Opinion ID: 167321
Heading Depth: 2
Heading Rank: 1

Heading: Effect of the Named Person Endorsement

Text: 50 The Hartford first contends that the district court erred by holding that Haberman is a named insured under its insurance contract with Breast Cancer Screening Center of Oklahoma, Inc. According to the Hartford, the named person . . . as insured endorsement which lists Haberman as a named person refers only to her liability coverage under the contract. 6 We are not persuaded. 51 The guidelines for ascribing meaning to an insurance policy's terms in Oklahoma are well established. An insurance policy is a contract; when its terms are unambiguous and clear, the language is accorded its ordinary, plain meaning and enforced so as to carry out the parties' intentions. Bituminous Casualty Corp. v. Cowen Construction Inc., 55 P.3d 1030, 1033 (Okla.2002) (footnotes omitted). See also IDG, Inc. v. Continental Casualty Co., 275 F.3d 916, 921 n. 2 (10th Cir.2001). The parties are bound by the terms of their agreement and the court will not undertake to rewrite the same nor to make for either party a better contract than the one which was executed. Id. The test to be applied in determining whether a word [or phrase] is ambiguous is whether the word [or phrase] `is susceptible to two interpretations' on its face. Cranfill v. Aetna Life Insurance Co., 49 P.3d 703, 706 (Okla.2002) (quoting Littlefield v. State Farm Fire and Cas. Co., 857 P.2d 65, 69 (Okla.1993)). The test is applied from the standpoint of a reasonably prudent lay person, not from that of a lawyer. Id. (citing Couch on Insurance 3d § 21:14 (1995)). In reviewing a provision of an insurance contract, the court should not use a forced or strained construction, take a provision out of context, or narrowly focus[] on a provision, Wynn v. Avemco Ins. Co., 963 P.2d 572, 575 (Okla. 1998) (citing Dodson v. St. Paul Ins. Co., 812 P.2d 372, 376 (1991)), so as to import a [more] favorable consideration to either party than that expressed in the contract. Crawford v. Indemnity Underwriters Ins. Co., 943 P.2d 1099, 1101 (Okla.Civ.App. 1997). 52 The parties agree that absent the named person endorsement, Haberman would not be entitled to UM/UIM benefits under the policy because she was neither a named insured on the policy's declarations page nor riding in a covered auto at the time of the accident. Thus, the issue to be resolved is the effect of the named person endorsement. Notably, the endorsement is titled  NAMED PERSON(S) OR ORGANIZATION(S) AS INSURED. (emphasis added). The endorsement states that the endorsement changes the policy and JoAnn Haberman is listed as a named person. In addition, the document states that the endorsement modifies insurance provided under the . . . BUSINESS AUTO COVERAGE FORM, GARAGE COVERAGE FORM and TRUCKERS COVERAGE FORM. The Business Auto Coverage Form includes liability coverage, uninsured and underinsured motorist (UM/UIM) coverage, and medical payments coverage. Clearly, based on this language alone, the endorsement unambiguously modifies the policy to make Haberman an insured for all purposes. 53 However, the last sentence in the endorsement states that each person named is an `insured' for LIABILITY COVERAGE, but only to the extent that person. . . qualifies as an `insured' under the WHO IS AN INSURED provision of SECTION II — LIABILITY COVERAGE. The Hartford argues that this sentence means that Haberman is a named insured only for liability coverage. But, the sentence does not expressly state that Haberman is covered only for liability, and the Hartford fails to articulate why an endorsement purportedly limiting a named insured only to liability coverage would clearly state that the endorsement modifies the whole policy — Business Auto Coverage Form, Garage Coverage Form, and Truckers Coverage Form. By the plain words of the sentence, the named insured is provided liability coverage, but only to the extent provided for in the liability section of the policy. Read in its entirety, the endorsement makes Haberman a named insured for all purposes under the policy, but her liability coverage is limited to the extent provided for in the liability section of the policy. 