Court Opinion

ID: 9739929
Source: CourtListenerOpinion
Date Created: 2023-08-26 20:23:46.878926+00
Date Added: 2024-06-11T07:24:14.800207
License: Public Domain

ANN WALSH BRADLEY, J.
¶ 37. (concurring). I agree with the majority that the Dowhowers have failed to establish that Wis. Stat. § 632.32(5)(i)l deprives them of a constitutionally protected right. I write separately, however, because I conclude that the policy is ambiguous. It fails to convey clearly to a reasonable person in the position of the insured that the insurance company is not obligated to pay the full $50,000 limits.
¶ 38. Wisconsin Stat. § 632.32(5)(i)l grants insurers the right to reduce their limits of liability by the sums paid by or on behalf of the tortfeasor. Reducing clauses are not per se deceptive. However, for any particular reducing clause to pass muster under Wis. Stat. § 632.32(5)(i)l, the policy must clearly explain to the insured that the insured's recovery will be the aggregate of all sums paid from all sources up to the insurer's limit of liability. West Bend's policy fails to comply with this requirement.
¶ 39. The West Bend policy issued to the Dowhowers does not clearly and unequivocally inform them that the insurer's $50,000 limit of liability will be reduced by any and all amounts paid to the Dowhowers by the tortfeasor. Instead, the policy conveys inconsistent messages that would befuddle a reasonable insured in the Dowhowers’ position and would lead the insured to expect full coverage from West Bend in the amount of $50,000.
¶ 40. First and foremost, on the Declaration page of the policy West Bend lists its underinsured motorist *132coverage as "$50,000 EACH PERSON $100,000 EACH ACCIDENT." Arguably, the Declaration page is the most crucial section of the policy for the typical insured because it specifies the various types of coverage purchased by the insured, followed by the limit, of liability for each, and also provides the respective premiums.
¶ 41. Insurance contracts are construed to comport with the reasonable expectations of the insured. Sweeney v. General Cas. Co., 220 Wis. 2d 183, 194, 582 N.W.2d 735 (Ct. App. 1998) (quoting Matthiesen v. Continental Cas. Co., 193 Wis. 2d 192, 203-04, 532 N.W.2d 729 (1995)). Insureds often examine only the Declaration page to verify that they have been provided the coverage for which they contracted.
¶ 42. Examining the Declaration page in West Bend's policy, a reasonable policyholder comes to the conclusion that the insurer will provide underinsured motorist coverage in the amount of $50,000 per person. Absent is any reference to a potential reduction in the amount. The Declaration page creates an illusion of coverage because it misrepresents West Bend's liability as $50,000, when in reality the insurer will rarely, if ever, disburse the full amount by virtue of the reducing clause found elsewhere in its policy.
¶ 43. Those policyholders who are more curious and perhaps more savvy may look beyond the Declaration page in search of a detailed explanation of their underinsured motorist coverage. An examination of the policy's Table of Contents will not dispel the insured's expectation of coverage in the amount of $50,000.
¶ 44. The Table of Contents lists numerous types of coverage and clearly directs the insured to pages in the policy which set forth the "limit of liability" on each type of coverage. Although a specific "limit of liability" *133is listed for uninsured motorist coverage, medical payment coverage, liability coverage, and damage to your auto coverage, noticeably absent is any listing of a limitation of liability for underinsured motorist coverage. Thus, a reasonable insured would not anticipate any reduction of the coverage guaranteed in the Declaration.
¶ 45. To conclude otherwise, a reasonable insured would be required to look beyond the Declaration page which gives an insured an expectation of a full $50,000, and beyond the Table of Contents, which gives a reasonable insured an expectation of no limitation of underinsured coverage, and beyond the eleven-page policy, and beyond the first endorsement — notice of payment plan options, and beyond the three-page second endorsement — amendment of policy provisions, and beyond the third endorsement — punitive or exemplary damages exclusion, and beyond the fourth endorsement — notice of an insured right to file a complaint, and beyond the three-page fifth endorsement — important notice regarding coverage changes, and beyond the sixth endorsement-windshield repair notice, and beyond the seventh endorsement — important notice regarding coverage changes, and beyond the eighth endorsement — split liability limits, and beyond the ninth endorsement — waiver of deductible, and beyond the tenth endorsement — split uninsured motorist limits, and beyond the two-page eleventh endorsement — uninsured motorist coverage, and beyond the twelfth endorsement — split underinsured motorist limits, until finally arriving at the bottom of the second page of the three-page thirteenth endorsement — underinsured motorist coverage, to find a "limit of liability" section that includes several provisions.
