Opinion ID: 1232510
Heading Depth: 2
Heading Rank: 3

Heading: The Issue of Underinsured Motor Vehicle

Text: ¶ 26. To state the obvious, underinsured motor vehicle coverage requires an underinsured motor vehicle. Nancy Langridge argues that the drunk driver's vehicle meets the policy's underinsured motor vehicle definition as to her. Her reasoning is as follows. ¶ 27. First, Mrs. Langridge asserts that she is an insured. The policy's coverage provision provides: We will pay damages for bodily injury an insured is legally entitled to collect from the owner or driver of an underinsured motor vehicle. The bodily injury must be caused by accident arising out of the operation, maintenance or use of an underinsured motor vehicle.  Nancy Langridge contends that she is an insured  who is legally entitled to collect wrongful death damages from the drunk driver for the death of her husband. She supports her position by referencing the policy's definition of bodily injury, which means bodily injury to a person and sickness, disease or death which results from it. (Emphasis added). According to Mrs. Langridge, her wrongful death claim meets the requirements of the for bodily injury  clause of the coverage language because it is for the death of her husband which resulted from his bodily injury. State Farm does not dispute this reasoning. It is this reasoning that opens the door to a derivative claim. ¶ 28. Second, Mrs. Langridge asserts that the vehicle driven by the drunk driver meets the policy's definition of an underinsured motor vehicle. She relies on paragraph b of the underinsured motor vehicle definition: Underinsured Motor Vehicle means a land motor vehicle. 1. the ownership, maintenance or use of which is insured or bonded for bodily injury liability at the time of the accident; and 2. whose limits of liability for bodily injury: a. are less than the limits of liability of this coverage; or b. have been reduced by payments to persons other than the insured to less than the limits of liability of this coverage. (Emphasis added). ¶ 29. Mrs. Langridge asserts that paragraph b renders the drunk driver's vehicle underinsured as to her. As she reads paragraph b, she is the insured.  The drunk driver's $150,000 limits of liability have been reduced by payments to her husband, not to her, and therefore these payments have rendered the drunk driver's vehicle underinsured as to her. ¶ 30. State Farm reads the policy differently. Under the policy, a motor vehicle can be considered underinsured in either of two ways. First, paragraph a in the definition of underinsured motor vehicle speaks of a vehicle whose limits of liability a. are less than the limits of liability of this coverage. ¶ 31. In this instance, the drunk driver purchased $50,000 more in liability coverage than the Langridges bought in UIM coverage. There is no dispute that the drunk driver's vehicle was not underinsured as to William Langridge. ¶ 32. State Farm emphasizes that Nancy Langridge's wrongful death claim for the death of her husband arises out of her husband's bodily injury and not her own, and therefore her claim is derivative. To underscore this point, State Farm relies on the limits of liability section of the policy. Under the Limits of Liability section,  Bodily injury to one person includes all injury and damages to others resulting from this bodily injury.  [3] (Emphasis added). State Farm asks that we read this provision in conjunction with Gocha v. Shimon, 215 Wis. 2d 586, 573 N.W.2d 218 (Ct. App. 1997), and Richie v. American Family Mutual Insurance Company, 140 Wis. 2d 51, 409 N.W.2d 146 (Ct. App. 1987). ¶ 33. Both Gocha and Richie involved fact situations in which insureds were not entitled to collect the greater per accident limit; they were confined to the smaller per person limit because there was only one insured who suffered a bodily injury. These cases distinguish between independent claims and derivative claims. Both conclude that when an insured seeks payment arising out of the bodily injury of another, the insured's claims are derivative of the claim of the person suffering the bodily injury, [4] and as a result only the per person limit is available for each person suffering bodily injury. ¶ 34. Turning to paragraph b, State Farm explains that paragraph b is designed to address situations in which multiple parties suffer bodily injury in one accident, and the tortfeasor's automobile liability insurance is exhausted by payments to a person or persons other than the State Farm policy's insured claimant. These other persons might be in other vehicles, or they might be in the same vehicle as the insured. Payments from the tortfeasor's policy for bodily injury to other persons can reduce the tortfeasor's liability limits that are available to the insured. ¶ 35. Typically, if a policy defines underinsured motor vehicle as it did hereby comparing the tortfeasor's liability limits to the limits of UIM coverage then payment to other injured parties that reduces the coverage available to an insured below UIM limits will usually not trigger UIM coverage. Anderson, supra, § 4.3(E) (emphasis added). Thus, paragraph b goes beyond typical coverage to provide coverage for an insured when a tortfeasor becomes functionally underinsured by virtue of payments to others, in that the tortfeasor's remaining coverage to compensate the insured is less than the insured's own UIM limits. ¶ 36. This concept meshes with language in the Limits of Liability section: The amount of coverage is shown on the declarations page under Limits of LiabilityWEach Person, Each Accident.... Under Each Accident is the total amount of coverage, subject to the amount shown under Each Person, for all damages due to bodily injury to two or more persons in the same accident. (Emphasis added).