Opinion ID: 2678680
Heading Depth: 2
Heading Rank: 3

Heading: Allstate Indemnity Umbrella Policy

Text: The Underwoods’ umbrella policy defines an “insured person” to mean a) you, and any other person who is named on the Policy Declarations; b) any person related to you by blood, marriage or adoption who is a resident of your household; or c) any dependent person in your care, if that person is a resident of your household. In the district court, Rice argued that Wiebe, as a permissive user, was an “insured person” under the umbrella policy. Rice now declares in her reply brief that she does “not argue that permissive user Howard Wiebe met the technical definition of an ‘insured person’ under the umbrella policy issued to the Underwoods.” Her focus on appeal is directed instead to Wiebe’s status as a “permissive user.” Under the umbrella policy’s “Excess Liability Insurance Coverage XL” (XL coverage), “Allstate [Indemnity] will pay damages which an insured person becomes legally obligated to pay because of bodily injury, personal injury or property damage, subject to the terms, conditions and limits of this policy. Bodily injury, personal injury and property damage must arise from a covered occurrence.” Allstate Indemnity provides XL coverage, saying: -5- Losses We Cover Under Coverage XL We will cover an occurrence arising only out of: 1. Personal activities of an insured person, including the permissive use of a land vehicle or watercraft owned by an insured person. An “occurrence” is “an accident during the policy period, . . . resulting in bodily injury, personal injury or property damage.” There is no question Rice suffered “bodily injury” from “an accident during the policy period,” and the October 10, 2010, accident ostensibly fits the definition of an “occurrence” under the umbrella policy’s XL coverage. The disputed question is whether the accident was a “covered occurrence” meriting XL protection. Rice maintains it was, because Wiebe was a permissive user of the Underwoods’ vehicle and the accident arose out of such permissive use. This may be true, but it is not the only requirement for XL coverage. See Ritchie v. Allied Prop. & Cas. Ins. Co., 307 S.W.3d 132, 135 (Mo. 2009) (en banc) (“Courts should not interpret policy provisions in isolation but rather evaluate policies as a whole.”). The XL coverage obligates Allstate Indemnity to “pay damages which an insured person becomes legally obligated to pay because of bodily injury.” (Italics added).2 There are no such damages here. Rice declared and agreed in the settlement agreement that “there is no allegation or evidence of negligence or fault on the part of” the Underwoods “regarding any injuries or damages” resulting from Rice’s accident. Rice does not offer any plausible legal theory applicable in the state of Missouri that would render the Underwoods legally responsible for Wiebe’s negligence. See, e.g., Murray v. Am. Family Mut. Ins. Co., 429 F.3d 757, 760 n.2 2 At oral argument, Allstate Indemnity’s counsel did not direct the court to this clause of the contract. Doing so would have clarified the discussion considerably. Allstate Indemnity’s counsel did cite Allstate Ins. Co. v. Hendrix, 476 S.E.2d 644 (Ga. Ct. App. 1996), which relies on a similar clause. -6- (8th Cir. 2005) (“Unlike some states, Missouri does not generally impose vicarious liability on a vehicle owner for the negligence of another person operating the vehicle.”).3 In short, Rice has offered no factual or legal scenario under Missouri law—nor do we find one—by which the Underwoods would become legally obligated to pay damages to Rice under the facts of this case.4 Allstate Indemnity contends a Georgia case is on all fours with this case. In Hendrix, a married couple, Charles and Joyce Buis, permitted Robert Cummings to drive their car. See 476 S.E.2d at 645. While Cummings was driving the Buises’ car, a motorcyclist, Hendrix, ran into the car and was injured. See id. As here, Cummings’s and the Buises’ auto liability policies did not cover all of Hendrix’s alleged damages, and Hendrix “claimed that Cummings was an insured under a $1,000,000 personal umbrella policy issued by Allstate to Mr. and Mrs. Buis.” Id. The relevant insurance policy provisions are similar to the Allstate Indemnity provisions.5 3 Rice proposes that a Missouri statute requiring auto liability policies to insure both the owner and any permissive user of a vehicle impliedly extends the coverage of an umbrella policy to permissive users. See Mo. Rev. Stat. § 303.190.2(2). Rice admits the statute is not directly applicable. As far as we are aware, the Missouri General Assembly has not seen fit to extend the statute in this way, and Rice’s proposal does not persuade us the Missouri Supreme Court would amend the statute on some public policy ground. 4 This is not to say a claimant could not recover based on the negligent acts of the insured persons. For example, if Rice had alleged the Underwoods were liable for her injuries because the Underwoods negligently permitted an obviously intoxicated Wiebe to drive their car, XL coverage possibly could apply. And in some states, the Underwoods potentially could be liable by law. 5 The Hendrix court quotes the Buises’ policy as follows: When We Pay Allstate will pay when an insured becomes legally obligated to pay for -7- The Georgia appellate court reasoned, “When the policy is construed as written, including the ‘When We Pay’ provision, the language becomes clear and unambiguous.” Id. “[T]he policy states that Allstate provides coverage if the insured or a member of his household is legally obligated to pay damages as a result of a loss.” Id. “A holding that the insurance company was also required to extend coverage to losses for which the named insured or members of his household were not legally obligated would amount to an extension of coverage for which the insurer had not bargained and would, in effect, rewrite the contract.” Id. The same reasoning applies here. Allstate Indemnity’s XL coverage provisions explicitly and unambiguously protect against losses the insured person incurs—that is, protection for “damages which an insured person becomes legally obligated to pay.”6 (Italics added). Not every conceivable loss is covered. The XL coverage personal injury or property damage caused by an occurrence. .... Losses We Cover Coverage applies to an occurrence arising only out of: 1. personal activities of an insured including the lending by an insured of a land vehicle or watercraft owned by an insured. Id. 6 Rice argues the umbrella coverage is ambiguous “based on the ‘give and take’ rule.” See, e.g., Jones v. Mid-Century Ins. Co., 287 S.W.3d 687, 689 (Mo. 2009) (en banc) (“Missouri law is well-settled that where one provision of a policy appears to grant coverage and another to take it away, an ambiguity exists that will be resolved in favor of coverage.”). But nowhere does the XL coverage purport to insure the legal obligations of anyone not identified as an insured person under the terms of the policy. No policy provision granted coverage to Wiebe—no coverage was “given,” consequently, no coverage was “taken” away. -8- delineates a specified, numbered subset of three “covered occurrence[s]” in the clause entitled “Losses We Cover Under Coverage XL.” Rice would have the umbrella policy’s XL coverage insure not only the “legal obligations” of the Underwoods, but also the legal obligations of an unlimited pool of permissive-user tortfeasors. This interpretation contradicts the very purpose of umbrella insurance, as interpreted by the Missouri courts: While a primary insurance policy provides “the first layer of insurance coverage,” an umbrella policy is used to provide “specific coverage above an underlying limit of primary insurance.” 3 Leo Martinez, et al., New Appleman Insurance Law Practice Guide § 29A.02[1] (2012 ed.). The purpose for writing an umbrella policy in addition to a primary policy is “to protect the insured against liability for catastrophic losses that would exceed the limits of affordable primary coverage.” Id. at § 29A.02[3]. Lero v. State Farm Fire & Cas. Co., 359 S.W.3d 74, 82 (Mo. Ct. App. 2011) (emphasis added). Allstate Indemnity is not responsible for the fact Wiebe had not purchased any excess insurance for his own protection “against liability for catastrophic loss[].” Id.