Title: Owners Insurance Co. v. Craig
Citation: N/A
Docket Number: SC95843
State: Missouri
Issuer: Missouri Supreme Court
Date: April 4, 2017

SUPREME COURT OF MISSOURI 
en banc 
OWNERS INSURANCE COMPANY, 
) 
) 
Appellant, 
) 
) 
v. 
) 
No. SC95843 
) 
VICKI CRAIG and CHRIS CRAIG, 
) 
) 
Respondents. 
) 
APPEAL FROM THE CIRCUIT COURT OF GREENE COUNTY 
The Honorable Jason R. Brown, Judge 
Owners Insurance Company appeals a summary judgment entered in favor of its 
policyholders Vicki Craig and Chris Craig that denied Owners the right to reduce the 
amount paid pursuant to its underinsured motorist ("UIM") coverage by the amount paid 
by the at-fault motorist's liability insurer.  Because the policy at issue unambiguously 
provides for such set-off, the circuit court's judgment is reversed and the case is remanded. 
Factual and Procedural History 
Owners issued the Craigs a policy with UIM coverage.1  The policy's declarations 
list "$250,000 per person" as the UIM "limit," but the "Limit of Liability" section in the 
UIM endorsement states: 
1 "The purpose of underinsured motorist coverage is to provide insurance coverage for insureds 
who have been bodily injured by a negligent motorist whose own automobile liability insurance 
Opinion issued April 4, 2017
2 
 
4.  LIMIT OF LIABILITY 
a. The Limits of Liability stated in the Declarations for Underinsured 
Motorist Coverage are for reference purposes only.  Under no 
circumstances do we have a duty to pay you or any person entitled to 
Underinsured Motorist Coverage under this policy the entire Limits 
of Liability stated in the Declarations for this coverage. 
 
The policy then contains "set-off" provisions: 
b. Subject to the Limits of Liability stated in the Declarations for 
Underinsured Motorist Coverage and paragraph 4.a. above, our 
payment for Underinsured Motorist Coverage shall not exceed the 
lowest of: 
(1) the amount by which the Underinsured Motorist Coverage Limits 
of Liability stated in the Declarations exceed the total limits of all 
bodily injury liability bonds and liability insurance policies 
available to the owner or operator of the underinsured automobile; 
or 
(2) the amount by which compensatory damages, including but not 
limited to loss of consortium, because of bodily injury exceed the 
total limits of all bodily injury liability bonds and liability 
insurance policies available to the owner or operator of the 
underinsured automobile. 
 
This language clearly provides that Owners will pay the declarations' listed limit amount 
minus what is paid by the underinsured motorist's policy if damages exceed the 
declarations' listed limit amount, or damages minus what is paid by the underinsured 
motorist's policy if damages do not exceed the declarations' listed limit amount.  As such, 
these provisions ensure Owners will never be obligated to pay the full amount the 
declarations list as the UIM "limit."2  
                                              
coverage is insufficient to pay for the injured person's actual damages."  Wasson v. Shelter Mut. 
Ins. Co., 358 S.W.3d 113, 117 (Mo. App. 2011). 
2 Because the coverage relates to underinsured motorists, rather than uninsured motorists, the 
amount paid on behalf of the at-fault motorist will always be greater than zero.  See Manner v. 
Schiermeier, 393 S.W.3d 58, 66 n.8 (Mo. banc 2013). 
3 
 
With this policy in place, Vicki was injured in an accident when her vehicle was 
struck by one driven by another motorist; she incurred damages exceeding $300,000.  
Because the at-fault motorist was insured under a Shelter Insurance policy with a liability 
limit of $50,000, Shelter Insurance paid the Craigs $50,000.  The Craigs then turned to 
Owners, seeking $250,000, the declarations' listed UIM limit amount.  Instead, Owners 
paid the Craigs $200,000, citing the set-off provisions that allowed them to deduct the 
$50,000 Shelter Insurance paid on behalf of the at-fault motorist.  Owners then sought a 
declaratory judgment over the disputed $50,000, and both sides moved for summary 
judgment with a joint stipulation of facts.  The circuit court ruled the policy was ambiguous 
and entered summary judgment in favor of the Craigs.  Owners appealed and, pursuant to 
article V, § 10 of the Missouri Constitution, the case was transferred to this Court by 
certification of a dissenting judge after opinion by the court of appeals. 
Standard of Review 
 
