Opinion ID: 884678
Heading Depth: 2
Heading Rank: 1

Heading: Stacking of underinsured motorist coverages

Text: ¶ 31 Asking that we answer the second certified question in the negative, Farmers Alliance first argues we ought to honor the terms of the policy, which expressly prohibit Holeman from stacking underinsured motorist coverages in the present case. Pointing to our decision in Farmers Alliance Mutual Insurance Co. v. Holeman (1996), 278 Mont. 274, 281, 924 P.2d 1315, 1320 (hereinafter Holeman I ), Farmers Alliance argues we must look to the terms of the policy itself to determine whether Holeman can stack the underinsured motorist coverages contained therein. ¶ 32 In Holeman I, we interpreted § 33-23-303, MCA, and concluded that statute does not prohibit the stacking of the medical payment coverage and the under insured motorist coverage available under a policy of motor vehicle liability insurance where a premium is charged for coverage of each motor vehicle listed within that policy. Holeman I, 278 Mont. at 282, 924 P.2d at 1320. We recognized that the Montana Legislature had instead left [t]he question of whether excess or additional coverages, such as underinsurance coverage, can be stacked ... as a matter of policy interpretation. Holeman I, 278 Mont. at 281, 924 P.2d at 1320. Relying on our determination that the permissibility of stacking underinsurance coverages is a matter of policy interpretation, Farmers Alliance argues that whether Holeman may stack the underinsured motorist coverages at issue in the present case depends solely upon the terms of the policy. ¶ 33 The policy at issue clearly purports to prohibit an insured from stacking underinsured motorist benefits, providing in pertinent part that: D. LIMIT OF INSURANCE 1. Regardless of the number of covered autos, insureds, premiums paid, claims made or vehicles involved in the accident, the most we will pay for all damages resulting from any one accident is the LIMIT OF INSURANCE for [UNDERINSURED] [5] MOTORISTS COVERAGE shown in the Declarations. ¶ 34 Although we determined in Holeman I, that the permissibility of stacking underinsured coverages is a matter of policy interpretation, we did not have occasion to address the validity of the anti-stacking provisions contained in the policy at issue. To answer the question before us, we must begin where we left off in Holeman I, and determine whether the policy's anti-stacking provisions are indeed valid, or void as against the public policy of this State. In so doing, we will address each of Farmers Alliance's two remaining arguments in turn. ¶ 35 Relying on our decision in Grier v. Nationwide Mutual Insurance Co. (1991), 248 Mont. 457, 812 P.2d 347, Farmers Alliance argues, as it did before this Court in Holeman I, that the policy's underinsured motorist coverage is actually part of the policy's uninsured motorist coverage, the stacking of which is clearly prohibited by § 33-23-203, MCA. More specifically, Farmers Alliance asserts that because the underinsured motorist provision in the instant policy is contained within the section governing uninsured motorist coverage, the underinsured coverage is actually a part of the uninsured motorist coverage, and as such cannot be stacked in light of § 33-23-203, MCA. ¶ 36 In Holeman I, we rejected the precise argument presently advanced by Farmers Alliance. Although our sole task in Holeman I was to interpret the anti-stacking language of § 33-23-203, MCA, rather than the terms of the policy itself, we nevertheless proceeded to distinguish the policy at issue in Grier from the one in the present case. For example, we noted that unlike the policy at issue in Grier, the instant policy sets forth the underinsurance coverage on the declarations page. Holeman I, 278 Mont. at 281, 924 P.2d at 1319. In accordance with our decision in Holeman I, we determine that the policy at issue in Grier differs substantively from the one at issue in the present case, and thus conclude that Grier does not control our analysis. ¶ 37 Finally, Farmers Alliance argues Holeman cannot stack underinsured motorist coverages because Leonard qualified as an insured only by virtue of his occupancy in the insured vehicle. Because Leonard was not a named insured who bought and paid for the policy at issue, Farmers Alliance asserts, he could not reasonably expect to share in the expanded coverage afforded by the stacking of underinsured motorist benefits. Farmers Alliance relies on a number of cases from various jurisdictions in support of its argument that there exists a material distinction between a named insured who has purchased and paid for an insurance policy, and an individual who qualifies as an insured only by virtue of his or her occupancy in an insured vehicle at the time of an accident. ¶ 38 For example, Farmers Alliance points to the case of Ohio Casualty Insurance Co. v. Stanfield, (Ky.1979), 581 S.W.2d 555, in which the Kentucky Supreme Court distinguished between a first