Opinion ID: 2623504
Heading Depth: 3
Heading Rank: 1

Heading: Minimum Statutory Automobile Insurance Requirements

Text: ¶ 13 The Calhouns first challenge the validity of John's Progressive policy. Essentially, they argue that, with the owned vehicle exclusion, the Progressive policy falls short of the minimum statutory automobile insurance requirements. Therefore, the Calhouns argue that we should construe the Progressive policy to provide coverage in this case. ¶ 14 Section 41-12a-301 of Utah's Financial Responsibility Act [1] mandates, in relevant part, that every resident owner of a motor vehicle shall maintain owner's or operator's security in effect at any time that the motor vehicle is operated on a highway within the state. Utah Code Ann. § 41-12a-301(2)(a). The terms owner's security, operator's security, or owner's or operator's security are defined as an insurance policy or combination of policies conforming to Section 31A-22-302. Id. § 41-12a-103(9)(a). [2] Section 31A-22-302 provides that [e]very policy of insurance or combination of policies purchased to satisfy the owner's or operator's security requirement of Section 41-12a-301 shall include ... motor vehicle liability coverage under Section[ ] 31A-22-303. Id. § 31A-22-302(1)(a) (1994). And section 31A-22-303 states that a policy shall (i) name the motor vehicle owner or operator in whose name the policy was purchased, state that named insured's address, the coverage afforded, the premium charged, the policy period, and the limits of liability; (ii) (A) if it is an owner's policy, designate by appropriate reference all the motor vehicles on which coverage is granted, insure the person named in the policy, insure any other person using any named motor vehicle with the express or implied permission of the named insured, and, except as provided in Subsection (7), insure any person included in Subsection (1)(a)(iii) against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles[;] ... or (B) if it is an operator's policy, insure the person named as insured against loss from the liability imposed upon him by law for damages arising out of the insured's use of any motor vehicle not owned by him ... with the same limits of liability as in an owner's policy under Subsection (1)(ii)(A); (iii) except as provided in Subsection (7), insure persons related to the named insured by blood, marriage, adoption, or guardianship who are residents of the named insured's household, including those who usually make their home in the same household but temporarily live elsewhere, to the same extent as the named insured.... Id. § 31A-22-303(1)(a)(i)-(iii) (Supp.1998) (emphasis added). As long as the liability coverage provided in any automobile insurance policy satisfies, in addition to all other applicable statutes, either the requirements of an owner's policy under subsection (A), or an operator's policy under subsection (B), the insurance policy complies with the minimum insurance requirements mandated by section 31A-22-303, and thus satisfies the financial responsibility requirements of section 41-12a-301(2)(a). ¶ 15 Because the Progressive policy in this case states simply that it is a Utah Motor Vehicle Policy, there is some dispute as to the exact nature of the coverage provided by the policy. Although the Calhouns and Progressive agree that the policy is, at minimum, an owner's policy, the parties disagree as to whether subsection (A) requires an owner's policy to insure the named insured's permissive use of any household member's vehicle in addition to the insured's use of the vehicle named in the policy. Moreover, the parties also disagree as to whether the Progressive policy is an operator's policy, and whether it provides, or should be construed to provide, operator's coverage that would insure John's accident here. ¶ 16 Because all parties agree that the Progressive policy is an owner's policy, we will first examine whether the owner's policy portion of subsection (A) requires the policy to provide coverage for John's use of his father's Jeep. If we determine that the policy need not provide such coverage, we will then address whether the policy is also an operator's policy, and whether the policy either provides, or should be construed to provide, the type of operator's coverage that would insure John in this case.
