Opinion ID: 1887583
Heading Depth: 1
Heading Rank: 4

Heading: Limits of Coverage

Text: We must now determine whether American's policy, which must be construed so as to provide coverage for the accident at issue, affords coverage for its stated policy limits of $100,000/$300,000 or for the minimum required statutory limits of $10,000/$20,000. Our courts of appeal have reached conflicting decisions regarding this issue also. The first circuit in the instant case held that the coverage afforded should be that of the full policy limits, stating that coverage should be afforded in the amounts specifically selected by the parties to the insurance contract. 97-0858 at p. 9, 713 So.2d at 1247. The court distinguished its decision in Mattingly v. State Through Dept. of Health and Human Resources, 509 So.2d 82 (La.App. 1 Cir.1987), a case where it held a $100,000 deductible in a policy that provided bodily injury and property damage liability limits of $20,000 per occurrence was against public policy and must be made to provide the minimum coverage required by law. The fourth and fifth circuits have also held that where an exclusion has been held invalid due to a conflict with our compulsory liability insurance laws, the policy should be construed to effect coverage up to the full limits of the policy. Cinquemano v. Underwood, 611 So.2d 838 (La.App. 4 Cir. 1992); McCrossen v. Star Auto Service, Inc., 628 So.2d 1350 (La.App. 5 Cir.1993). The second circuit, on the other hand, has held that the policy will only be required to provide the minimum coverage mandated by our compulsory liability insurance law. Fields v. Western Preferred Cas. Co., 437 So.2d 344 (La.App. 2 Cir.1983). The third circuit has not ruled consistently on this issue. Compare Threats v. Derousselle, 93-1047 (La.App. 3 Cir. 4/6/94), 636 So.2d 276 (full policy limits) with Arnaud v. Commercial Union Ins. Co., 594 So.2d 992 (La.App. 3 Cir.1992) (statutory minimum). The general rule in other states is that where the insurer's liability is based upon the terms of compulsory automobile liability insurance or financial responsibility statutes, the extent of the insurer's liability should be governed by the terms of the statute rather than those of the policy. Accordingly, even where the policy provides greater coverage limits, recovery has been limited to the minimum coverage required by law. See 29 A.L.R.2d 817 and cases cited therein. See also DeWitt v. Young, 229 Kan. 474, 625 P.2d 478 (1981) (holding that the invalid exclusion was clear and unambiguous and therefore afforded no coverage in excess of the required minimum); Universal Underwriters Ins. Co. v. American Motorists Ins. Co., 541 F.Supp. 755 (N.D.Miss.1982) (adhering to the general rule and finding the exclusion void only as to the minimum coverage required by statute). We believe that in the instant case the applicable limits of coverage should be the minimum required by statute. Hanover cites no authority, and we discern none, that, apart from the statute, the business use exclusion is void as a matter of public policy. In this case, there is no suggestion that the insurer intended to subvert public policy when it included the business use exclusion in its policy. As discussed above, the circuit courts of our state had reached inconsistent conclusions regarding whether business use exclusions contravene statutory law and the public policy behind it. Thus, the law in this area was unsettled and American was not in bad faith in including the business use exclusion in its policy. To hold that the full policy limits apply to provide coverage in this case would thwart the intentions of the parties to this contract even more because the intent of the parties, as evidenced by the business use exclusion included in the contract, was that there be no coverage at all when the insured vehicle was used in any business. For all these reasons, we hold the American policy provides the statutorily required minimum limits of coverage for this accident. The court of appeal's decision on this issue is reversed.