"Whether to grant summary judgment is an issue of law that this Court determines 
de novo."  Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. banc 2007).  "The 
interpretation of an insurance policy is a question of law that this Court also determines de 
novo."  Id.   
Analysis 
 
Owners argues that the policy unambiguously provides for the $50,000 set-off, that 
the policy never promises to pay up to the full amount listed in the declarations but 
expressly states in the UIM endorsement that such amount is for reference purposes only, 
and that the declarations alone do not promise coverage.  The Craigs argue the policy is 
4 
 
ambiguous because, despite the language in the UIM endorsement, the declarations list 
$250,000 as the UIM limit and other portions of the policy reference the declarations as 
containing or describing the policy's limits of liability.3 
 
"An ambiguity exists when there is duplicity, indistinctness, or uncertainty in the 
meaning of the language in the policy.  Language is ambiguous if it is reasonably open to 
different constructions."  Seeck, 212 S.W.3d at 132 (internal quotations omitted).  
Additionally, "it is well-settled that where one section of an insurance policy promises 
coverage and another takes it away, the contract is ambiguous."  Ritchie v. Allied Prop. & 
Cas. Ins. Co., 307 S.W.3d 132, 140–41 (Mo. banc 2009).  An insured cannot create an 
ambiguity by reading only a part of the policy and claiming that, read in isolation, that 
portion of the policy suggests a level of coverage greater than the policy actually provides 
when read as a whole.  Such a request for a "truncated consideration of portions of the … 
policy is unavailing.  'Insurance policies are read as a whole, and the risk insured against 
is made up of both the general insuring agreement as well as the exclusions and 
definitions.'"  Dutton v. Am. Family Mut. Ins. Co., 454 S.W.3d 319, 323-24 (Mo. banc 
2015); accord Ritchie, 307 S.W.3d at 135 (When determining whether an ambiguity exists, 
"[c]ourts should not interpret policy provisions in isolation but rather evaluate policies as 
                                              
3 The Craigs point to an introductory section titled "A Quick Guide to Your Policy" on the policy's 
cover sheet that states, "The DECLARATIONS contain: . . . LIMITS OF LIABILITY," as well as 
a statement on the first page of the policy that says, "The attached Declarations describe the 
automobile(s) we insure and the Coverages and Limits of Liability for which you have paid a 
premium."  The Craigs also argue Owners failed to provide the full policy when it was purchased 
and went into effect, but that allegation was not part of the stipulated facts before the circuit court.  
"Where the trial court's decision was based on stipulated facts, the only question for this Court is 
whether the trial court drew the proper legal conclusions from the facts stipulated."  Johnson v. 
McDonnell Douglas Corp., 745 S.W.2d 661, 662 (Mo. banc 1988). 
5 
 
a whole.").  Any ambiguity is resolved in favor of the insured.  Id.  But "[a]bsent an 
ambiguity, an insurance policy must be enforced according to its terms."  Seeck, 212 
S.W.3d at 132. 
In the UIM context, this Court has previously held that an ambiguity exists when 
the policy contains both: (1) express language indicating the insurer will indeed pay up to 
the declarations' listed limit amount; and (2) set-off provisions ensuring the insurer will 
never be obligated to pay such amount.  See Manner, 393 S.W.3d at 66; Ritchie, 307 
S.W.3d at 140–41; Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 690–93 (Mo. banc 
2009).  The ambiguity arises from the fact that both statements cannot be true; either the 
insurer will sometimes pay up to the declarations listed limit, or the amount it will pay 
always will be limited by the amount paid by the underinsured motorist.  Here, there is no 
such internal inconsistency or contradiction as, unlike in cases such as Jones, the policy 
contains no express language indicating the insurer will pay up to the declarations' listed 
limit amount.  In fact, the "Limit of Liability" section in the UIM endorsement contains the 
opposite, stating the declarations' listed limit amount is "for reference purposes only" and 
"[u]nder no circumstances" will Owners have a duty to pay that entire amount.  Essentially, 
this policy takes a form that this Court previously suggested would be enforceable: 
A policy that plainly states it only will pay the difference between the amount 
recovered from the underinsured motorist and the [declarations' listed limit 
amount] is enforceable.  In such a case, the mere fact that [the declarations' 
listed limit amount] will never be paid out is not misleading, for the policy 
never suggests that this is its liability limit and never implies that it may pay 
out that amount.   
 