¶ 17 As an owner's policy, the Calhouns argue that the Progressive policy must cover John's permissive use of any household member's vehicle. They base this assertion on the language in subsection (A) of section 31A-22-303(1)(a)(ii), which states that an owner's policy must insure the person named in the policy. Id. § 31A-22-303(1)(a)(ii)(A). According to the Calhouns, this language requires an owner's policy to insure the named insured not just as to liability incurred from driving the motor vehicle named in the policy, but also as to liability incurred from driving all other vehicles with either the express or implied permission of the owner. Under this interpretation, the Calhouns argue that the Progressive policy must provide insurance coverage for John's use of his father's Jeep. ¶ 18 If we were to interpret the phrase insure the person named in the policy in isolation, we would no doubt be more inclined to agree with the Calhouns' position. However, when deciding questions of statutory interpretation we do not look to language in isolation. Rather, we look first to the statute's plain language, in relation to the statute as a whole, to determine its meaning. Bd. of Educ. v. Sandy City Corp., 2004 UT 37, ¶ 9, 94 P.3d 234. When viewed in light of the language and structure of section 31A-22-303, we conclude that subsection (A)'s mandate that an owner's policy insure the person named in the policy requires only that a policy provide insurance for the person named in the policy with respect to damages arising out of the insured's use of the motor vehicle named in the policy. ¶ 19 Section 31A-22-303(1)(a)(i) begins with the requirement that all automobile insurance policies include certain basic coverage information, including the name of the automobile owner or operator in whose name the policy is purchased, the named insured's address, the coverage afforded by the policy, the premium charged for the coverage, the period for which the policy will provide coverage, and the policy's limits of liability. Utah Code Ann. § 31A-22-303(1)(a)(i). The statute goes on to include additional policy coverage requirements, depending on whether the policy is an owner's policy or an operator's policy: (ii) (A) if it is an owner's policy, designate by appropriate reference all the motor vehicles on which coverage is granted, insure the person named in the policy, insure any other person using any named motor vehicle with the express or implied permission of the named insured, and, except as provided in Subsection (7), insure any person included in Subsection (1)(a)(iii) against loss from the liability imposed by law for damages arising out of the ownership, maintenance, or use of these motor vehicles[;] ... or (B) if it is an operator's policy, insure the person named as insured against loss from the liability imposed upon him by law for damages arising out of the insured's use of any motor vehicle not owned by him ... with the same limits of liability as in an owner's policy under Subsection (1)(ii)(A); Id. § 31A-22-303(1)(a)(ii)(A)-(B) (emphasis added). ¶ 20 The legislature's separation of these two sections by the disjunctive or, as opposed to the conjunctive and, clearly mandates that a policy need only provide owner's coverage or operator's coverage not both. [3] See Utah Code Ann. § 41-12a-301(2)(a) (requiring vehicle owners to maintain owner's or operator's security (emphasis added)). Given the clear division between an owner's policy as described in subsection (A), and an operator's policy in subsection (B), a plain reading of this statute suggests that the legislature intended for an owner's policy to provide coverage with respect to a particular vehicle, and for an operator's policy to provide coverage for a particular individual. ¶ 21 Our interpretation is guided by the fact that, in distinguishing between these two policy types, the legislature chose the terms owner and operator. By definition, the term owner is closely associated with a specific vehicle, see id. §§ 31A-22-301(6), 41-12a-103(8)(a) (defining owner as a person who holds legal title to a motor vehicle), while the term operator is more closely associated with the specific individual, see id. §§ 31A-22-301(5), 41-12a-103(7) (defining operator as every person who is in actual physical control of a motor vehicle). ¶ 22 Our interpretation is further supported by the fact that the phrase insure the person named in the policy is preceded by the requirement that the policy designate by appropriate reference all the motor vehicles on which coverage is granted,  and followed immediately by the requirement that the policy insure any other person using any named motor vehicle with the express or implied permission of the named insured. Id. § 31A-22-303(1)(a)(ii)(A) (emphasis added). Subsection (A)'s requirement that an owner's policy insure the vehicle named in the policy, as opposed to subsection (B)'s requirement that an operator's policy insure the insured's use of any vehicle, supports our conclusion that, unlike an operator's policy, an owner's policy only mandates insurance coverage of the insured's use of the vehicle (or vehicles) named in the policy. ¶ 23 Finally, interpreting the phrase insure the person named in the policy in subsection (A) as pertaining only to the insured's use of the named vehicle is also favorable from a public policy perspective. Section 31A-22-303(1)(a)(iii) requires insurance policies to insure all household members not specifically excluded under subsection (7) to the same extent as the named insured. Id. § 31A-22-303(1)(a)(iii). If we were to follow the Calhouns' proposed interpretation and require an owner's policy to provide the type of operator's coverage contemplated by subsection (B), owners of multiple vehicles could purchase an owner's policy for one vehicle and, absent a named driver exclusion for each member in the insured's household, [4] obligate insurance companies to provide coverage for all other uninsured vehicles and for all other household members. This would, as Progressive notes, undoubtedly result in markedly higher insurance premiums and could seriously impact the ability of automobile owners to obtain affordable automobile insurance. ¶ 24 Therefore, we hold that the phrase insure the person named in the policy in section 31A-22-303(1)(a)(ii)(A) requires that an owner's policy insure the named insured with respect to the vehicle named in the policynot that an owner's policy must insure the named insured with respect to any vehicle he or she drives. Because the Progressive policy does so in this case, it complies with the minimum insurance requirements of an owner's policy under subsection (A). Accordingly, as an owner's policy, the Progressive policy is only required to provide insurance coverage to John for accidents arising out of the use of his Suzuki, not his father's Jeep.
¶ 25 The Calhouns argue that even if the Progressive policy does not cover John's use of his father's Jeep as an owner's policy, the Progressive policy provides, or should be construed to provide, coverage for John's accident as an operator's policy. The Calhouns assert that this result is warranted because either the policy is an operator's policy according to its plain language, or alternatively, the policy language is ambiguous, and should be construed against Progressive and in favor of coverage. We address each argument in turn.
¶ 26 In support of their assertion that Progressive is required to insure John's accident, the Calhouns argue that, by its own terms, the Progressive policy is an operator's policy. The language in the policy to which the Calhouns refer stems from Progressive's promise to pay damages for bodily injury and property damage for which an insured person becomes legally responsible because of an accident arising out of the ownership, maintenance, or use of a vehicle. (Emphasis omitted.) The policy defines insured person to include, in relevant part, you [the named insured] or a relative with respect to an accident arising out of the ownership, maintenance, or use of any vehicle with the express or implied permission of the owner of the vehicle. (Original emphasis omitted and emphasis added.) The Calhouns argue that because this language tracks the language of the ... `operator's policy' portion of [section 31A-22-303(1)(a)(ii)(B)], the Progressive policy is an operator's policy that must cover John's use of his father's Jeep. ¶ 27 We agree with the Calhouns that this initial provision appears to provide the type of operator's insurance coverage contemplated by an operator's policy in subsection (B). However, this statement of coverage must be read in light of the policy's explicit limitations of coverage, which include, in pertinent part, the following: EXCLUSIONS READ THE FOLLOWING EXCLUSIONS CAREFULLY. IF AN EXCLUSION APPLIES, COVERAGE WILL NOT BE AFFORDED UNDER THIS PART I. Coverage under this Part I, including our duty to defend, does not apply to: ... 12. bodily injury or property damage resulting from the operation or use of a vehicle owned by you [the named insured] or a relative, other than a covered vehicle. When the Progressive policy is read in conjunction with this unequivocal exclusion, it is clear that although the policy may provide additional operator's coverage, it is not an operator's policy within the meaning of section 31A-22-303(1)(a)(ii)(B). ¶ 28 Moreover, contrary to the Calhouns' assertions, exclusionary endorsements such as the owned vehicle exception at issue are not necessarily invalid. Rather, contracting parties are free to limit coverage in excess of the minimum required limits, and [an] exclusion found in [a] contract [is] valid in relation to any coverage exceeding minimum amounts. Allstate Ins. Co. v. United States Fid. & Guar. Co., 619 P.2d 329, 