing any alternative 
explanation for Auto-Owners' decision to use that term.  The 
majority declines to give the caption any meaning because it 
                                                 
5 It should be noted that the phrase "following form" 
appears in four of the 11 endorsements to Auto-Owners' umbrella 
policy, including the "Punitive Damages – Following Form 
Endorsement," the Bodily Injury Following Form Endorsement," the 
endorsement regarding Pollution Liability (Following Form)," and 
the endorsement at issue here.  The surrounding endorsements 
follow a similar pattern as the endorsement at issue in this 
case.  It appears that when Auto-Owners issued the policy and 
the endorsement, it believed that the term had meaning. 
Additionally, some of these parallel endorsements expressly 
acknowledge that coverage will be provided under this umbrella 
policy to the extent that coverage is provided by the underlying 
policy.  The punitive damages endorsement, for example, provides 
"It is agreed that this policy covers punitive or exemplary 
damages only to the extent that such coverage is available to 
the insured under a policy listed in the Schedule of Underlying 
Insurance 
Policies." 
 
(Emphasis 
added.) 
 
Similarly, 
the 
pollution endorsement provides: "This policy does not apply to 
[damages caused by pollution] except to the extent that coverage 
is provided[] a. by a policy described in SCHEDULE A . . . ."  
(Emphasis added.) 
No.  2009AP2752.awb 
 
10 
 
asserts that the term "following form" can only be used when an 
excess policy follows the entire form of an underlying policy.  
According to the majority, there can be no such thing as a 
following form endorsement.  Majority op., ¶30.  Why not?   
¶64 It may be that many excess insurers choose to follow 
the form of an entire policy.  However, other excess insurers 
have written policies that are largely independent of the 
underlying policies, but that nevertheless offer a certain type 
of coverage or exclusion that follows the form of a coverage or 
exclusion in an underlying policy.  Nothing prevents an umbrella 
insurer from writing such an endorsement, as it appears Auto-
Owners has done here.6    
¶65 Wadzinski's interpretation is consistent with the text 
and gives meaning to all the language in the caption.  UM 
coverage is "excluded" unless it is covered by an underlying 
                                                 
6 In fact, a review of the case law shows that it is common 
practice to include following form endorsements in a policy that 
otherwise contains independent terms.  The court of appeals 
recently interpreted an "UNINSURED AND UNDERINSURED MOTORISTS 
COVERAGE FOLLOWING FORM ENDORSEMENT" in what otherwise appears 
to have been a stand-alone personal liability umbrella policy.  
Veto v. Am. Fam. Mut. Ins. Co., 2012 WI App 56, ¶8 n.2, ___ 
Wis. 2d ___, ___ N.W.2d ___.  Further, the Fifth Circuit Court 
of Appeals recently interpreted an umbrella policy in which only 
one 
endorsement, 
the 
Professional 
Liability 
Limitation 
endorsement, followed form.  See Estate of Bradley ex rel. 
Sample v. Royal Surplus Lines Ins. Co., Inc., 647 F.3d 524, 
530 (5th Cir. 2011) ("[N]othing in the Royal policy suggests 
that it follows form as to all terms and conditions in the 
Lexington policy.  Rather, the Professional Liability Limitation 
endorsement is the only term that contains a follow form 
provision, and it specifies that the Royal policy will follow 
form to the Lexington policy 'with respect to professional 
liability' arising out of Mariner's operations at the Indianola 
nursing home."). 
No.  2009AP2752.awb 
 
11 
 
policy, in which case the umbrella phrase will "follow form" and 
also provide coverage.   
¶66 A policy's grant of coverage is ambiguous if it is 
susceptible 
to 
more 
than 
one 
reasonable 
interpretation.  
Folkman, 264 Wis. 2d 617, ¶13; Stubbe, 257 Wis. 2d 401, ¶8.  
Even if the majority's interpretation can be considered to be 
reasonable, the policy is rendered ambiguous due to the 
existence of an alternative reasonable interpretation.  Under 
our well-established canons of construction, an ambiguous policy 
should be construed in favor of coverage.  Folkman, 264 
Wis. 2d 617, ¶13; Stubbe, 257 Wis. 2d 401, ¶8.   
VI 
¶67 Before concluding, I pause to observe that the 
majority's attempt to bolster its analysis by comparing the cost 
of various policy premiums is folly.  See majority op., ¶¶4, 5, 
17 n.8.  It is based on uninformed speculation.   
¶68 There is nothing in this record that informs how 
Wadzinski's premium was determined and nothing in this record 
which provides any context from which reasonable inferences can 
be drawn.  Nevertheless, the majority asserts in a footnote that 
"the amount paid for coverage may lend support to the conclusion 
that potentially ambiguous terms should be construed one way 
rather than another."  Id., ¶17 n.8.  
¶69 The majority fails to appreciate that the amount paid 
for excess insurance generally bears little relationship to the 
range of prices that we have come to expect for primary 
insurance coverage.  "Because excess policies do not provide 
No.  2009AP2752.awb 
 
12 
 
'first dollar' coverage and are generally not within the 
'working layer,' the premium charged is generally much lower 
than that of a primary policy."  Knoerzer, supra, at 187.7     
¶70 It should not surprise any reader of this opinion that 
no member of this court understands the formulas for determining 
insurance premiums.  Without anything in the record to explain 
how rates are calculated or what inference should be drawn from 
the calculation made by the underwriters issuing this policy, 
any snap judgment based on the amount of a premium would be pure 
speculation. 
¶71 Actuaries set the amount of a premium by relying on 
complex formulas which contain a multitude of variables.  I need 
do nothing more than replicate what the industry considers to be 
the most basic of formulas to demonstrate this point:    
SIMPLE EXAMPLE 
The following simple example illustrates how expenses 
and profit are incorporated within the fundamental 
insurance 
equation 
and 
in 
the 
ratemaking 
process . . .  
If the rates are appropriate, the premium collected 
will be equivalent to the sum of the expected losses, 
LAE, 
underwriting (UW) expenses (both fixed and 
variable), and the target underwriting profit. . . . 
[T]his can be written as:  
                                                 
7 By way of example, for companies underwriting excess 
policies for wealthy clients, the first $1 million in coverage 
is usually the most expensive, at perhaps $150 to $300, with 
each additional $1 million in coverage costing around $100 to 
$125 annually.  Joseph B. Treaster, Umbrella Coverage for 
Preventing Your Ruin, N.Y. Times, March 18, 2008.  The situation 
is often the reverse for the insurer who underwrites excess 
policies for middle and lower income clients.  Id.    
No.  2009AP2752.awb 
 
13 
 
P = L + EL + (EF + V x P) + QT x P 
P – (V + QT) x P = L + EL + EF 
P = [L + EL + EF] 
    [1.0 – V – QT] 
_                       _   _    _ 
P = [L + EL + EF] / X = [L + EL + EF] 
    [1.0 – V - QT]     [1.0 – V – QT] 
Geoff Werner & Claudine Modlin, Casualty Actuarial Society, 
Basic Ratemaking 125 (4th ed. 2010).   
¶72 Given the complexity of ratemaking and the fact that 
there is nothing in the record to explain the premium and how it 
was derived, it is difficult to see how the amount of 
Wadzinski's premium could lend any support to the conclusion 
that potentially ambiguous terms should be construed one way or 
another.  See majority op., ¶17 n.8.   
¶73 For all of the reasons set forth above, I respectfully 
dissent.   
¶74 I am authorized to state that CHIEF JUSTICE SHIRLEY S. 
ABRAHAMSON joins this dissent.       
 
 
 
 
No.  2009AP2752.awb 
 
 
 
1