54 Even assuming arguendo that there is merit to the Hartford's argument, the endorsement would be ambiguous because it does not explicitly exclude all other coverage and the ambiguity would be resolved in favor of Haberman. Kerr-McGee Corporation v. Admiral Insurance Co., 905 P.2d 760, 762 (Okla.1995) (if the language in an insurance contract is found to be ambiguous, the contract should be interpreted consistent with the mutual intent of the parties, with the ambiguity resolved most favorably to the insured and against the insurance carrier). See also McDonald v. Schreiner, 28 P.3d 574, 577, n. 11 (Okla.2001) (When an insurance contract provision is ambiguous, words of inclusion will be liberally construed in favor of the insured and those of exclusion will be strictly construed against the insurer.) (emphasis in original); Max True Plastering Co. v. United States Fidelity and Guaranty Co., 912 P.2d 861 (Okla.1996). Because the endorsement does not expressly exclude all other coverage, or expressly limit coverage to liability only, we hold that Haberman is a named insured for all purposes under the policy, including UM/UIM coverage. 7
55 The Hartford next contends that under Oklahoma law, UM/UIM coverage may be tied to specified vehicles in a commercial auto insurance policy and that, as a result, Haberman is not entitled to UM/UIM coverage since she was not riding in a covered vehicle. Haberman's expert witness conceded during her testimony that UM/UIM coverage may be tied to specified vehicles in a commercial auto insurance policy. Therefore, the issue is whether an individual who is a named insured may be limited to specified vehicles for purposes of UM/UIM coverage in a commercial auto insurance policy. 56 As far as we are aware, there is no Oklahoma case precedent directly addressing this issue. Nevertheless, the Hartford asserts that the Oklahoma Supreme Court's ruling in Graham v. Travelers Insurance Co., 61 P.3d 225 (Okla.2002), supports its argument that Haberman may be denied UM coverage because she was not riding in a covered vehicle. Our review of Graham, however, shows that the case is distinguishable from the present case. The record in this case also clearly shows that the policy did not tie Haberman's UM/UIM coverage to specified vehicles so that we conclude that Haberman is entitled to UM coverage based on the policy. 57 In Graham, the Oklahoma State Supreme Court addressed whether in a commercial insurance policy, UM/UIM coverage that is provided for vehicles owned by the named insured, must also be provided to employees using their own vehicles, which are limited by an endorsement to liability coverage. 8 Id. at 226-27. The court began by examining the policy at issue in the case: 58 The policy included in the record has separate explanations for WHO IS AN INSURED for the liability coverage, and for the UM coverage. The UM coverage is in the form of an endorsement, which states in bold letters at the top THIS ENDORSEMENT CHANGES THE POLICY. READ IT CAREFULLY. In a larger font, the next line reads OKLAHOMA UNINSURED MOTORISTS COVERAGE. Under section B, WHO IS AN INSURED, the policy provides: 59 1. You. 60 2. If you are an individual, any family member. 61 3. Anyone else occupying a covered auto or a temporary substitute for a covered auto. The covered auto must be out of service because of its breakdown, repair, servicing, loss or destruction. 62 4. Anyone for damages he or she is entitled to recover because of bodily injury sustained by another insured. 63 . . . Under an endorsement entitled Employees as Insureds the policy provides, The following is added to the `LIABILITY COVERAGE WHO IS AN INSURED provision.' On the next line it adds, Any employee of yours is an `insured' while using a covered `auto' you don't own, hire or borrow in your business or your personal affairs. The Business Auto Coverage Part Declarations page shows a covered auto symbol of 1 for liability coverage. The limit of insurance is $ 1,000,000.00. Symbol 1 on the Business Auto Coverage Form indicates that 1 = ANY `AUTO.' 64 Id. at 228. Finding that the endorsements clearly show that CKE (the employer) and Travelers (the insurance company) intended UM/UIM coverage for vehicles owned by CKE, the Oklahoma State Supreme Court held that Graham's vehicle clearly was insured for liability and was not insured, under the provisions of the policy, for UM/UIM. Id. at 229. 65 The court pointed out that Graham, the plaintiff, was required by law to have liability coverage, and thus UM/UIM coverage, for his own vehicle: 66 CKE's liability policy for nonowned vehicles benefits the company since it insures CKE for the negligent acts of its employees who are in the course of their employment. It has an indirect benefit to the employee, who must by law insure his own vehicle for liability. 