Ritchie, 307 S.W.3d at 141 n.10. 
6 
 
While the Craigs point to the declarations' listed limit amount and other portions of 
the policy that make bare, general references to the declarations containing the limit of 
liability, the declarations "are introductory only and subject to refinement and definition in 
the body of the policy."  Peters v. Farmers Ins. Co., 726 S.W.2d 749, 751 (Mo. banc 1987).  
The declarations "do not grant any coverage.  The declarations state the policy's essential 
terms in an abbreviated form, and when the policy is read as a whole, it is clear that a reader 
must look elsewhere to determine the scope of coverage."  Floyd-Tunnell v. Shelter Mut. 
Ins. Co., 439 S.W.3d 215, 221 (Mo. banc 2014).  Evaluating the policy as a whole, it 
unambiguously provides that the declarations' listed limit amount serves only as a reference 
point for use with the set-off provisions, which are likewise unambiguous.4 
Conclusion 
 
The circuit court's judgment is reversed and the case is remanded. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 Zel M. Fischer, Judge 
 
Breckenridge, C.J., Stith, Wilson and Russell, JJ., concur;  
Draper, J., dissents in separate opinion filed. 
                                              
4 The glaring weakness in the dissent is that, while purporting to condemn reading policy 
provisions in isolation, it is based on nothing more than the cherry-picking of an isolated provision 
and presenting it without context in an effort to create an ambiguity.  The "Other Insurance" 
provision relied on by the dissent applies only to the "Liability Coverage" section of the policy.  
The UIM endorsement, which provides separate coverage, has its own "Other Insurance" provision 
expressly stating that it "shall not be construed to increase the Limit of Liability for Underinsured 
Motorist Coverage described in 4. LIMIT OF LIABILITY immediately above for Underinsured 
Motorist Coverage."  This Court will not "create an ambiguity under the policy language where 
none exists so as to construe the imaginary ambiguity in such a way to reach a result which some 
might consider desirable but which is not otherwise permissible under the policy or the law."  
Harrison v. MFA Mut. Ins. Co., 607 S.W.2d 137, 142 (Mo. banc 1980).  
 
 
SUPREME COURT OF MISSOURI 
en banc 
OWNERS INSURANCE COMPANY,  
) 
 
 
 
 
 
 
 
 
 
 
) 
 
 
 
Appellant, 
 
 
 
) 
 
 
 
 
 
 
 
) 
 
 
v. 
 
 
 
 
 
 
) 
No. SC95843 
 
 
 
 
 
 
 
) 
 
 
 
 
 
VICKI CRAIG and CHRIS CRAIG, 
  
)  
   
 
 
) 
Respondents.  
 
 
) 
 
DISSENTING OPINION 
 
 
I concur in the principal opinion’s holding reaffirming the principle that insurance 
companies may issue policies with set-off provisions.  However, I respectfully dissent 
because I would find that Owners Insurance Company’s (hereinafter, “Owners”) 
underinsured motorist coverage policy (hereinafter, “UIM”) issued to Vicki and Chris 
Craig (hereinafter and collectively, “Insured”) contained ambiguous provisions.  
Therefore, I would affirm the trial court’s judgment. 
Courts do not read provisions of an insurance contract in isolation but rather 
evaluate the entire policy as a whole.  Manner v. Schiermeier, 393 S.W.3d 58, 65 (Mo. 
banc 2013).  “Interpretation of an insurance policy and the determination of whether 
provisions are ambiguous are questions of law, subject to de novo review.”  Taylor v. Bar 
Plan Mut. Ins. Co., 457 S.W.3d 340, 344 (Mo. banc 2015).  “In construing the terms of 
2 
 
