Opinion ID: 1842845
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Heading Rank: 4

Heading: Caused by Accident Requirement.

Text: The meaning of the term accident within the context of UM coverage and, in particular, whether the term can include intentional acts of an uninsured tortfeasor, is an issue of first impression in Iowa. Other jurisdictions have answered the question differently depending upon whether an accident is viewed from the perspective of the injured insured or the uninsured tortfeasor. A majority of jurisdictions consider the question from the perspective of the injured insured, and conclude an intentional act of an uninsured tortfeasor may nevertheless be an accident under a UM provision as long as it was unprovoked by the injured insured. See State Farm Mut. Auto. Ins. Co. v. McMillan, 925 P.2d 785, 793 (Colo.1996) (collecting cases); Wendell v. State Farm Mut. Auto. Ins. Co., 293 Mont. 140, 974 P.2d 623, 629-30 (1999) (same); see also 2 Irvin E. Schermer, Automobile Liability Insurance § 42.03[8], at 42-23 (3d ed.1995). The rationale for viewing the incident causing the injury from the standpoint of the victim has been summarized in one well-known treatise as follows: First ... unless the tortious conduct of the uninsured or unidentified motorist was provoked by the injured person, the events and the injuries resulting from intentional acts are indistinguishable from those that result from negligent acts. In other words, when injuries are viewed from the vantage point of an injured person, the cause of the injuries is no less fortuitous than the situation in which a person is injured as a result of the negligent operation of an uninsured vehicle. Second, since uninsured motorist insurance is a first party coverage, the insurance provides no benefitsdirectly or indirectlyto the tortfeasor. Indeed, if the tortfeasor is financially responsible, the insurer which has paid uninsured motorist insurance benefits may seek reimbursement for payments made to a claimant. Therefore, the claim for indemnification under uninsured motorist insurance is readily distinguished from situations involving a question about whether liability insurance covers claims for damages that result from intentional torts. Third, the justifications for not indemnifying the insured who intentionally commits a tortious act relate to deterrence or punishment: considerations that do not apply to the payment of first party, uninsured motorist insurance claims. Uninsured motorist insurance benefits paid to an injured person do not reduce the possibility that the tort system or the criminal law system will operate either (a) to punish the tortfeasor or (b) to influence the conduct of the tortfeasor who caused the loss which is indemnified by the insurance or of other potential tortfeasors. Fourth, the enactment of uninsured motorist insurance statutes throughout the country, which mandate either that the insurance be offered to all motor vehicle insurance purchasers or included in all motor vehicle insurance policies, reflects the importance attached to providing indemnification for innocent traffic victims who are injured by financially irresponsible or unidentified motorists. 1 Alan I. Widiss, Uninsured and Underinsured Motorist Insurance § 10.2, at 655-56 (rev.2d ed.1999) (footnote omitted) [hereinafter Widiss]. The minority view generally defines the term accident from the perspective of the uninsured tortfeasor. See McMillan, 925 P.2d at 793 (collecting cases); Wendell, 974 P.2d at 630 (same). The courts following this position point out that the purpose of the UM coverage is to provide the injured insured with the same protection that liability insurance coverage would have provided if the uninsured motorist had been insured. See Roller v. Stonewall Ins. Co., 115 Wash.2d 679, 801 P.2d 207, 210-11 (1990). Accordingly, it is argued that UM provisions should not be interpreted to cover intentional acts of an uninsured tortfeasor because liability policies do not cover injuries caused by intentional conduct of an insured. Id. In other words, an injured insured should not be put in a better position by virtue of being injured by an uninsured motorist than if injured by an insured motorist. Id. at 210. Some of the courts following the minority view also express concern that utilizing the perspective of the victim to determine whether an incident is accidental would essentially write the term accident out of the policy and render the requirement ineffectual because most all incidents involving injuries would be accidents. State Farm