Court Opinion

ID: 9565858
Source: CourtListenerOpinion
Date Created: 2023-08-21 19:29:14.552767+00
Date Added: 2024-06-11T09:18:31.271825
License: Public Domain

Dore, J.
(dissenting)—I dissent. I would hold that liability coverage exclusions in underinsured motorist (UIM) policies are invalid as against public policy because they limit insurance coverage on a basis other than the risk of the insurer, and therefore contravene this State's longstanding policy of full compensation for accident victims. In light of that finding, I would overrule Millers Cas. Ins. Co. v. Briggs, 100 Wn.2d 1, 665 P.2d 891 (1983).
Initially, I think it is important to note that Blackburn filed an action in Thurston County Superior Court seeking to hold Evergreen liable in order to recover against the liability portion of the Safeco policy. Blackburn argued that at the time of the accident Lougee was the agent of Evergreen and, therefore, covered by Evergreen's Safeco policy. A trial was held in which, pursuant to stipulation, the issues were limited to Lougee's relationship to Evergreen. The Thurston County Superior Court determined that Lougee was not the agent of Evergreen, and that Evergreen therefore could not be liable to Blackburn. The Court of Appeals affirmed. Blackburn v. Evergreen Chrysler Plymouth, 53 Wn. App. 146, 765 P.2d 922, review denied, 112 Wn.2d 1015 (1989). That decision precluded Blackburn from recovering against the liability portion of Evergreen's Safeco policy. The majority would now prevent Blackburn from recovering UIM benefits under the Safeco policy.
Blackburn is purportedly barred from UIM coverage by a liability coverage exclusion: a policy provision which stipulates that UIM coverage is not available where the under-insured vehicle is the same vehicle which is insured for *95liability purposes.8 This court has previously held that liability coverage exclusions are valid. Millers Cas. Ins. Co. v. Briggs, 100 Wn.2d 1, 665 P.2d 891 (1983). For the following reasons I would now overrule Millers.
The court in Millers determined that the Legislature had implicitly authorized the liability coverage exclusion in the text of RCW 48.22.030(2). That statute provides in part:
No new policy or renewal of an existing policy insuring against loss resulting from liability imposed by law for bodily injury, death, or property damage, . . . shall be issued with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of underinsured motor vehicles . . ..
The Millers court did not engage in any independent, detailed analysis of this statute. Instead, it relied on a Louisiana case interpreting that state's similar UIM statute. The Louisiana court reasoned:
In our view, the intent and effect of this provision is plain. A person insured under the uninsured motorist provision of a particular policy delivered or issued for delivery in this state with respect to a motor vehicle registered or principally garaged in this state must establish that he is legally entitled to recover damages from the owners or operators of uninsured or underinsured motor vehicles in order to obtain coverage thereunder. As to coverage under the uninsured motorist provisions of a particular policy, the statute thus contemplates two distinct motor vehicles: the motor vehicle with respect to which uninsured motorist coverage is issued and the "uninsured or underinsured" motor vehicle. In addition, as to each policy containing uninsured motorist coverage, the statute distinguishes between the person insured under the policy in *96question and the owner or operator of the uninsured or under-insured motor vehicle.
Breaux v. Government Employees Ins. Co., 369 So. 2d 1335, 1338 (La. 1979).
In other words, from the fact that RCW 48.22.030(2) refers separately to "motor vehicle" and "underinsured motor vehicles", the Millers court inferred that an insured who recovers against the liability portion of one policy can be barred from recovering UIM benefits unless he bases that claim on some other UIM policy, presumably covering some other vehicle. This has come to be known as the "2-car rule."
I would now reject this interpretation of the UIM statute. First, the Millers court erred in adopting the reasoning of the Louisiana court without conducting an independent analysis of our own statute. While the Louisiana UIM statute is substantially similar to ours, there is one important difference. The Louisiana statute provides:
D. The following provisions shall govern the issuance of uninsured motorist coverage in this state.
(l)(a)(i) No automobile liability insurance covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state . . . unless coverage is provided therein or supplemental thereto, in not less than the limits of bodily injury liability provided by the policy, under provisions filed with and approved by the commissioner of insurance, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom . . ..
