Opinion ID: 746833
Heading Depth: 2
Heading Rank: 2

Heading: Does Vermont's UIM Statute Require a Different Result?

Text: 22 Plaintiff maintains that even if she is not covered under the UIM provisions of the policy, the public policy behind Vermont's UIM statute nonetheless requires defendant to provide her with such coverage. The Vermont statute reads, in relevant part 23 No policy insuring against liability arising out of the ownership, maintenance or use of any motor vehicle may be delivered or issued for delivery in this state ... unless coverage is provided therein, or supplemental thereto, for the protection of persons insured thereunder who are legally entitled to recover damages, from owners or operators of uninsured, underinsured or hit-and-run vehicles. 24 23 V.S.A. § 941(a). As its text suggests, this statute requires every liability policy delivered or issued for delivery in Vermont to include UIM coverage for the protection of the persons insured under such liability policy. The statute's goal is to ensure that those drivers responsible enough to procure insurance coverage for accidents they themselves cause are protected against accidents caused by irresponsible individuals who fail to obtain adequate insurance. Rhault v. Tsagarakos, 361 F.Supp. 202, 205-06 (D.Vt.1973). The statute provides coverage against such hazards in the insured's own policy and at the insured's own cost. 25 The Vermont Supreme Court has interpreted § 941(a) to require portable coverage. Monteith, 618 A.2d at 490. In other words, the UIM coverage mandated by statute must protect persons insured under the liability policy wherever they may be, and cannot require that the insureds be in an insured vehicle at the time of an accident in order to obtain UIM coverage. Policy provisions that purport to limit, reduce or eliminate the coverage mandated by statute will not be given effect. Sanders v. St. Paul Mercury Ins. Co., 148 Vt. 496, 536 A.2d 914, 916 (1987). 26 Although the statute mandates portable coverage when it applies, it does not apply to everyone. The statute mandates protection only for persons insured under the liability policy, and it does not state who those persons must be. See Norman v. King, 163 Vt. 612, 659 A.2d 1123, 1125 (1995). The determination of who is to be the insured under a liability policy is left instead as a matter of contract to the discretion of the parties to that insurance contract. Unless a party can show that he or she is an insured under the liability policy, the UIM statute does not come into play. The practical effect of this rule is that while insurers may not deny portable UIM coverage to persons who are insured under the liability policy, they are free to do so with respect to those not occupying that status. Id. Thus, unless plaintiff can show that she falls within the definition of an insured under the liability policy, she is not protected by the UIM statute and her appeals to the public policy behind it must fail. 27 Plaintiff cannot make such showing. The liability coverage of Morrison's policy identifies the following persons as insureds: 28
29 b. Anyone else while using with your permission a covered auto you [the named insured] own, hire or borrow.... 30 c. Anyone else who is not otherwise excluded under paragraph b above and is liable for the conduct of an insured. 31 The policy lists only Morrison and Target--not plaintiff--as named insureds under paragraph (a), and there is no claim that plaintiff falls within paragraphs (b) and (c). Coverage, accordingly, depends upon whether plaintiff can show that she was using the rental car at the time of the accident. Courts examining similar policy terms have adopted various definitions of using a motor vehicle. See generally 7 Am.Jur.2d Automobile Insurance § 129 (1980 & Supp. Apr. 1997) (collecting cases). We need not decide which definition the Vermont Supreme Court would adopt, however, for even under the most liberal definition of using a motor vehicle, plaintiff's trip across the street for a cup of coffee would not qualify. 32 Our analysis is not altered by the fact that the plaintiff requested liability coverage from her rental car company. Plaintiff cites Moon v. Guarantee Ins. Co., 764 P.2d at 1335-36, for the proposition that a rental car customer who requests liability insurance from a rental car company must be considered the named insured under a liability policy issued to that rental car company. Plaintiff reasons that the rental contract is a policy of insurance, and that the plaintiff, as the named insured thereunder, must be afforded UIM coverage. Under plaintiff's analysis, her status as a named insured under the rental contract requires us to look to the policy behind 23 V.S.A. § 941(a) and deem her a named insured under the contract between Liberty and Morrison, even though that contract's terms excludes her from coverage. Relying on similar reasoning, the district court held that Liberty was required to provide coverage. 33 We are not persuaded by this analysis. First, we doubt that the rule in Moon can be squared with the principles underlying the Vermont Supreme Court's decision in Norman v. King. In Norman, the Court held that Vermont's UIM statute requires UIM coverage only for persons insured under the terms of the liability policy. 659 A.2d at 1125. The plaintiff's proposed rule, which asks us to require coverage for renters even when they are not within the liability policy's definition of insured, conflicts with this principle. 34 Even if plaintiff were correct that a rental contract could be considered a liability policy for purposes of § 941(a), a question on which we express no opinion, the plaintiff must look to the issuer of that policy--the rental car company--for recovery. We see no basis in the insurance policy or in the language of or public policy behind § 941(a) upon which to require Liberty to answer for the rental car company's gratuitous promises. 35 Because plaintiff cannot show that she is an insured under the liability policy, the UIM statute affords her no protection. Because plaintiff is not covered under the terms of the UIM policy and, as a person not insured under the liability policy, cannot turn to the UIM statute for help, the defendant is entitled to summary judgment in its favor.