class of individuals who are named insureds and thereby protected regardless of their location or activity from damages caused by injury inflicted by an uninsured motorist, and a second class of insureds whose protection is confined to damages from injury inflicted by an uninsured motorist while they are `occupying an insured highway vehicle.' Ohio Casualty, 581 S.W.2d at 557. Recognizing that a first class, named insured may reasonably expect that his payment of an additional premium will result in increased coverage for those falling within the definition of the `named insured,' the court held that the named insured in that case could stack the uninsured motorist coverages contained in his own insurance policy. Ohio Casualty, 581 S.W.2d at 559 (quoting Lambert v. Liberty Mut. Ins. Co. (Ala.1976), 331 So.2d 260, 263). In concluding that the insured could not stack the uninsured coverages contained within his employer's policy, however, the court determined the defendant was a second class insured as to that policy, and could not reasonably expect to share in the broader coverage afforded a first class insured since he did not pay for the additional coverage involved. Ohio Casualty, 581 S.W.2d at 559. ¶ 39 Holeman responds that this Court has already established that there exists no material distinction between a first class named insured who pays premiums on a policy, and a second class insured who qualifies as such only by virtue of his or her occupancy in an insured vehicle. More specifically, Holeman points to our decision in Sayers v. Safeco Insurance Co. (1981), 192 Mont. 336, 340, 628 P.2d 659, 662, in which we held that, where the plaintiff qualified as an insured as defined by the policy, we had no reason to distinguish between persons insured and policyholders who have actually paid the premiums. Instead, we concluded that [t]he justification for stacking lies not in who has paid for the extra protection, but rather that the protection has been purchased, and held that [t]he benefits flow to all persons insured. Sayers, 192 Mont. at 340, 628 P.2d at 662. ¶ 40 Pointing to our decision in Chilberg v. Rose (1995), 273 Mont. 414, 903 P.2d 1377, Farmers Alliance argues we have since recognized a distinction between named insureds and those who qualify as insureds only by virtue of their occupancy in an insured vehicle. In Chilberg, the plaintiff was injured while riding in a car owned by Jay Dean and insured through Mid-Century Insurance Company. Chilberg, 273 Mont. at 415, 903 P.2d at 1378. At the time of the accident, Dean had three cars insured under separate policies through Mid-Century. Chilberg, 273 Mont. at 415, 903 P.2d at 1378. The plaintiff sought to stack the uninsured motorist and medical benefits provided for in all three policies. Chilberg, 273 Mont. at 415, 903 P.2d at 1378. We held the plaintiff was not entitled to stack those coverages on the grounds that he did not qualify as an insured under the two disputed policies because he was not occupying the cars insured under the two disputed policies. Chilberg, 273 Mont. at 417, 903 P.2d at 1379. We noted that Chilberg was a passenger who neither had `reasonable expectations' of coverage under the policy nor did he qualify as an insured spouse or family member under more than one policy. Chilberg, 273 Mont. at 418, 903 P.2d at 1380. ¶ 41 Although we recognized that the plaintiff in Chilberg was an occupant who had no reasonable expectations of coverage under all three policies, we prohibited stacking on the primary grounds that the plaintiff did not qualify as an insured under the two other Mid-Century policies. In the present case, there is only one policy at issue. In its certification order, the United States District Court clarified that Gary Lee Leonard is an insured for purposes of underinsured motorist coverage and auto medical payments coverage under the policy at issue. As we noted in Sayers benefits for which the insurer has received valuable consideration flow to all persons insured. [6] As an insured, Leonard was thus entitled to share in the benefits for which Farmers Alliance had received valuable consideration. Sayers, 192 Mont. at 340, 628 P.2d at 662. Whether Leonard qualified as an insured because he purchased and paid for the policy at issue, or by virtue of his occupancy in the insured vehicle is immaterial. The fact is, Leonard was an insured under the terms of the policy, and as such was entitled to the same coverage afforded any insured. ¶ 42 To identify the scope of that coverage, and to determine whether Leonard, as an insured, was entitled to stack the underinsured motorist coverages contained within the policy, we turn for guidance to our decision in Bennett v. State Farm Mutual Automobile Insurance Co. (1993), 261 Mont. 386, 862 P.2d 1146. In Bennett, we held that [a]n `other insurance' clause that prohibits stacking of underinsured motorist coverage provided by separate policies from the same insurer is void as