Mut. Ins. Co. v. Pitman, 148 N.H. 499, 809 A.2d 1280, 1282-83 (N.H.2002) (finding minority view reasonable but following majority view). Another way the minority courts resolve the question is to refrain from utilizing either perspective, and consider the existence of an accident by applying its commonly understood meaning. Roller, 801 P.2d at 210. Under this approach, an accident is not a subjective term and the perspective of the insured or tortfeasor is irrelevant. Id. Either an incident is an accident or it is not. Id. In interpreting the caused by accident language of the UM provision in this case, we first observe that the insurance policy fails to define the word accident. When a word is left undefined in a policy, we give it the ordinary meaning a reasonable person would understand the word to mean. Farm & City Ins. Co. v. Potter, 330 N.W.2d 263, 265 (Iowa 1983). If two reasonable interpretations exist, we adopt the one favoring the insured. Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd., 568 N.W.2d at 818. However, the mere disagreement by the parties over the meaning of a term, or perhaps even a disagreement among courts, does not by itself establish an ambiguity, although we view the disagreement of courts in this matter as a strong indication of an ambiguity. See Morgan v. Am. Family Mut. Ins. Co., 534 N.W.2d 92, 99 (Iowa 1995) (disagreement by parties does not, standing alone, establish an ambiguity), overruled on other grounds by Hamm v. Allied Mut. Ins. Co., 612 N.W.2d 775, 784 (Iowa 2000). To determine the existence of an ambiguity, we begin by examining the purpose and intent of our UM statute. Although the intent of the parties controls the resolution of the issue, it is recognized that our UM statute forms a basic part of the policy and must be considered to effectuate the parties' intent. Hollingsworth v. Schminkey, 553 N.W.2d 591, 595 (Iowa 1996); see also Lee v. Grinnell Mut. Reinsurance Co., 646 N.W.2d 403, 406 (Iowa 2002) (The terms of the policy are to be construed in light of the purposes and intent of the applicable statute.); Veach v. Farmers Ins. Co., 460 N.W.2d 845, 847 (Iowa 1990) (same). Where a statute closely guides the contract between the parties, as in UM coverage as well as many other provisions in insurance policies, it is to be presumed that the parties contracted with the intention of executing a policy satisfying the statutory requirements, and intended to make the contract to carry out its purpose. 7 Lee R. Russ, Couch on Insurance § 109:17, at 109-29 (3d ed.1995) (footnotes omitted) [hereinafter Couch]; see also Mortensen v. Heritage Mut. Ins. Co., 590 N.W.2d 35, 39 (Iowa 1999) (provisions of Iowa Code chapter 516A are read into insurance policies). The language of the UM clause of the insurance policy closely tracks the language of our uninsured motorist statute found in Iowa Code section 516A.1 (2001). This section requires all motor vehicle insurance policies that insure against liability for bodily injury or death arising out of the ownership, maintenance, or use of a motor vehicle to provide coverage: for the protection of persons insured under such policy who are legally entitled to recover damages from the owner or operator of an uninsured motor vehicle... because of bodily injury ... caused by accident and arising out of the ownership, maintenance, or use of such uninsured ... motor vehicle. Id. We have previously traced the concept of UM coverage back to a standard endorsement promulgated by the National Bureau of Casualty Underwriters in 1956, initiated as a response to the growing trend among the states to require liability insurance. Douglass v. Am. Family Mut. Ins. Co., 508 N.W.2d 665, 666 (Iowa 1993) (citing Dag E. Ytreberg, Annotation, Insured's Right to Bring Direct Action Against Insurer for Uninsured Motorist Benefits, 73 A.L.R.3d 632, 636-37 (1976)), overruled on other grounds by Hamm, 612 N.W.2d at 784. The idea was not only to require all motorists to carry liability insurance, but to further close the gap between motor vehicle financial responsibility and compulsory insurance by providing financial compensation to innocent persons injured by the wrongful acts of those motorists who were uninsured. See Ytreberg, 73 A.L.R.3d at 636-37. In Douglass, we indicated that the purpose of a UM provision was to provide to the victim of an accident the same protection that the victim would have had if the negligent tortfeasor had had minimum insurance coverage. 