Opinion ID: 1805285
Heading Depth: 1
Heading Rank: 1

Heading: Legally Entitled to Recover Damages.

Text: Initially we note that Katherine is correct in her assertion that this action is based on the insurance policy. Lemrick v. Grinnell Mut. Reins. Co., 263 N.W.2d 714, 716 (Iowa 1978). In Lemrick, we were asked to decide whether the two-year statute of limitations applicable to tort actions or the ten-year statute of limitations applicable to contract actions governed a claim for uninsured motorist benefits. We recognized that the uninsured motorist coverage placed the insured in the position he would have occupied had the uninsured motorist possessed insurance and was sued by the insured. Lemrick, 263 N.W.2d at 716-17. However, we noted that when seeking uninsured motorist benefits the insured is not in fact suing the uninsured motorist but rather is seeking contract benefits under the insurance policy. Id. at 717. We concluded that a claim for uninsured motorist benefits is a contract claim and therefore the ten-year contract statute of limitations governs. Id. Likewise, in the present case, Katherine is not suing the underinsured motorist for damages. Rather, her claim is against her insurance company for policy benefits. Therefore, we look to the policy to determine her entitlement to those benefits. This case is complicated by the fact that the insurance policy is not part of the record. However, any underinsured motorist coverage offered by Iowa Kemper was required to comply with Iowa's underinsured motorist statute, section 516A.1. Hinners v. Pekin Ins. Co., 431 N.W.2d 345, 346 (Iowa 1988); American States Ins. Co. v. Estate of Tollari, 362 N.W.2d 519, 521 (Iowa 1985). If a policy's provisions are contrary to the statute, the policy provisions are rendered ineffective, and the statute controls. Hinners, 431 N.W.2d at 346. Therefore, an insurer cannot offer underinsured motorist coverage more restrictive than that required by the statute. Id. It follows then that if Katherine is legally entitled to recover damages as that phrase is used in section 516A.1, she would qualify for coverage under Iowa Kemper's policy, assuming the other terms and conditions of the policy are satisfied. [1] Accordingly, we now examine the meaning of the phrase legally entitled to recover damages as used in section 516A.1. In determining the meaning of this phrase, we first look for guidance to the legislature's intent in including this element in Iowa's underinsured motorist statute. Leuchtenmacher v. Farm Bureau Mut. Ins. Co., 461 N.W.2d 291, 293 (Iowa 1990). In ascertaining legislative intent, we consider the language used in the statute, the object sought to be accomplished, and the wrong to be remedied. Id. Section 516A.1 provides in pertinent part: No automobile liability or motor vehicle liability insurance policy ... shall be delivered or issued for delivery in this state ... unless coverage is provided in such policy or supplemental thereto, for the protection of persons insured under such policy who are legally entitled to recover damages from the owner or operator of an ... underinsured motor vehicle because of bodily injury, sickness, or disease, including death resulting therefrom, caused by accident and arising out of the ownership, maintenance, or use of such ... underinsured motor vehicle.... Iowa Code § 516A.1 (1991) (emphasis added). The purpose of this statute is to provide compensation to an insured who is the victim of an underinsured motorist's negligence to the same extent as if the underinsured motorist were adequately insured. American States Ins. Co., 362 N.W.2d at 522. As a prerequisite to coverage, the statute requires the claimant to prove that the insured is legally entitled to recover damages from the underinsured motorist. Cf. Hinners, 431 N.W.2d at 346 (To recover for damage caused by an uninsured motorist, therefore, it must be shown that ... (2) the claimant is legally entitled to damages from the uninsured owner or operator....). Thus the statutory requirement that the insured be legally entitled to recover damages from the underinsured motorist is an element of the insured's claim. It does not purport to define the proper party who may bring an action on the policy against the insurance company. This distinction is important in considering the argument espoused by Economy Fire. Under Economy Fire's interpretation of section 516A.1, only the person or entity with the capacity to sue the tortfeasor would be legally entitled to recover damages even though that person would not be the one ultimately entitled to receive those damages. [2] The problem with this proposition is that the person with capacity to sue will not necessarily be an insured under the policy. Only the insured is entitled to underinsured motorist benefits. Iowa Code § 516A.1 (1991) (requires coverage ... for the protection of persons insured under such policy); Kats v. American Family Mut. Ins. Co., 490 N.W.2d 60, 62 (Iowa 1992) (section 516A.1 requires underinsured motorist coverage only for persons insured under the policy). Cf. Hinners, 431 N.W.2d at 346 (to recover uninsured motorist benefits, one must prove that the claimant is a `person[] insured'). In situations involving post-death loss of consortium damages, insureds would not be able to recover under their own underinsured motorist coverage unless the administrator of the decedent's estate also qualifies as an insured. For example, in the Hinners case, the spouse suffering the loss of consortium was an insured under a policy which did not insure her husband. Hinners, 431 N.W.2d at 346. Consequently, had the husband in Hinners died, the surviving spouse would not have been able to recover her damages under a policy which purportedly insured her for such damages. Although she would have qualified as an insured under the policy, she would not have been legally entitled to recover damages since she would not have had the capacity to sue the tortfeasor. Although the administrator would have met the requirement of being legally entitled to recover damages, the administrator also would not have been entitled to recover under the policy because the administrator would not have qualified as an insured. The consequence of Economy Fire's interpretation of the statute is that the ability of an insured claiming post-death loss of consortium damages to recover underinsured motorist benefits would depend upon the fortuity of whether the administrator of the deceased spouse's estate is also an insured under the surviving spouse's policy. We believe that such a result is inconsistent with the legislature's purpose in requiring underinsured motorist coverage and was not intended by the legislature when it used the phrase legally entitled to recover damages. See Leuchtenmacher, 461 N.W.2d at 293-94 (legislature did not intend the phrase legally entitled to recover to mean that the insured was required to establish liability in a separate lawsuit against the underinsured motorist prior to seeking benefits under the policy). We conclude that the only reasonable interpretation of legally entitled to recover damages is that it means the insured must have suffered damages caused by the fault of the underinsured motorist and be entitled to receive those damages. Our decision is consistent with decisions from other jurisdictions which have interpreted the term legally entitled to recover under varying circumstances. A majority of jurisdictions have defined legally entitled to recover to mean simply that the plaintiff must be able to establish fault on the part of the uninsured or underinsured motorist which gives rise to damages and to prove the extent of those damages. E.g., Baker v. Continental Western Ins. Co., 748 F.Supp. 716, 722 (D.S.D.1990); Transnational Ins. Co. v. Simmons, 19 Ariz.App. 354, 356-57, 507 P.2d 693, 695-96 (1973); Van Hoozer v. Farmers Ins. Exch., 219 Kan. 595, 549 P.2d 1354, 1366-67 (1976); Franco v. Allstate Ins. Co., 505 S.W.2d 789, 792 (Tex.1974). We hold the trial court erred in granting Economy Fire's motion for summary judgment on the basis that Katherine did not have the capacity to sue the tortfeasor.