Opinion ID: 2622648
Heading Depth: 2
Heading Rank: 2

Heading: UM/UIM Coverage

Text: DeHerrera argues that Sentry violated statutory mandates for UM/UIM coverage when it denied UM/UIM benefits because her son occupied a vehicle that was not a car at the time of injury. If a policy provision violates public policy by attempting to dilute, condition, or limit statutorily mandated coverage then it may be void and unenforceable. Terranova v. State Farm Mut. Auto. Ins. Co. ., 800 P.2d 58, 60 (Colo. 1990). Because the General Assembly, by enacting section 10-4-609, did not intend to set forth comprehensive requirements for uninsured motorist coverage, we look to both the plain language of the statute and its legislative purpose to determine if the Sentry policy violates statutory mandates. See id. at 62. A policy that limits UM/UIM benefits under circumstances where the General Assembly intended for UM/UIM benefits to be recovered is invalid. Id. at 63. An insurer must offer UM/UIM coverage in an automobile liability or motor vehicle liability policy. If an insured purchases such coverage, then an insurer must provide UM/UIM benefits when an insured person is legally entitled to recover damages from owners or operators of uninsured motor vehicles. § 10-4-609(1)(a). In other words, an insured is entitled to recover UM/UIM benefits when a person who is at fault in an accident does not have any liability insurance. UM/UIM benefits are also available when the tortfeasor is the owner or driver of an underinsured motor vehicle. § 10-4-609(4). An underinsured motor vehicle is defined in part as a land motor vehicle insured by a liability policy, where the limits for liability coverage are less than the limits for UM/UIM insurance under the injured insured's own policy. § 10-4-609(4)(a). Applying this definition to the statute, if an insured's damages exceed the limits of the tortfeasor's liability coverage, an injured insured may receive compensation from her own policy to cover the remaining portion of her damages, up to the limits of her UM/UIM insurance. In this way, UM/UIM coverage replaces the benefits an innocent injured insured would have recovered from an uninsured or underinsured tortfeasor, if the tortfeasor had been insured for liability coverage to the same extent that the injured insured was covered for UM/UIM benefits. Other sections of the UM/UIM statute support the principle that the limits of an injured insured's UM/UIM coverage replace the uninsured or underinsured motorist's liability limits. The statute imposes a duty on an insurance carrier to offer an insured the opportunity to raise her limits for UM/UIM coverage to an amount higher than the statutory minimum, which is $25,000 per person and $50,000 per accident. §§ 10-4-609(1), 609(2); Allstate Ins. Co. v. Parfrey, 830 P.2d 905, 912 (Colo.1992). The minimum limits for liability insurance coverage are set at the same level. § 42-7-413(1)(c), 11 C.R.S. (2000). Thus, the statute requires an insurer to offer an insured the opportunity to purchase more than the minimum UM/UIM insurance because of the effect of the statute in an instance where both parties carry policies with the minimum limits of coverage. In such a case, replacing liability limits of a tortfeasor with UM/UIM limits of an injured insured would not create any additional benefit for the injured insured. See Allstate Ins. Co., 830 P.2d at 913. An injured insured would still only receive $25,000 to cover her personal injuries even if her damages exceeded that amount. If insurers were not required to offer UM/UIM insurance at higher levels than the minimum liability insurance, then the intent of the statute to protect insureds against the risk of inadequate compensation for injures caused by an underinsured motorist would be frustrated. Id. at 913. The effect of the statute to replace an uninsured or underinsured tortfeasor's automobile liability limits with an innocent injured insured's UM/UIM coverage furthers the public policy declared by the legislature when it first enacted the statute, which is to assure the widespread availability to the insuring public of insurance protection against financial loss caused by negligent financially irresponsible motorists. Ch. 91, sec. 1, 1965 Colo. Sess. Laws 333. By providing an insured the opportunity to protect against loss, up to policy limits, resulting from the negligent conduct of financially irresponsible motorists, the UM/UIM statute permits an insured to receive the benefits thereof to the extent necessary for full compensation for loss sustained by the insured. Kral v. Am. Hardware Mut. Ins. Co., 784 P.2d 759, 763-765 (Colo.1989); see also Peterman v. State Farm Mut. Auto. Ins. Co., 961 P.2d 487, 492 (Colo.1998) (The purpose of the UM statute is to ensure that individuals injured in an accident will be compensated for their losses even if the other motorist is uninsured.). Because of the important policy behind UM/UIM insurance to protect persons from the often-devastating consequences of motor vehicle accidents, we have concluded that great weight must be accorded this legislative intent. As we turn to a discussion of whether the Sentry policy provisions concerning UM/UIM coverage comply with statutory minimums, we are also mindful of the nature of UM/UIM insurance coverage, the limits of which function, in effect, as a replacement for an uninsured or underinsured tortfeasor's automobile liability limits. We now address whether DeHerrera is eligible for UM/UIM coverage. As with PIP coverage, Sentry argues that the policy unambiguously fails to provide UM/UIM coverage to a person occupying a vehicle that is not a car at the time of injury and thus excludes the motorcyclist from coverage in this case. The UM/UIM statute contains no provisions excluding protection for an insured based on the kind of vehicle an insured occupies at the time of injury. Rather, it simply states that UM/UIM coverage, if not waived by the named insured, must protect persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles. § 10-4-609(1). This phrase, `persons insured thereunder' means that insurers must provide UM/UIM coverage for the protection of persons insured under the liability policy that the insurer is issuing. Aetna Cas. & Sur. Co., 906 P.2d at 97 (emphasis added). Thus, the statute provides coverage for persons; it does not place geographical limits on coverage and does not purport