(Italics mine.) La. Rev. Stat. Ann. § 22:1406(D)(1)(a)(i) (West Supp. 1990). The difference is that, where our statute refers only to "underinsured motor vehicles," the Louisiana statute refers to both uninsured and underinsured motor vehicles. This difference means that the Louisiana statute will support an interpretation which our UIM statute will not. Since the "motor vehicle" referred to in the first part of the Louisiana statute is obviously insured, the *97uninsured or underinsured motor vehicle referred to subsequently must be a different vehicle. The same vehicle could not be both insured and uninsured. In this light, the Louisiana court was justified in concluding that its statute unambiguously "contemplates two distinct motor vehicles".
That reasoning, however, does not apply to our own statute. The first part of our statute refers to a "motor vehicle" covered by a liability policy and subsequently refers only to "underinsured motor vehicles".9 Since a single vehicle can be both insured for liability purposes and underinsured for UIM purposes, there is no reason to conclude from the words of the statute alone that the Legislature contemplated two distinct policies on two distinct cars. The Breaux analysis is inapplicable to RCW 48.22.030(2).
Second, the analysis of Breaux is inadequate on its own terms. RCW 48.22.030(2) defines the vehicles for which underinsured motorist coverage must be provided. In choosing the words of this subsection, the Legislature obviously did not consider the intricate questions presented by Millers and the present case. To decide, on the basis of the wording of the statute alone, that liability coverage exclusions are consistent with the Legislature's intent simply stretches general terms past their breaking point.
For example, the statute does indeed refer separately to "motor vehicle" and "underinsured motor vehicles", but it also refers separately to "persons" and "owners or operators". We could infer a "2-person rule" from the wording of the statute just as plausibly as a "2-car rule"—even more so, given that the statute is aimed at protecting persons, not vehicles. See Finney v. Farmers Ins. Co., 92 Wn.2d 748, 752, 600 P.2d 1272 (1979), modified in Glover v. Tacoma Gen. Hosp., 98 Wn.2d 708, 724 n.4, 658 P.2d 1230 (1983). Such a "2-person rule" would provide UIM coverage to *98Blackburn. Like the "2-car rule", however, it would have no genuine basis in the substantive policy foundations of the statute. In order to determine the validity of the liability coverage exclusion, we must look to those foundations.
The precursor of our present UIM statute, RCW 48.22-.030, was the uninsured motorist statute effective January 1, 1968. Laws of 1967, ch. 150, § 27, p. 737 (former RCW 48.22.030). That statute required companies writing automobile liability coverage in this state to provide, in conjunction with the liability policy, first party coverage which would directly compensate the insured who happened to be injured by a motorist who had failed to obtain liability coverage of his own. This court stated the policy behind this statute in Touchette v. Northwestern Mut. Ins. Co., 80 Wn.2d 327, 494 P.2d 479 (1972):
It was enacted to expand insurance protection for the public in using the public streets, highways and walkways and at the same time cut down the incidence and consequences of risk from the careless and insolvent drivers. The statute is both a public safety and a financial security measure. Recognizing the inevitable drain upon the public treasury through accidents caused by insolvent motor vehicle drivers who will not or cannot provide financial recompense for those whom they have negligently injured, and contemplating the correlated financial distress following in the wake of automobile accidents and the financial loss suffered personally by the people of this state, the legislature for many sound reasons and in the exercise of the police power took this action to increase and broaden generally the public's protection against automobile accidents.
Touchette, at 332.
In 1980, the uninsured motorist statute was expanded to require insurers to provide first party coverage to named insureds who happened to be injured by drivers carrying insufficient liability insurance. That is, the uninsured motorist insurance scheme was changed to an underinsured (UIM) motorist plan. An underinsured motor vehicle is defined as:
[A] motor vehicle with respect to the ownership, maintenance, or use of which either no bodily injury or property damage liability bond or insurance policy applies at the time of an accident, or with respect to which the sum of the limits of liability *99under all bodily injury or property damage liability bonds and insurance policies applicable to a covered person after an accident is less than the applicable damages which the covered person is legally entitled to recover.
RCW 48.22.030(1). The purposes and policies of the uninsured motorist statute, which Touchette articulated, were carried over to the underinsured motorist statute. Britton v. Safeco Ins. Co. of Am., 104 Wn.2d 518, 530-31, 707 P.2d 125 (1985).