67 Id., 61 P.3d at 229 (internal citations omitted). As a result, the court concluded that not finding UM/UIM coverage in that case did not violate Oklahoma's public policy interest in providing UM/UIM coverage. 68 Here, Haberman is a named insured by virtue of the named person endorsement. The plain words of the endorsement made Haberman a named insured for all purposes, including UM/UIM coverage, since the endorsement modified the entire policy. The endorsement also did not limit Haberman's coverage to only liability for circumstances in the course of employment, unlike the endorsement in Graham that was specifically limited to adding company employees to the company's liability coverage while acting in the course of their employment. In addition, the UM/UIM endorsement in this case did not expressly limit Haberman's UM/UIM coverage to only covered vehicles, unlike the policy in Graham. Accordingly, the policy in this case provided coverage to Haberman in her capacity as an individual, rather than only as an employee of Breast Cancer Screening Center of Oklahoma, Inc. 69 Moreover, the record indicates that both Haberman and the Hartford intended for the policy to provide UM/UIM coverage to Haberman. The Hartford knew that Haberman is the sole principal of a closely held business. The Hartford knew that the vehicles that Haberman drives for her personal use were the same vehicles used by her closely held business, and that she did not have any separate automobile insurance. That is why the Hartford's insurance agent explained in a letter to Haberman: The second endorsement [the `Named Person(s) or Organization(s) as Insured' endorsement] adds you as an Individually Named Insured to the automobile policy since you do not have an individual Personal Automobile policy. 9 Therefore, the policy in this case was designed to give a direct, rather than an indirect, benefit to Haberman. 70 Oklahoma courts have stated that [a]ny attempt to tie uninsured motorist coverage to automobiles alone, rather than to people, must fail. State Farm Mutual Automobile Ins. Co. v. Wendt, 708 P.2d 581, 585 (Okla.1985) (citing Cothren v. Emcasco Insurance Co., 555 P.2d 1037 (Okla.1976)). See also Mustain v. United States Fidelity & Guaranty Co., 925 P.2d 533, 535 (Okla. 1996) (Pursuant to 36 O.S.1991 § 3636, UM insurance is first-party coverage that follows the person.) (footnotes omitted). The policy in this case provided UM/UIM coverage to Haberman as an individual. Given that the endorsement did not limit Haberman's coverage to liability or in the course of employment, and given that the UM/UIM endorsement did not limit coverage to only while riding in a covered vehicle, we conclude that Haberman is entitled to UM/UIM coverage, even though she was not riding in a covered vehicle, as she would have in a personal policy in which she is a named insured. See Graham at 230 (quoting Moser v. Liberty Mutual Ins. Co., 731 P.2d 406, 408 (Okla.1986) ([T]he intent of the uninsured motorist legislation is to afford one insured under his own liability insurance policy the same protection in the event he is injured by an uninsured motorist as he would have had if the negligent motorist had carried liability insurance.)). 71 To be clear, our decision is based on the facts of this case: the record shows that the parties intended for Haberman to have UM/UIM coverage; and, as noted above, the policy did not limit Haberman's coverage to liability and the UM/UIM endorsement did not specifically limit coverage only to while riding in a covered vehicle. We are, therefore, confident that Oklahoma courts will not find our ruling today inimical to the state's public policy on UM/UIM coverage.
72 The Hartford also contends that the district court committed reversible error because the court allowed Haberman to stack the UM benefits. We find no merit to this claim of error. 73 As discussed above, Haberman is a named insured in her capacity as an individual rather than as an employee. Accordingly, she is a Class 1, rather than a Class 2, insured entitled to UM/UIM coverage. Under Oklahoma law, when separate premiums are charged for uninsured motorist coverage the benefits can be stacked. See Withrow v. Pickard, 905 P.2d 800, 803-804 (Okla.1995) (It is well settled in Oklahoma that insureds may stack their UM coverage for the additional vehicles under a policy if they have paid separate UM premiums for each vehicle.). The record in this case shows that two separate premiums of $128 each were paid for the two automobiles listed in the policy. Aplt.App. at 44. It was, therefore, not error for the district court to determine that Haberman could stack UM benefits.