to tie protection against uninsured motorists to occupancy in any kind of vehicle. This construction of the UM/UIM statute is consistent with the effect of UM/UIM coverage limits to act as a replacement for the liability policy limits of an uninsured or underinsured motorist who is at fault in a motor vehicle accident. If a motorist insures a vehicle for liability coverage, his policy affords protection to all members of the public injured by negligent conduct arising out of the use of the motor vehicle, irrespective of whether the injured person was a pedestrian, a bicyclist, a motorcyclist, or an occupant of a car. § 10-4-706(1)(a); see also § 42-7-413(1)(c); Kohl v. Union Ins. Co., 731 P.2d 134, 135 (Colo.1986) (liability coverage applies whenever the injury is causally related to a conceivable use of the insured vehicle); Mullis v. State Farm Mut. Auto. Ins. Co., 252 So.2d 229, 236 (Fla.1971) (If an auto liability policy insured negligently hits another with his insured automobile, it is immaterial whether such other is a pedestrian or occupies any particular vehicle; the insured's carrier is liable.). Thus, because UM/UIM insurance is designed to protect an innocent insured as if the person at fault had been insured for liability, then an injured insured is covered by UM/UIM insurance  whenever or wherever bodily injury is inflicted upon him by the negligence of an uninsured motorist. Mullis, 252 So.2d at 238 (emphasis in original). In other words, the injured insured would have received the benefits of the uninsured or underinsured tortfeasor's liability policy without regard to the injured insured's location at the time of injury, had that uninsured or underinsured motorist been insured. See Kral, 784 P.2d at 764 (concluding that the UM/UIM statute places an injured party having uninsured motorist coverage in the same position as if the uninsured motorist had been insured). Other states with similar UM/UIM statutes have also held that a carrier must provide UM/UIM coverage to a person irrespective of the vehicle occupied by the injured insured. See Ball v. Midwestern Ins. Co., 250 Kan. 738, 829 P.2d 897, 900 (1992) (Uninsured motorist insurance provides coverage to the insured and is not tied or limited to actual occupancy of a particular vehicle.); Fisher v. Morrison, 519 So.2d 805, 810 (La. App.1987); Hickman v. Cmty. Serv. Ins. Co., 78 Mich.App. 1, 259 N.W.2d 367, 369 (1977) (an offer of uninsured motorist coverage must be extended for protection from injuries caused by uninsured motorists wherever the `insured' happens to be and whatever the `insured' happens to be doing at the time of the injury); Kaysen v. Fed. Ins. Co., 268 N.W.2d 920 (Minn.1978) (uninsured motorist protection is not coverage for vehicles but of persons, even though it is contained in an insurance policy otherwise insuring an automobile), superceded by statute, Wintz v. Colonial Ins. Co., 542 N.W.2d 625 (Minn. 1996); Progressive Am. Ins. Co. v. Glenn, 428 So.2d 367, 368 (Fla.Dist.Ct.App.1983) (holding impermissible an attempt by an insurance carrier to exclude uninsured motorist's coverage based solely upon the mode of transportation). The court of appeals, however, relied on Allstate Indemnity Co. v. Gonzales, 902 P.2d 953 (Colo.App.1995), to hold that it is permissible for an insurer to deny coverage to an insured based on occupancy in a particular vehicle at the time of injury. See DeHerrera, 992 P.2d at 634. Allstate held that because the UM/UIM statute does not require an insurance carrier to offer UM/UIM insurance in a motorcycle insurance policy, an insurance carrier may exclude a motorcyclist from UM/UIM coverage in any policy. 902 P.2d at 955-56 (applying section 10-4-601(2)). This analysis is flawed because it focuses on the type of vehicle insured, rather than on the class of persons insured for UM/UIM coverage. We hold that the language of the UM/UIM statute and the purpose of that statute require that UM/UIM insurance apply to an insured person when injured by a financially irresponsible motorist, irrespective of the vehicle the injured insured occupies at the time of injury. Thus, the court of appeals' reliance on Allstate in this case is misplaced. Before applying our holding to the facts of this case, we note that we do not address whether the Sentry policy unambiguously denies UM/UIM coverage to an insured based on occupancy in a vehicle that is not a car because we hold that, irrespective of the policy's ambiguity, such a restriction violates public policy and is void. DeHerrera's son, as a resident relative of the named insured, is a person insured under the policy. He was injured in an accident arising out of the use of a motor vehicle, however he was not fully compensated for his injuries because the motorist at fault for the accident did not carry enough liability insurance. DeHerrera, however, had purchased UM/UIM insurance from Sentry in limits higher than the limits of the underinsured motorist's liability policy. We hold that the UM/UIM statute requires that UM/UIM insurance apply to an insured person who purchases such coverage when injured in an accident caused by an underinsured motorist, irrespective of the vehicle the injured insured occupies at the time of injury. The circumstances of this case comply with these requirements. Thus, we require Sentry to provide UM/UIM benefits to DeHerrera to compensate her for damages in this case. We note that the argument can be made that requiring UM/UIM insurance irrespective of the vehicle occupied by an insured at the time of injury may encourage unjust results in particular circumstances. For instance, a family owning more than one vehicle may purchase insurance for only one vehicle, under the rule of this case, and yet recover UM/UIM benefits when struck by an uninsured motorist while occupying any of its owned but uninsured vehicles. Further, Sentry argues that it is unjust to require an insurance carrier to assume the increased risk of injury associated with riding a motorcycle. However, the UM/UIM statute, unlike the No Fault Act, does not exclude UM/UIM coverage based on occupancy of an owned but uninsured vehicle, and also does not exclude UM/UIM coverage for motorcyclists. [8] Therefore, we decline to adopt these exclusions because no such exclusions have been enacted by the General Assembly in the UM/UIM statute. Golden Animal Hosp. v. Horton, 897 P.2d 833, 836 (Colo.1995). [9]