Opinion ID: 1740407
Heading Depth: 3
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Heading: The reducing clause in the policy issued by Rural

Text: ¶ 34 General principles of contract construction control the interpretation of an insurance contract. Taylor, 245 Wis.2d 134, ¶ 10, 628 N.W.2d 916 (citing Kremers-Urban Co. v. Am. Employers Ins. Co., 119 Wis.2d 722, 735, 351 N.W.2d 156 (1984)). Discerning and giving effect to the intent of the parties is the objective. Sprangers v. Greatway Ins. Co., 182 Wis.2d 521, 536, 514 N.W.2d 1 (1994). Toward that end, courts give the common, ordinary meaning to the policy language (i.e., what the reasonable person in the insured's position would understand them to mean). Folkman, 264 Wis.2d 617, ¶ 17, 665 N.W.2d 857. Any ambiguity that may exist is construed in favor of the insured, while exclusions in coverage are narrowly construed against the insurer. Id., ¶ 16, 665 N.W.2d 857 (citing Smith v. Atlantic Mut. Ins. Co., 155 Wis.2d 808, 811, 456 N.W.2d 597 (1990)). Ambiguity arises if the language of the policy is susceptible to more than one reasonable construction. Id. The resulting interpretation of the policy's language should advance the insured's reasonable expectations of coverage. Taylor, 245 Wis.2d 134, ¶ 10, 628 N.W.2d 916. ¶ 35 The reducing clause in this case states that the limit of liability will be reduced by amounts [p]aid because of the `bodily injury' by or on behalf of persons or organizations who may be legally responsible. The common, ordinary language establishes that the meaning of this language mimics the meaning of § 632.32(5)(i)1. See Ruenger v. Soodsma, 2005 WI App 79, ¶ 1, 281 Wis.2d 228, 695 N.W.2d 840 (concluding that a Rural Mutual Insurance Company reducing clause identical to the one in this case complied with § 632.32(5)(i)1.). ¶ 36 The phrasing of the reducing clause differs slightly from the language used in § 632.32(5)(i)1., but the difference does not affect the meaning. While § 632.32(5)(i)1. uses the phrase for the bodily injury or death for which the payment is made, the first subsection uses because of the `bodily injury.' Both phrases limit the scope of the provision to payments made for the injuries arising from the accident. Accordingly, like the statutory language, the scope of the reducing clause is set by whether a payor may be legally responsible, not the payor's UIM status. ¶ 37 The reducing clause unambiguously complies with § 632.32(5)(i). Based on the common, ordinary language, a reasonable person in the insured's position would understand the clause to have the effect of reducing the UIM liability limit by payments made by or on behalf of those legally responsible for the accident at issue, regardless of their UIM status.