508 N.W.2d at 667. The specific purpose of UM coverage identified in Douglass could be viewed to support the notion that an accident in the context of UM coverage excludes intentional acts of the uninsured tortfeasor. See Ytreberg, 73 A.L.R.3d at 636-37. This is based on the concept that the intentional act would have prevented the insured from recovering from the tortfeasor insurer if the tortfeasor had maintained the required minimum insurance coverage. See Dolan v. State Farm Fire & Cas. Co., 573 N.W.2d 254, 257 (Iowa 1998) (assault victim had no recovery from homeowner's insurer because of exclusion for insured homeowner's intentional acts). This view appears compatible with the position of the minority of the courts who find injuries caused by intentional acts of the tortfeasor to be outside the scope of the term accident because the injured insured would not have been protected under the tortfeasor's liability policy. However, we have also viewed our UM statute to be more than a mere substitution for a tortfeasor's noncompliance with the financial responsibility laws. We have previously explained `[t]he purpose of uninsured motorist coverage is to ensure minimum compensation to victims of uninsured motorists.' Hamm, 612 N.W.2d at 779 (citation omitted). We have also said that our legislature intended to assure protection to an insured against motorists whose liability to the insured is not covered. Rodman v. State Farm Mut. Auto. Ins. Co., 208 N.W.2d 903, 909 (Iowa 1973). Neither of these purposes necessarily suggests that UM coverage is limited, as liability coverage is limited, to claims involving unintentional acts of the uninsured tortfeasor. We acknowledge our prior cases have adopted a narrow coverage view of uninsured-motorist coverage, in contrast with a broad coverage view of underinsured-motorist coverage. Veach, 460 N.W.2d at 848; see also McClure v. Northland Ins. Co., 424 N.W.2d 448, 449-50 (Iowa 1988). However, our narrow-coverage view applies to the duplication of benefits from other sources. Veach, 460 N.W.2d at 848; McClure, 424 N.W.2d at 449. It means we traditionally subtract from the policy limit any recovery from other sources in awarding UM coverage. McClure, 424 N.W.2d at 449; see also McClure v. Employers Mut. Cas. Co., 238 N.W.2d 321, 329-30 (Iowa 1976) (insurer would be allowed to deduct workers' compensation benefits from UM policy limits to avoid duplicative award). The objective of the statute is to restrict the maximum recovery to the minimum required amount. Lemrick v. Grinnell Mut. Reins. Co., 263 N.W.2d 714, 719 (Iowa 1978). This case, however, is not about duplication of benefits, and the narrow coverage approach taken in our prior cases does not restrict our consideration of the meaning of an accident in determining whether coverage exists in the first place. Accordingly, our stated purposes of UM coverage are generally consistent with the view recognized in other jurisdictions that UM coverage essentially exists to protect insureds who have been injured by financially irresponsible motorists, so that such coverage resembles an accident policy for the victim. Annotation, Coverage Under Uninsured Motorist Clause of Injury Inflicted Intentionally, 72 A.L.R.3d 1161, 1164 (1976); accord Wendell, 974 P.2d at 629. We next turn to consider the insurance policy as a whole, including other terms of UM coverage. See Morgan, 534 N.W.2d at 99; Bates v. United Sec. Ins. Co., 163 N.W.2d 390, 397 (Iowa 1968) (courts consider contract as a whole). The intention of the parties to a contract must be derived from the language of the entire contract. Schlotter v. Leudt, 255 Iowa 640, 645, 123 N.W.2d 434, 438 (1963). The policy defines a uninsured motor vehicle to include not only an uninsured vehicle, but also a motor vehicle that is insured by a bodily injury liability ... policy at the time of the accident but the company denies coverage. This definition reveals that UM coverage applies not only when the tortfeasor's motor vehicle is not insured by a bodily injury liability ... policy but also when, as in this case, the motor vehicle is insured but the insurer denies coverage. Clearly, the UM provisions contemplate coverage to include situations, like this case, when the victim could not recover under the tortfeasor's liability policy due to an exclusion. Moreover, the policy identifies the circumstances when a vehicle will not be considered an uninsured motor vehicle. These circumstances did not include denial of coverage for intentional conduct. See Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd., 568 N.W.2d at 817 (insurer has duty to define limitations in clear and explicit terms). The