against Montana public policy. Bennett, 261 Mont. at 390, 862 P.2d at 1149. In so doing, we recognized the public policy that an insurer may not place in an insurance policy a provision that defeats coverage for which the insurer has received valuable consideration, and wrote that [t]he purpose of underinsured motorist coverage is to provide a source of indemnification for accident victims when the tortfeasor does not provide adequate indemnification. Bennett, 261 Mont. at 389, 862 P.2d at 1148. We then concluded that the public policy considerations that invalidate contractual `anti-stacking' provisions in an uninsured motorist endorsement also support invalidating those provisions in an underinsured motorist endorsement. Bennett, 261 Mont. at 389, 862 P.2d at 1148. ¶ 43 Although arguably distinguishable from the case at hand, Bennett nevertheless governs our analysis in the present case. For example, although there were two separate insurance policies at issue in Bennett but only one at issue in the present case, we conclude that distinction is immaterial. Furthermore, as amicus notes, we based our decision in Bennett, not only on public policy considerations, but also on the doctrine of reasonable expectations. More specifically, we noted that because underinsured motorist coverage generally does not depend on the insured person occupying an insured vehicle, the insured in that case could reasonably expect to recover damages up to the limit of both policies under which she was an insured and for which separate premiums had been paid. Bennett, 261 Mont. at 389, 862 P.2d at 1148. Moreover, we stated that Montana citizens should have a reasonable expectation that when they purchase separate policies for underinsured motorist coverage, they will receive adequate compensation for losses caused by an underinsured motorist, up to the aggregate limits of the policies they have purchased. Bennett, 261 Mont. at 390, 862 P.2d at 1149. ¶ 44 We have recognized, however, that status as an insured, and any connected underinsured motorist coverage, may indeed depend upon occupancy in an insured vehicle. See Chilberg, 273 Mont. at 418, 903 P.2d at 1380. Particularly in light of our holding in Chilberg, it is certainly arguable that Leonard may have had no reasonable expectation of expanded coverage because he did not purchase the policy at issue, but instead qualified as an insured by virtue of his occupancy in an insured vehicle. Despite the apparent inapplicability of the reasonable expectations doctrine in the present case, however, we conclude that the overriding public policy considerations upon which we relied in Bennett mandate that Holeman be permitted to stack the underinsured motorist coverages present in this case. ¶ 45 Worth addressing at this juncture is the assertion by amicus for the Alliance of American Insurers regarding the effect of the 1997 amendments to the anti-stacking provisions of § 33-23-303, MCA. In 1997, the Montana Legislature enacted Senate Bill 44, thereby amending § 33-23-303, MCA, with the purpose of prohibiting the stacking of all coverages in automobile insurance policies. The present version of § 33-23-303, MCA, thus purports to preclude the stacking of underinsured motorist coverages. Amicus argues that when the Montana Legislature amended § 33-23-303, MCA, to preclude all stacking, it established and defined the public policy of this State. Amicus asserts that [i]n order to avoid premium increases which may result from claims of stacking in multi-vehicle policies under underinsured and medical payment coverages, this Court should recognize that the public policy embodied in Senate Bill 44 does not carry an effective date. In light of the amendments to § 33-23-303, MCA, amicus asks that we revisit the determination we made in Bennett that the public policy of this State supports the stacking of underinsured motorist coverages when separate premiums have been paid. ¶ 46 In Guiberson v. Hartford Casualty Insurance Co. (1985), 217 Mont. 279, 288, 704 P.2d 68, 74, we upheld a decision by the district court to stack uninsured motorist coverages despite the subsequent passage of a statute prohibiting the practice. We specifically recognized that, [a]lthough the law forbids stacking now, we will not apply the law retroactively to deprive the plaintiff of coverage he was entitled to at the time of his accident. Guiberson, 217 Mont. at 288, 704 P.2d at 74. Similarly, in the instant case, we will not apply the provisions of § 33-23-303, MCA, or the public policy it embodies, retroactively to deprive Leonard of coverage he was entitled to at the time of the accident. ¶ 47 Based on the foregoing, we conclude that Holeman is entitled to stack the underinsured motorist coverages contained in the Farmers Alliance policy at issue in this case, in light of the fact that multiple vehicles were insured under one policy and separate premiums were charged for coverage of each motor vehicle listed within the policy.