Opinion ID: 1296223
Heading Depth: 2
Heading Rank: 5

Heading: Post-Dowhower Cases

Text: ¶ 40. Since we issued our decision in Dowhower, the court of appeals has decided numerous cases involving UIM coverage and reducing clauses. In 2000, the court of appeals decided Sukala, 2000 WI App 266, a case in which plaintiffs challenged the validity of the reducing clauses in two UIM provisions. The court conclude[d] that under § 632.32(5)(i) and Dowhower, UIM reducing clauses like those at issue here can no longer be considered to render coverage illusory. Id. at ¶ 15. ¶ 41. The Sukala court further stated: We read the Dowhower court's statements to mean either that (1) unambiguous UIM reducing clauses can no longer be considered `illusory' or (2) asking whether unambiguous UIM reducing clauses are illusory is no longer a valid inquiry. Id. at ¶ 19. [1] ¶ 42. In essence, we agree with this analysis. But then the court proceeded to an ambiguous and misleading conclusion: We conclude that under Dowhower and the declared public policy of the legislature in Wis. Stat. § 632.32(5)(i), UIM reducing clauses complying with § 632.32(5)(i) cannot render UIM coverage illusory. Once we have concluded that the UIM provisions of a policy are unambiguous, as we have here, then our inquiry is at an end. Id. at ¶ 20. In the quoted language, the Sukala court shifted terms, moving from the reducing clause to the UIM provisions of the policy, although the two could easily be read as one and the same. A policy in which all the UIM provisions are unambiguous is different from a policy in which only the reducing clause is unambiguous. In any event, the concluding sentence implies that once the reducing clause is found to be unambiguous, the inquiry is at an end. That is incorrect because Dowhower contemplates consideration of the entire policy. ¶ 43. In 2001, in Estate of Dorschner v. State Farm Mutual Automobile Insurance Co., the court of appeals reinforced the impact of Sukala, stating: In that case the court found the reducing clause, which mimicked the language of the authorizing statute, was clearly unambiguous. . . . The court concluded that under Dowhower and the declared public policy of the legislature in Wis. Stat. § 632.32(5)(i), reducing clauses that comply with the statute cannot render UIM coverage illusory. Once we have concluded that the UIM provisions of a policy are unambiguous, as we have here, then our inquiry is at an end. Dorschner v. State Farm Mut. Auto. Ins. Co., 2001 WI App 117, ¶ 11, 244 Wis. 2d 261, 628 N.W.2d 414 (quoting Sukala, 2000 WI App 266, ¶ 20). ¶ 44. However, in Taylor, 2001 WI 93, this court again emphasized the Dowhower requirement that the policy must be unambiguous in its relevant language for a reducing clause to be valid. In Dowhower, we held that a reducing clause in an UIM policy is valid so long as `the policy clearly sets forth that the insured is purchasing a fixed level of UIM recovery that will be arrived at by combining payments made from all sources.' We reached this conclusion after considering the case law regarding UIM coverage in conjunction with the statute that authorizes reducing clauses in UIM policies, Wis. Stat. § 632.32(5)(i)1. Id. at ¶ 24 (citations omitted). In Taylor, the court decided that a reducing clause was valid after examining it in the context of the whole policy. Id. at ¶¶ 25-26. ¶ 45. In her dissent in Taylor, Justice Bradley asserted that UIM coverage, as authorized by Wis. Stat. § 632.32(5)(i), does not meet the expectations of a reasonable insured. Id. at ¶ 35 (Bradley, J., dissenting). She added that, While I do not question the validity of a statutorily authorized reducing clause, I do question the validity of a policy crafted around the reducing clause in such a way as to defeat the reasonable expectations of the insured. Id. at ¶ 45 (emphasis added). [2] ¶ 46. Although Justice Bradley's statement was not part of the majority opinion, it reflects the reasoning in Dowhower that reducing clauses must be crystal clear in the context of the whole policy. Otherwise, insureds are not likely to understand what they are purchasing.