exclusions from the coverage section of the policy also did not identify intentional conduct of the tortfeasor. See Wendell, 974 P.2d at 630-31 (noting that some cases denying coverage are distinguishable based on the fact the policies being construed contained express exclusions for intentional conduct). There is nothing in the policy that specifically distinguishes between intentional acts and negligent acts within the UM provisions relating to the phrase caused by accident. See McMillan, 925 P.2d at 792-93 (construing similar policy language). We next review the definition of the term accident in an effort to ascertain its reasonable meaning. We have previously considered the definition of accident in the context of the liability provisions of an automobile insurance policy. In Potter, we held a collision that occurred after the insured driver was unable to stop her vehicle was an accident under the terms of a liability policy, even though the insured intentionally severed the brake lines of the vehicle. We reached this conclusion because the insured nevertheless attempted to avoid the collision after the brakes failed. See Potter, 330 N.W.2d at 267. In reaching this holding, we recognized that the meaning of an accident in a liability policy should normally be viewed from the viewpoint of the tortfeasor because the liability policy insures the tortfeasor, not the victim. Id. at 265. We also acknowledged the existence of authority supporting an interpretation of an accident from the standpoint of the injured victim, but found it unnecessary to resolve the split of authority. Id. We also found it unnecessary to determine if the word accident excluded an event in which the acts of the tortfeasor intended to harm others or the property of others. Id. at 266. These questions went unanswered because, despite the evidence that the tortfeasor intended to set in motion the events that caused the harm, the tortfeasor never intended to cause damage to anyone, but instead attempted to avoid the collision. Id. at 266-67. Notwithstanding, we quoted with approval from Comfort v. Continental Casualty Co., 239 Iowa 1206, 1207-08, 34 N.W.2d 588, 588-89 (1948): [A]n `accident' is an event which, under the circumstances, is unusual and unexpected by a person to whom it happens; the happening of an event without the concurrence of the will of the person by whose agency it is caused. We also considered the definition of an accident in the context of a premise liability policy in Central Bearings Co. v. Wolverine Insurance Co., 179 N.W.2d 443 (Iowa 1970). In this case, we recognized the futility of attempting an all-inclusive definition and underline[d] the necessity of interpreting the term within the context of the document in which it is used. Id. at 448. In the context of premises liability insurance, we held that the common, reasonable meaning of an accident was a misfortune with concomitant damage to a victim. Id. This approach was based on the accepted view that an accident referred to `an undesigned, sudden, and unexpected event, usually of an afflictive or unfortunate character.' Id. As in Potter, we rejected the notion that an accident merely meant the negligence which eventually results in [the] misfortune. Id. Most recently, we considered the definition of an accident in Austin v. CUNA Mutual Life Insurance Co., 603 N.W.2d 577 (Iowa 1999). In Austin, we held that an accident in the context of an accidental injury and death policy did not include death from surgery for a medical condition not itself the result of an underlying accident. 603 N.W.2d at 580. We indicated the term accident generally encompassed a sudden and unexpected event, but ultimately excluded injuries from the treatment of a medical condition from the definition of an accident by considering the question from the viewpoint of a person on the street. Id. at 578-80. As in Central Bearings Co., we found the definition of an accident was tied to the context of the situation. See id. Two important points emerge from our prior cases. First, no single common definition of an accident applies to all types of insurance. Second, while we consider an accident to be an unusual and unexpected event, we have indicated that the event can be viewed through the lens of the tortfeasor, victim, and even a fictitious third party. Thus, these cases help expose the ambiguity that can arise from the use of the word accident. Nevertheless, none of our prior cases have accepted the position argued in this case that an accident takes place when the tortfeasor intended to harm the person