Court Opinion

ID: 7022789
Source: CourtListenerOpinion
Date Created: 2022-07-24 04:52:15.186687+00
Date Added: 2024-06-11T16:10:37.920538
License: Public Domain

JUSTICE McNAMARA, dissenting: I respectfully dissent from the majority holding that the policy’s use of the word “specifying,” instead of “requiring,” mandates the enlargement of the policy limits to the admittedly not-applicable financial responsibility statute’s higher limits. I agree with the trial court’s interpretation of the policy, i.e., that the statutory requirements were not applicable or relevant where the statute itself was not applicable. A small minority of jurisdiction holds, as the majority does here, that where a policy states it will comply with a financial responsibility law, the statutory terms must be read into the policy as contractual terms and are not just applicable after the first accident occurs. (See Annot., 8 A.L.R.Sd 388, §4 (1966).) The large majority of jurisdictions, however, holds, as I would here, that a policy provision deferring to a statute has no effect until the statute actually becomes applicable. The majority acknowledges that Indiana law, which this court must follow, expressly holds that policy provisions referring to financial responsibility laws remain dormant until after the first accident occurs. (Grimes v. Government Employees Insurance Co. (Ind. App. 1980), 402 N.E.2d 50; Green v. State Farm Mutual Automobile Insurance Co. (1976), 168 Ind. App. 434, 343 N.E.2d 828.) The majority momentarily defers to the parties’ agreement “that the Indiana [statute] does not directly apply” here. (175 Ill. App. 3d at 171.) Thus, it would appear the insurer properly relied upon the limits of liability set forth in the policy, and not those recited in the Indiana statute. See 6B J. Appleman, Insurance Law & Practice §4297, n.84.35 (Buckley ed. 1979), citing Green v. State Farm Mutual Automobile Insurance Co. (1976), 168 Ind. App. 434, 343 N.E.2d 828. The majority, however, leaps upon one word in the policy which differs from the Grimes and Green policies and rests its analysis entirely upon one of Webster’s definitions of “specify.” The real error lies in the majority’s focus upon the policy language as though it were merely an ordinary insurance policy provision. The proper construction of financial responsibility laws, to determine whether a policy must conform to the statutory provisions, demands a primary focus upon the purpose of the statute, and only a secondary focus on any potentially vague or conflicting policy language. In fact, it is well established that general principles of construction of ordinary insurance policies are disregarded in determining the scope and extent of coverage under a financial responsibility law preview in a policy where necessary to accomplish a legislative aim. (7 Am. Jur. 2d Automobile Insurance §20, at 466 (1980).) For example, the public policy behind financial responsibility laws supersedes any rules of public policy applied in ordinary insurance law. (7 Am. Jur. 2d Automobile Insurance §29, at 478 (1980).) This court should focus, therefore, on the statute which the insured asks us to invoke, and not merely focus, with no reference to the statute’s purpose, upon a single word in the out-of-State clause of the policy. The key in the interpretation of a policy incorporating provisions of financial responsibility statutes is to give effect to the intention of the legislature, notwithstanding what the contractors understood it to be, and notwithstanding the contractors’ agreement to the contrary. (7 Am. Jur. 2d Automobile Insurance §29, at 479-80 (1980).) Thus, whether the Act and policy are in either direct or indirect conflict, the policy must be interpreted and construed in light of the purposes of the Act. 7 Am. Jur. 2d Automobile Insurance §§28 through 29, at 475-80 (1980). An examination of the purpose of financial responsibility laws immediately reveals their rigid limitation to a class of persons having been involved in a first accident or who have had their license suspended — a class of which plaintiff here is not a member. The key distinction between the compulsory insurance laws and the financial responsibility laws is that financial responsibility laws apply to a limited group of drivers. (6B J. Appleman, Insurance Law & Practice §4299 (Buckley ed. 1979).) In contrast, compulsory insurance laws apply to an unlimited group of all vehicle owners. (6B J. Appleman, Insurance Law & Practice §4299 (Buckley ed. 1979).) Compulsory insurance mandates automobile liability insurance in order to operate a vehicle on the highways in that State. Financial responsibility laws, however, are purposely designed to apply only after one accident. 6B J. Appleman, Insurance Law & Practice §4299 (Buckley ed. 1979). Indiana case law emphasizes that the financial responsibility statute is meant to increase public protection as to a select group of drivers, thus protecting victims against a second accident. (Grimes, 402 N.E.2d 50.) The insured here does not fall within that select group and cannot therefore invoke the inapplicable statute. I agree with the trial court’s well-reasoned opinion that to hold otherwise would convert the policy into a variable coverage policy. The policy itself expressly limits coverage to the limits contained therein, with no reference to a variable rate. The majority repeatedly points to the different language used in the policy’s references to compulsory and financial responsibility laws. The difference in language merely reflects the critical distinction in the two types of insurance. The policy will pay the “specified limits” in a “financial responsibility law or similar law specifying limits of liability.” The limits are “specified” instead of “required” because it is absurd to “require” compliance with a statute which will be inapplicable in numerous cases. Moreover, “specified” is also defined in Webster’s as: “give a specific character or application to.” (Emphasis added.) (Webster’s Third New International Dictionary 2187 (1971).) We can hardly invoke a financial responsibility statute which specifies, or gives application to, limits in an inapplicable statute. The policy states it will provide the “required minimum amounts” under a “compulsory insurance or similar law requiring” insurance. Again, compulsory insurance is, by definition, required. Financial responsibility laws do not even demand compliance after the first accident where, e.g., the individual opts to relinquish his license or not to drive in that State. I believe the majority errs in reading into the policy the statutory provisions, thus extending coverage, where the statute itself is not applicable. I would affirm the trial court’s entry of summary judgment in favor of defendant.