It is important to recognize, however, that the purpose of the UIM statute is not just the same as that of its predecessor; it is even broader. The uninsured motorist statute protected only against at-fault motorists who were completely uninsured. Consequently, a victim could benefit from third party coverage or first party coverage, but never both. The former statute merely established a floor of insurance coverage below which no victim would fall, regardless of who caused his injuries. The adoption of the UIM statute fundamentally altered this arrangement. By extending first party coverage to victims injured by motorists with insufficient liability coverage, the Legislature made the accident victim's recovery of both third party coverage and first party coverage an object of the statute. Rather than merely setting a floor of coverage, the UIM statute adopted the broader goal of full compensation for victims of automobile accidents.10
This court recognized the policy of full compensation in Elovich v. Nationwide Ins. Co., 104 Wn.2d 543, 550, 707 P.2d 1319 (1985). In Elovich, the insurer argued that the UIM statute should be interpreted to require only a "decreasing layer" of first party coverage; that is, an insured would be guaranteed only a minimum dollar *100amount of combined liability and UIM benefits. This would have been consistent with practice under the former uninsured motorist statute, in that liability benefits would have offset the first party recovery. However, this court rejected the "decreasing layer" theory, holding that liability coverage should not offset UIM benefits. This court held instead that the UIM statute was intended to provide a "floating layer" of insurance coverage. UIM coverage is not available unless, and until, liability coverage has been exhausted, but it floats on top of liability coverage providing a full second layer of protection.
Examining the history of the UIM statute, this court focused on the words "damages which the covered person is legally entitled to recover" in RCW 48.22.030(1), which replaced an earlier, narrower definition of the benefits to be provided under the statute:
The amendment shifted the statute's focus from the liability limits of "the insured's own policy," to the limits of "damages which the covered person is legally entitled to recover." The new language shifts the emphasis from minimum recovery defined by policy limits to the total damages the party has suffered.
(Italics mine.) Elovich, at 550. Therefore, this court held that automobile accident victims should be compensated for the full cost of their injuries, up to the UIM policy limits.
This court stated the principle of Elovich expressly and repeatedly in Hamilton v. Farmers Ins. Co., 107 Wn.2d 721, 727, 733 P.2d 213 (1987): "The intent of the statute is to provide full compensation to the injured insured under an underinsured motorist policy." In Hamilton, the insurer argued that, where a UIM insured has settled with and released a tortfeasor, the insurer should be able to offset the amount of the (now unavailable) assets of the tortfeasor against UIM benefits. The theory was that the insured had impaired the insurer's right of subrogation. This court rejected that argument as fundamentally inconsistent with the policy of full compensation.
*101As the foregoing makes clear, subrogation rights cannot be engrafted onto the statutory scheme when they would thwart the purpose of fully compensating the injured insured.
Hamilton, at 731. And again:
The statutory aim of fully compensating the insured cannot be defeated by offsetting underinsurance coverage by tortfeasor assets that have not been received by the insured.
Hamilton, at 735.
This court invalidated a similar restrictive provision in Elovich. The insurer had inserted a clause which denied UIM coverage where the insured "'settles, without [the insurer's] written consent, with anyone who may be liable for the injury."' Elovich, at 552. This court held that the consent to settlement clause was invalid because it violated "the statutorily enunciated public policy of protecting insureds from uncompensated injury. ” Elovich, at 553.
In Britton, this court considered a provision in a UIM policy which set off disability benefits received by the insured against UIM benefits. This court held that the reduction in benefits violated the principles articulated in Touchette, and was therefore void as against public policy.
[W]here the underinsured motorist endorsement does not provide protection to the extent mandated by the underinsured motorist statute, the offending portion of the policy is void and unenforceable. In other words, the Legislature has mandated a certain amount and kind of coverage; the insurer cannot avoid that obligation by a policy clause which has not been authorized by the Legislature.
(Footnote omitted.) Britton, at 531. Millers should be overruled primarily because, unlike Britton, Elovich and Hamilton, it fails to give the public policy in favor of full compensation the controlling weight to which it is entitled. This court does not take lightly its responsibility to precedent, but in an area of law governed by a new statute which is interpreted in light of still-developing principles, subsequent cases have their claims too. United States v. Scott, 437 U.S. 82, 95, 101, 57 L. Ed. 2d 65, 98 S. Ct. 2187 (1978), cert. denied, 440 U.S. 929 (1979). I am persuaded that the rule of Millers must yield "to the lessons of experience and *102the force of better reasoning," Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 405, 407-08, 76 L. Ed. 815, 52 S. Ct. 443 (1932) (Brandéis, J., dissenting). Millers was decided soon after the passage of the UIM statute, before this court had developed a solid body of precedent to guide its interpretation. This court relied on what seemed a reasonable construction of a similar statute in another jurisdiction. Since this court decided Millers, however, our cases under RCW 48.22.030 have consistently given primary consideration to the fact that the Legislature intended to provide full compensation to accident victims. As a result, Millers has turned out to be an indefensible anomaly in our case law.
