Court Opinion

ID: 9669232
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:45:06.69619+00
Date Added: 2024-06-11T18:15:54.176388
License: Public Domain

LAMBERT, Justice,
concurring in result only.
The only rationale advanced in favor of upholding a family exclusion on sums exceeding the statutory minimum is to prevent the possibility of collusion by family members to defraud insurance companies. This is simply an insufficient basis to sustain the exclusion. Long ago in Brown v. Gosser, Ky., 262 S.W.2d 480 (1953), we forcefully declared that the courts of this Commonwealth are not so ineffectual as to be unable to detect fraud in such circumstances.
When the foregoing is acknowledged, the only other reason for the exclusion is to limit the amount of liability insurance underwritten. In other words, application of a family exclusion in circumstances such as these has the effect of reducing a $100,000 policy to a $25,000 policy. In my view, such a reduction may not be accomplished in this manner. In general, when an insurance carrier writes a $100,000 policy, it should be required to furnish that amount of coverage unless sustainable public policy authorizes a different result. See Chaffin v. Kentucky Farm Bureau Ins. Co., Ky., 789 S.W.2d 754, 757-58 (1990).
One of the motivations for purchasing liability insurance in sums exceeding that which is required by law is to provide funds to compensate those whom a tortfeasor may catastrophically injure. Of course, such a *837purchase also has the benefit of protecting a tortfeasor’s assets to the extent of available insurance coverage. To one who is motivated by a desire to compensate those whom he may negligently injure, a policy provision which reduces to the minimum coverage for his family members, those who are at once most likely to be injured by the tortfeasor’s negligence and dearest to him, is an absolute contradiction. However, by virtue of the packaging and selling of insurance products as providing the greater policy limit, purchasers are misled into believing that the higher limit applies to all whom they may injure when in fact it applies only to strangers. Whether by the doctrine of ambiguity or reasonable expectations, such a contract must be reformed.
The majority characterizes its opinion is “the next logical step” from Bishop v. Allstate Insurance Co., Ky., 623 S.W.2d 865 (1981). In my view the majority has overruled Bishop and I believe that it should say so. In Bishop, we held that a family exclusion clause violated public policy due to its conflict with the mandate of the General Assembly to secure minimum tort liability coverage. A logical inference from what the Bishop court did not say but surely implied is that family exclusions denying coverage for all amounts in excess of the minimum coverage are not contrary to public policy. Staser v. Fulton, Ky.App., 684 S.W.2d 306 (1984). I see the majority opinion as hopelessly in conflict with Bishop.
The majority has expansively articulated its view of this Court’s role in the development of public policy. It has broadly undertaken to adjust economic relations to achieve its view of economic fairness with what seems to be too little regard for the role of the legislative branch and for this Court’s prior decisions. This Court is not vested with such a broad charter with respect to public policy. It should limit itself to appropriate adjustment when a prevailing rule of law lacks a sufficient justification for its continued existence. D & W Auto Supply v. Department of Revenue, Ky., 602 S.W.2d 420 (1980).
In my view, this is just such a case and calls for a modification of the existing rule. Collusion as a justification for an exclusion has been denounced and determined to be demonstrably false. Wh'en this invalid justification is accompanied by an affirmative misleading, there is reason enough to invalidate the policy provision.
However, I would reach a different result if the insurance carrier could show that the insured had knowingly determined to purchase less liability coverage for claims brought by family members than for claims brought by strangers. For legitimate underwriting reasons a distinction could be made and parties would be entitled to distinguish between potential claimants, provided, of course, that the statutory minimum was satisfied as to all as required by Bishop v. Allstate Insurance Co., Ky., 623 S.W.2d 865 (1981).
GRAVES, J., joins this concurring opinion.