an insurance policy, this Court applies ‘the meaning which would be attached by an 
ordinary person of average understanding if purchasing insurance,’ and resolves 
ambiguities in favor of the insured.”  Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 
690 (Mo. banc 2009) (quoting Seeck v. Geico Gen. Ins. Co., 212 S.W.3d 129, 132 (Mo. 
banc 2007)).  Additionally, “it is well-settled that where one section of an insurance 
policy promises coverage and another takes it away, the contract is ambiguous.”  Ritchie 
v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132, 140–41 (Mo. banc 2009).   
In this case, the principal opinion suggests Owners crafted a limitation of liability 
provision that this Court tacitly approved in Ritchie.  See Ritchie, 307 S.W.3d at 141 
n.10.  Owners placed this set-off provision in its policy, which under any possible 
circumstance prevents Insured from recovering the full amount of the UIM policy limits.  
While a set-off provision may be used to prevent double recovery as explained in Jones, 
287 S.W.3d at 693, I believe the principal opinion read the set-off provision in Owners’ 
policy in isolation and failed to look at all of the provisions used in the UIM coverage 
policy. 
In Owners’ UIM policy language, there is an additional clause explaining its 
coverage.1  It states: 
2.  COVERAGE 
a. We will pay compensatory damages, including but not limited 
to loss of consortium, that any person is legally entitled to 
                                                 
1 While the principal opinion asserts that these are “cherry-picked,” isolated provisions, 
these provisions are referenced within the UIM portion of the policy.  Evaluating the 
policy as a whole, I believe there is an ambiguity within the policy in that an ordinary 
person of average understanding would believe that he or she purchased UIM coverage 
that could be applied in excess of any other automobile liability insurance. 
3 
 
recover from the owner or operator of an underinsured 
automobile for bodily injury sustained by an injured person 
while occupying an automobile that is covered by SECTION 
II – LIABILTIY COVERAGE of the policy. 
 
Pursuant to the policy’s liability for coverage, it states: 
 
6.  OTHER INSURANCE 
This provision governs the relationship of this policy with insurance 
policies issued by insurance companies other than us.  It does not define our 
limit of liability to pay any overage provided by this policy and shall not be 
construed to increase any limit of liability described under 4. LIMIT OF 
LIABILITY.  Except as stated below, the Liability Coverage provided by 
this policy for your automobile shall be primary and with regard to any 
other automobile to which it applies, coverage shall be excess of any other 
applicable automobile liability insurance. 
 
(Emphasis added).  Additionally the declarations page indicates Insured contracted for 
UIM limits of up to $250,000 per person and up to $500,000 per occurrence.   
 
While the “LIMIT OF LIABILITY” provision seeks to set off any amount of 
recovery from the policy limits stated on the declarations page, the “OTHER 
INSURANCE” provision clearly states that any coverage Owners provides is in excess of 
recovery from any other insurance provider.  Allowing Owners to set off any recovered 
amount from Insured’s policy limits ensures that Insured will never recover the full 
amount of the stated liability limits because there will always be some recovery from an 
underinsured motorist.2  Yet, the policy clearly provides that Owners’ coverage is in 
                                                 
2 All Missouri drivers are required to provide liability insurance of “twenty-five thousand 
dollars because of bodily injury to or death of one person in any one accident and, subject 
to said limit for one person, fifty thousand dollars because of bodily injury to or death of 
two or more persons in any one accident, and ten thousand dollars because of injury to or 
destruction of property of others in any one accident.”  Section 303.190.2(2), RSMo 
2000. 
4 
 
excess of any other insurance.  The “reasonable expectation of an insurance buyer is to 
purchase protection against large losses, and cover when the other driver’s insurance does 
not satisfy those losses.”  Zemelman v. Equity Mut. Ins. Co., 935 S.W.2d 673, 679 (Mo. 
App. W.D. 1996).   
 
Here, Insured chose to pay for $250,000 per person and $500,000 per occurrence 
in UIM coverage, not $250,000 minus the amount recovered from the underinsured driver 
who caused more damage than the driver was insured to pay.  Because Owners’ policy 
appears in one section to provide any underinsurance coverage in excess of other 
coverage and another section prevents the full recovery of the declared policy limits 
without exception, there is an ambiguity.  See Ritchie, 307 S.W.3d at 140–41; Seeck, 212 
S.W.3d at 133.  Accordingly, I would affirm the trial court’s judgment. 
 
 
 
 
 
 
 
 
 
 
________________________ 
 
 
 
 
 
 
 
GEORGE W. DRAPER III, JUDGE