or property damaged. See Potter, 330 N.W.2d at 266 (suggesting the situation would not be an accident in the context of a liability policy). Thus, it may be reasonable to define the term to exclude such a situation. On the other hand, it is also reasonable to include such a situation based on our recognition that the term must be interpreted in the context of the type of insurance at issue and our willingness to consider the viewpoint of the victim in determining the existence of an accident. Moreover, the rationale for our general tendency to view an accident from the viewpoint of the tortfeasor in the case of a liability policy is found in the fact that liability policies provide insurance for the tortfeasor, not the victim. To the contrary, UM coverage provides insurance to the victim, not the tortfeasor. Thus, we find no reason to reject the viewpoint of the victim to define an accident for purposes of UM coverage. Liability coverage involves third-party coverage and exists as a form of indemnification to protect the insured from paying for damages the insured causes to others. In contrast, UM coverage is first-party coverage that serves not to indemnify, but to compensate the insured for injuries by uninsured motorists. See Wendell, 974 P.2d at 633 (discussing generally the nature of UM insurance in the context of the insurer's claim of non-compensability). Clearly, the social policy of preventing an injured insured from obtaining indemnification based upon intentional wrongs is not implicated in the context of UM coverage. Redden v. Doe, 357 So.2d 632, 633-34 (La.Ct.App.1978). Thus, this policy should not be used to help justify the denial of UM coverage for intentional acts. It simply does not apply to first-party coverage and innocent victims. See Abraham v. Raso, 183 F.3d 279, 298 (3d Cir.1999); Wendell, 974 P.2d at 631; Shaw v. City of Jersey City, 174 N.J. 567, 811 A.2d 404, 409 (2002). We also think a distinction between intentional and negligent acts of an uninsured tortfeasor within the context of UM coverage would lead to rather absurd and unintended results for blameless injured insureds. See McMillan, 925 P.2d at 794 n. 12. It would be unfair for an insured who has suddenly and unexpectedly been injured by an uninsured motorist to be denied UM coverage simply because the conduct of the uninsured motorist happened to be intentional. Instead, it would be logical for insured motorists to expect UM coverage without regard to negligence or intentional conduct of the tortfeasor. See Pitman, 809 A.2d at 1282. Viewed from the eyes of an innocent, victimized insured, injuries sustained from negligent acts of another are no less fortuitous than injuries resulting from intentional acts. See Wendell, 974 P.2d at 630. We conclude the term accident under a UM provision of an insurance policy can include the situation in which the injuries are caused by intentional conduct of an uninsured tortfeasor. The term is ambiguous due to the variant viewpoints of the participants to the event, and we consequently construe ambiguous terms in favor of coverage. Accordingly, we believe the term can properly be viewed from the perspective of a blameless insured. We think the important aspect of the definition is found in the element of surprise and misfortune, and these aspects of an event are still present when one party to the event had no intent to harm another or property of another, even though another party had such an intent. This approach is not inconsistent with our prior cases, but simply recognizes that an accident can occur when only one party to the event had the intent to harm the other, just as when neither party had any intent. This is consistent with our approach that an accident is `[a]n event which, under the circumstances, is unusual and unexpected by a person to whom it happens.' Comfort, 239 Iowa at 1207, 34 N.W.2d at 588; accord Weber v. IMT Ins. Co., 462 N.W.2d 283, 287 (Iowa 1990). This approach is also consistent with the nature and purpose of UM coverage in this state, as well as the language of the UM provision at issue. Additionally, it is compatible with the other doctrines governing insurance policies, and the reasonable expectations of the insured. Similarly, this approach falls in line with the majority rule in other jurisdictions. Based on the undisputed facts and arguments of the parties, Petersen did not intend or provoke the injuries caused by Adcock's sudden and unexpected assault. Accordingly, the incident causing injuries to Petersen was an accident under the UM provision of the policy. [2]