Opinion ID: 1920243
Heading Depth: 1
Heading Rank: 6

Heading: applicability of farm bureau's supplemental payment provision

Text: We have concluded above that the policy issued by Farm Bureau to Mr. LeBlanc limits Farm Bureau's liability for uninsured/underinsured coverage to $100,000. However, our inquiry regarding total payments by Farm Bureau requires further review of the policy. It is well settled that an insurer has the right to limit liability and impose conditions or restrictions under a policy provided such limitations do not conflict with statutory provisions or public policy. Reynolds v. Select Properties, Ltd., 93-1480, p. 3 (La.4/11/94); 634 So.2d 1180, 1183. La. R.S. 13:4203 imposes the requirement that all liability insurers are liable for interest on their policy limits from the date of judicial demand. Martin v. Champion, 95-0030 p. 8 (La.6/30/95); 656 So.2d 991, 996. Any provision of an insurance policy which enhances the liability coverage to the benefit of the insured must be included within the ambit of the UM coverage. Martin v. Champion Ins. Co., 95-0030 p. 4, 656 So.2d at 995. As such, insurers utilize supplemental payment provisions to outline their obligations regarding interest payments and courts must refer to supplemental payment provisions when determining a UM carrier's interest liability. Martin v. Champion Ins. Co., 95-0030 p. 11, 656 So.2d at 998. Therefore, to determine Farm Bureau's interest liability to the LeBlancs, we must again review the insurance contract to determine whether Farm Bureau's policy contains a supplemental payment provision and if so, the limits of coverage. Farm Bureau's policy contains a supplemental payment provision which declares that Farm Bureau agrees: To pay, in addition to the applicable limit of liability: (a) all expenses of the Company, all costs taxes against the insured in any such suit, all interest on any amount within the policy limits from the date of judicial demand until entry of judgment, and all interest accruing after entry of judgment until the Company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the Company's liability thereon; Farm Bureau maintains the insurance contract specifically limits its obligation to pay legal interest only on the limits of its policy. Conversely, the LeBlancs submit that the provisions of Coverage U requires Farm Bureau to pay all sums, except punitive and/or exemplary damages, which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured or underinsured automobile because of bodily injury ... According to the LeBlancs, this language obligates Farm Bureau to pay legal interest on the entire jury verdict attributable to Aysenne from the date of judicial demand until paid. In support of this position, the LeBlancs rely on Martin v. Champion Ins. Co, supra, in which this court found the uninsured insurer responsible for legal interest on the entire judgment. While the LeBlancs rely on Martin, both the LeBlancs and Farm Bureau agree that the facts of this case are distinguishable from Martin. We agree that Martin is distinguishable from the case sub judice. In Martin, plaintiff sued for damages sustained in an automobile accident. Plaintiff also included State Farm, her UM insurer, in the suit. [7] Prior to trial, plaintiff settled with the tortfeasor and its insurer for the $10,000 policy limit, dismissing both from the suit. Plaintiff also accepted an unconditional tender from State Farm in the amount of $5,000. The case proceeded to trial against State Farm and the jury returned a verdict awarding plaintiff $170,600 for her injuries. The judgment rendered by the trial court ordered State Farm to pay judicial interest on the entire amount of the verdict, $170,000, from the date of judicial demand until the date of the unconditional tender and on $155,600 from the date of tender until paid. The issue presented to this Court in Martin was whether the insurer was liable for interest on damages in excess of its $100,000 policy limit. In analyzing the main issue, the court noted that we would have to first determine whether the supplemental payment provision of State Farm's policy applied. Specifically, the court couched the issue as whether, in the absence of a valid written waiver, a supplemental payment provision contained in the liability portion of an automobile insurance policy applies to a UM claim. Martin v. Champion Ins. Co, 95-0030, p. 2, 656 So.2d at 994. As Ms. Martin had not executed a valid written waiver electing lower coverage, the court reasoned that La. R.S. 22:1406(d) required equal coverage for liability and UM claims. As to the issue of judicial interest, the State Farm supplemental payment provision stated that it would pay interest on all damages owed by an insured as the result of a judgment. Martin v. Champion Ins. Co, 95-0030, p. 3, 656 So.2d at 994. In the case sub judice, Mr. LeBlanc executed a valid written waiver electing lower limits as to his uninsured/underinsured coverage only. However, the waiver does not contain any language which would suggest that Mr. LeBlanc waived the application of the supplemental payment provision of the Farm Bureau policy, nor could the policy itself do so. See La. R.S. 13:4203. Moreover, Farm Bureau does not dispute its obligation to pay interest. Application of a supplemental payment provision to a UM claim arises under La.R.S. 22:1406 and not by virtue of contract. Martin v. Champion Ins. Co, 95-0030, p. 4, 656 So.2d at 994. The fact that a provision would not, by its literal terms, apply to the UM claim is irrelevant. Id. When a supplemental payment provision requires payment of interest in a liability suit, La.R.S. 22:1406 requires that such interest also be paid in a suit by an insured under its UM coverage, unless specifically rejected. Id. To hold otherwise, would effectively reduce the benefits of coverage below the liability coverage in direct contravention of the express mandate of La.R.S. 22:1406. Id. The Farm Bureau supplemental payment provision contains restrictive language not contained in the supplemental payment provision of State Farm's policy in Martin. Farm Bureau's policy provides that it will pay all interest on any amount within the policy limits from the date of judicial demand until entry of judgment, and all interest accruing after entry of judgment until the Company has paid or tendered or deposited in court such part of such judgment as does not exceed the limit of the Company's liability thereon. When the policy wording at issue is clear and unambiguously expresses the parties' intent, the insurance contract must be enforced as written. LSA-C.C. Art. 2046 (providing that when the words of a contract are clear, no further interpretation may be made to determine the parties' intent); Schroeder v. Bd. of Supervisors of Louisiana State University, 591 So.2d 342, 345 (La.1991). The policy, when read as a whole, clearly provides that Farm Bureau will pay its policy limits together with all interest on any amount within the policy limits. Accordingly, we conclude that the clear and explicit terms of Farm Bureau's policy requires Farm Bureau to pay interest, pursuant to its supplemental payment provision, on its policy limit of $100,000 from the date of judicial demand until paid.