This is apparent in the logic of the opinion itself. Millers' failure to give the fundamental policy of full recovery its due stands in marked contrast to the reasoning of Britton, Elovich and Hamilton. The opinion quotes a law review comment listing three differences between UIM coverage and liability coverage which purportedly justify the liability coverage exclusion:
First, . . . the injured party has not paid a premium for coverage to this insurer. Thus, there is no danger the insurer will gain a windfall if it is not forced to pay under both provisions of the policy. Second, unlike uninsured motorist coverage, the honoring of this kind of exclusion in underinsured motorist coverage does not leave the injured party completely without compensation. He has already received some compensation pursuant to the liability coverage of the policy. Third, assuming the injured party has automobile insurance of his own, he should be able to collect additional amounts as a result of that policy's underinsured motorist coverage.
Millers Cas. Ins. Co. v. Briggs, 100 Wn.2d 1, 7, 665 P.2d 891 (1983) (quoting Comment, Washington's Underinsured Motorist Statute: Balancing the Interests of Insurers and Insureds, 55 Wash. L. Rev. 819, 827 (1980)). On due reflection, it is clear that none of these distinctions can justify the liability coverage exclusion.
The first distinction suggested by this passage simply misses the point. If the liability coverage exclusion is invalid, it is not because it results in a windfall to the *103insurer. In most cases, it probably will not, since the insurer will set its premiums in a way that reflects the exclusions it has inserted in its policies. The real question is whether the insurer, in the process of writing exclusions and setting premiums, has unjustifiably restricted the scope of its coverage below the level which the Legislature has set as a condition for doing business in this state. Put another way, the question is whether the insurer has written its policy in a way that violates the public policy of full compensation for accident victims. If the insurer has done so, the fact that it has not received a windfall in the process is no justification.
The second point which Millers adopted from the law review comment does not merely fail to address the public policy behind the UIM statute; it completely contradicts it. As noted above, the former uninsured motorist scheme protected only against at-fault motorists who were completely uninsured. Receiving some liability coverage precluded any first party insurance recovery. The UIM statute fundamentally altered that scheme, providing both types of coverage in the interest of ensuring full compensation. Millers' suggestion that a victim's receiving "some" liability coverage can justify his not recovering UIM benefits amounts to saying we should return to "the bad old days". On the contrary, the Legislature has mandated UIM coverage precisely because "some” compensation under a liability policy is not enough. This court unambiguously rejected the notion of offsetting liability and UIM benefits in Elovich.
The third point of the law review comment also cannot justify the liability coverage exclusion, and for the same reason: it ignores the fundamental policy of the UIM statute. The fact that a victim might receive benefits from his own UIM policy is no justification for denying him the benefits of other UIM policies under which he would otherwise qualify. As Blackburn's case demonstrates, there is no *104reason to suppose that recovery under a tortfeasor's liability policy and one's own UIM policy will satisfy the fundamental purpose of the UIM statute: providing full compensation to the accident victim.
Not only has Millers turned out to be an anomaly in the body of case law under the UIM statute; its effect in this case makes it plain that it also leads to indefensible results in practice. If a guest passenger is injured in an accident which is not the fault of his host driver, he may recover against his own UIM coverage, the liability coverage of the driver at fault and the host driver's UIM coverage. See, e.g., Sears v. Grange Ins. Ass'n, 111 Wn.2d 636, 762 P.2d 1141 (1988). However, if the same passenger is injured in an accident in which the host driver is at fault, the passenger is limited to recovery against the liability policy of that driver. Under the liability coverage exclusion, the passenger cannot recover against the UIM coverage of the driver at fault.
These varying results are inconsistent with the legislative purpose of the UIM statute: to provide full compensation to accident victims.
We hesitate to overrule cases which have been in the books for some length of time, yet when we are confronted with a problem and are convinced that we have been wrong, it is our duty to do so.
State v. Partridge, 47 Wn.2d 640, 645, 289 P.2d 702 (1955). Because it violates public policy of full compensation established by the Legislature, the liability coverage exclusion must be invalidated. Accordingly, Millers should be overruled.
Safeco argues that permitting Blackburn to recover UIM benefits in these circumstances would convert UIM coverage to liability coverage. Safeco also contends that, since UIM coverage is substantially cheaper than liability coverage, Blackburn will receive a windfall if he recovers UIM benefits. I disagree.