*134¶ 46. The first provision states that West Bend's limit of liability comports with the limit set forth in the Declaration. This signals to the policyholder that West Bend will pay the entire amount of $50,000 guaranteed by the Declaration. However, the next provision represents the reducing clause and states that the limit of liability will be reduced by all sums paid by or on behalf of the tortfeasor. The two provisions taken together are inconsistent with other sections of West Bend's policy.
¶ 47. Even people who do read their insurance policies often do not understand these contracts. Jeffrey W. Stempel, Law of Insurance Contract Disputes § 4.04, 4-17 (2d ed. Supp. 2000) (citing Restatement (Second) of Contracts § 211 cmt. b (1981)). Viewed in conjunction, the two endorsement provisions, the Declaration, and the Table of Contents illustrate the policyholder's difficulty in fully comprehending the extent of underinsured motorist coverage. The inconsistency among the separate sections of West Bend's policy renders the policy ambiguous.
¶ 48. Ambiguities in insurance contracts are construed against the insurer and in favor of coverage. Smith v. Atlantic Mut. Ins. Co., 155 Wis. 2d 808, 811, 456 N.W.2d 597 (1990); Filing v. Commercial Union Midwest Ins. Co., 217 Wis. 2d 640, 647, 579 N.W.2d 65 (Ct. App. 1998). Accordingly, the underinsured motorist provisions should be construed against West Bend, and the Dowhowers should be entitled to their guaranteed recovery of the full $50,000.
¶ 49. Otherwise, West Bend benefits from an insurance policy that perpetrates an illusion of full coverage upon unsuspecting policyholders who do not meticulously read or fully comprehend the entirety of their insurance policies. The illusion of the West Bend policy lies in that insureds will receive some of the *135$50,000 but rarely ever the full amount guaranteed by the Declaration.
¶ 50. The legislature was aware of the concerns over deception voiced by Wisconsin courts. Although it authorized reducing clauses under Wis. Stat. § 632.32(5)(i)l, the legislature envisioned clear policies without a hint of illusion to protect consumers from fraudulent practices. It did not authorize deception in the implementation of the statute.
¶ 51. I agree with the majority that the Dowhowers' constitutional claim lacks merit. Although the insureds have attempted to label this case as a substantive due process case, it is not. To trigger substantive due process, there must be a constitutionally protected right and a deprivation of that right. The right asserted by the Dowhowers, the freedom to contract without fraud or deception, is tenuous.
¶ 52. Additionally, the Dowhowers have failed to demonstrate that Wis. Stat. § 632.32(5)(i)l deprives them of that asserted right. By enacting the statute, the legislature has granted insurers the right to reduce their limits of liability by the sums paid by or on behalf of the tortfeasor. Whether or not one agrees with the legislature is of no consequence. Wisconsin Stat. § 632.32(5)(i)l does not provide for an illusory, fraudulent, or deceptive policy.
¶ 53. The maj ority opinion discusses prior under-insured motorist cases at length. Majority op. at ¶¶ 22-32. However, the purpose of this discussion remains unclear because the majority fails to address what role, if any, prior case law has played in the resolution of this case. Furthermore, the majority is silent as to what effect, if any, Wis. Stat. § 632.32(5)(i)l and the holding in this case have on the precedential value of prior case law.
*136¶ 54. In sum, Wis. Stat. § 632.32(5)(i)l authorizes the offsetting of underinsured motorist coverage when the insureds have recovered from sources other than the insurer. There is nothing illusory about a well-drafted and clear reducing clause, one that specifically and unequivocally guarantees that the insured's recovery will be from all sources. The policy setting forth underinsured motorist coverage must clearly convey that the insured is stipulating to partial recovery from the tortfeasor's liability coverage. The West Bend policy fails to satisfy this mandate. Nevertheless, to avoid a splintered decision with questionable preceden-tial value, I join in the remand to the circuit court for consideration of whether within the context of the insurance policy the reducing clause is ambiguous.
¶ 55. I am authorized to state that SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE, joins this concurrence.