333 (Utah 1980) (footnote omitted); see also Utah Code Ann. § 31A-1-103(2) (1994) (This title [31A] restricts otherwise legitimate business activity. What this title does not prohibit is permitted unless contrary to other provisions of Utah law.). As long as any exclusions are phrased in language which clearly and unmistakably communicates to the insured the specific circumstances under which the expected coverage will not be provided, exclusions in insurance policies beyond the minimum coverage limits are allowed. Alf v. State Farm Fire & Cas. Co., 850 P.2d 1272, 1275 (Utah 1993) (quotations omitted). ¶ 29 The court of appeals correctly recognized that such exceptions are permissible when it upheld a similar owned vehicle exclusion in Hill v. Farmers Insurance Exchange, 888 P.2d 138 (Utah Ct.App.1994). In that case, the defendants had insured three vehicles under separate automobile insurance policies. Id. at 139. Each policy excluded coverage for bodily injury or property damage arising out of the ownership, maintenance or use of any vehicle other than [the] insured car [named in the policy], which [was] owned by or furnished or available for regular use by [the named insured] or a family member. Id. (emphasis and footnote omitted). Following an automobile accident in which the defendants' sixteen-year-old daughter injured the plaintiffs, the plaintiffs sought to recover under each of the three separate insurance policies. Id. at 139-40. The court of appeals rejected the plaintiffs' attempts to obtain multiple recoveries. Id. at 140-41. Because the policies unambiguously excluded coverage for the use of other household vehicles not named under each policy, the court held that the plaintiffs were not entitled to recover under the defendants' remaining two insurance policies. Id. at 141. ¶ 30 A similar result is warranted in this case. First, the Progressive policy provides the minimum owner's policy insurance coverage required by law. See supra Part I.A.1. Therefore, any additional coverage provided may be limited as long as the language is clear and unmistakablewhich is the case here. The Progressive policy's statement that it will not afford coverage for bodily injury or property damage resulting from the operation or use of a vehicle owned by you [the named insured] or a relative, other than the covered vehicle clearly and unmistakably communicates to the insured that, notwithstanding the policy's general grant of operator's coverage, the policy will not extend coverage to the insured's use of any household relative's vehicle not named in the Progressive policy. Given this unequivocal limitation, the policy's owned vehicle exclusion permissibly limits the additional operator coverage it provides in its policy to exclude liability for John's use of his father's Jeep.
¶ 31 The Calhouns argue that even if the Progressive policy does not explicitly provide operator coverage in this case, the policy is ambiguous, and should therefore be construed to provide the type of operator's liability insurance that would cover John's accident. They reason that because the Progressive policy only states that it is a Utah Motor Vehicle Policy, and fails to specify whether it is an owner's or operator's policy, [t]he insured, upon reading the policy, would have no way of knowing that Progressive intended to only provide the statutorily required coverage of [section] 31A-22-303(1)(a)(ii)(A) but not the statutory coverage in [section] 31A-22-303(1)(a)(ii)(B). Because Progressive created the alleged ambiguity, the Calhouns contend that we should resolve the issue in favor of coverage and construe the Progressive policy to extend insurance coverage to John's use of his father's Jeep. ¶ 32 Although the Calhouns correctly note that we resolve ambiguities in insurance policies in favor of coverage, Nielsen v. O'Reilly, 848 P.2d 664, 665-66 (Utah 1992); see also Pollard v. Truck Ins. Exch., 2001 UT App 120, ¶ 7, 26 P.3d 868; Hill, 888 P.2d at 138, policy language is ambiguous only when it is not plain to a person of ordinary intelligence and understanding, viewing the matter fairly and reasonably, in accordance with the usual and natural meaning of words, and in the light of existing circumstances, including the purpose of the policy. Nielsen, 848 P.2d at 666 (quotations omitted). As indicated above, the owned vehicle exclusion language in this case is not ambiguous. The exclusion clearly states that Progressive will not defend John for bodily injury or property damage resulting from the operation or use of a vehicle owned by ... a [household] relative, other than the covered vehicle. (Emphasis omitted.) Although John may have believed he was obtaining full coverage for his vehicle, the policy makes clear that coverage will not extend to John's use of his father's Jeep. Accordingly, we decline to construe the Progressive policy to extend coverage to John in this case.