The "conversion" argument of the insurer rests on the mistaken assumption that if one receives benefits under a third party's insurance contract, then one has illegitimately *105received third party—i.e., liability—insurance coverage. That does not follow. Although Blackburn seeks UIM benefits provided as part of a third party's policy, he nevertheless seeks only coverage of the kind mandated by the Legislature in RCW 48.22.030. What determines the nature of the coverage received—as "legitimate UIM" or "illegitimate liability" coverage—is not the configuration of the contract, but whether the coverage serves the purposes contemplated by the Legislature in mandating UIM insurance. Even if a victim is not in privity, he can fall within the class of victims which the Legislature sought to protect by means of the UIM statute.
The Safeco policy defines an "insured" person as any occupant of the covered vehicle. That is a broad definition, which Safeco drafted, and it encompasses Blackburn. While Blackburn did not pay for coverage of that scope, Evergreen did. Evergreen may not have contemplated extending this benefit to Lougee's passengers when it loaned the car to him; Blackburn may not have contemplated this benefit when he agreed to ride in the car Evergreen had insured. Nevertheless, Safeco offered UIM coverage as mandated by the Legislature, and it was paid for such coverage on all occupants of the automobile. As an occupant, and as a member of the class the Legislature sought to protect, Blackburn is entitled to UIM coverage.
The related argument that Blackburn's "conversion" of UIM to liability coverage would result in a windfall is equally flawed. There are two reasons why UIM insurance costs less than liability coverage. First, the risk insured against is different. The risk the UIM insurer takes on is not the risk of an accident's occurring, but the lower risk of an at-fault party's having inadequate liability coverage. Second, UIM coverage is a second line of defense, so to speak. It comes into play only after the first layer, liability *106coverage, has been exhausted.11 Consequently, it is less likely that the full amount of UIM benefits will have to be paid.
Blackburn is not asking for a windfall because his claim does not violate these assumptions. First, he asserted his claim only after establishing that his tortfeasor had insufficient liability insurance. Second, despite the fact that his injuries are severe and the cost will exhaust the UIM benefits, there is no question that Blackburn seeks only the "floating layer" of coverage mandated by Elovich v. Nationwide Ins. Co., 104 Wn.2d 543, 707 P.2d 1319 (1985). Had his injuries been less severe, he would have been entitled to, and would have claimed, only a small portion of the UIM benefits at issue. Consequently, Blackburn is demanding only what the insurer, in accordance with its statutory duties, has contracted to provide.
Conclusion
It is clear that the policy of full compensation is violated by the liability coverage exclusion which precludes adequate compensation in this case. The exclusion restricts the coverage mandated by the Legislature on a basis which the Legislature has not authorized. The liability exclusion should be rendered void and of no eifect. Blackburn is entitled to the benefits of the UIM coverage provided by Evergreen's Safeco policy.
Smith, J., concurs with Dore, J.
Reconsideration denied October 5, 1990.

Blackburn did not and could not receive the proceeds of the liability policy. Much of the controversy in this case has revolved around the proper application of Millers in such circumstances. Blackburn argues that Millers prohibits only double recovery, which he has not received. Safeco argues that Blackburn "triggered" liability coverage by causing Safeco to defend Evergreen and that, in any case, Millers authorizes the liability coverage exclusion regardless of whether the UIM claimant recovers or "triggers” liability coverage. Because I would hold that the liability coverage exclusion violates public policy in all circumstances and overrule Millers, I do not need to consider these arguments.

I recognize that RCW 48.22.030(1) defines ”'[U]nderinsured motor vehicles'" to include uninsured vehicles as well. This does not change the fact that a "2-car rule" cannot be inferred from the wording of RCW 48.22.030(2) alone, as Millers purported to do.

In order to advance the policy of full compensation, the Legislature in 1980 also increased the minimum required amount of first party coverage. The uninsured motorist statute required insurers to offer first party coverage in the same amount as each policy's liability coverage. The UIM statute adopted the same approach. The minimum liability coverage required in this state prior to 1980 was $15,000. The Legislature raised that figure to $25,000 at the time it adopted the UIM statute. Laws of 1980, ch. 117, § 6, p. 364.

In fact, if the insured settles for less than the full amount of the liability coverage available, the insurer can offset the full amount of the available liability coverage against the UIM benefits payable. Hamilton v. Farmers Ins. Co., 107 Wn.2d 721, 728, 733 P.2d 213 (1987).