Court Opinion

ID: 9668296
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:08:50.875147+00
Date Added: 2024-06-11T18:15:44.412083
License: Public Domain

CALLOW, J.
(dissenting). I would reverse the judgment of the circuit court and hold that both the “drive other car” exclusion and reducing clause are valid and enforceable. In addition, I would conclude the reducing clause in this contract provides that the “amounts payable” under the underinsured motorist (UIM) provision consist of the benefits payable under the limits of the policy less the amount received from the underinsured driver’s liability policy.
The first issue of concern is the validity of the “drive other car” exclusion. The majority concludes this clause is invalid under sec. 631.43, Stats. Section 631.43(1), Stats., by its terms, only applies “[w]hen 2 or more policies promise to indemnify an insured against the same loss.” Contrary to the majority’s conclusion, there are not two or more policies which promise to indemnify Wood for this loss. The Dodge B200 policy specifically states it does not apply for bodily injury to a person “[while] occupying, or when struck by, a motor vehicle that is not insured under this policy, if it is owned by you or any resident of your household.” In this case, the bodily injury occurred while Donna Wood was occupying the Dodge Aries, a motor vehicle the Woods owned which was not insured under the Dodge B200 policy. Thus, only the Aries policy promises to indemnify Wood for this loss. Because only one policy promises to indemnify the insured, sec. 631.43(1) does *658not apply and Wood should not receive $100,000 from the Dodge B200 UIM policy.
This case is very different from Welch v. State Farm Mutual Automobile Insurance Co., 122 Wis. 2d 172, 361 N.W.2d 680 (1985), in which we invalidated a similar “drive other car” exclusion in an uninsured motorist (UM) policy. The Welches owned two cars. A separate $100,000 UM policy was issued for each car. While occupying one of the cars, the Welches were involved in an accident in which the damages exceeded $200,000. Only because of the portable nature of UM insurance did the UM provisions in Welch satisfy the requirement of sec. 631.43(1), Stats., that “2 or more policies promise to indemnify an insured against the same loss.” We held that the statute allowed them to stack their two UM policies and recover $200,000. Welch, 122 Wis. 2d at 178.
In Welch, this court found that in enacting uninsured motorist statute, sec. 632.32(4), Stats., the legislature intended that UM insurance be portable. Id. at 180-81, Schwochert v. American Family Mutual Insurance Co., 139 Wis. 2d 335, 348, 407 N.W.2d 525 (1987). A policy is portable when it covers the insured whether or not he or she is occupying the insured vehicle. Thus, although the Welches were not occupying the nonacci-dent vehicle, that vehicle’s policy, because it was portable, was available to cover their loss. We concluded that it was the combined effect of the stacking and uninsured motorist statutes which invalidated the “drive other car” clause: “[w]e hold that ‘drive other car’ exclusionary clauses are contrary to the legislative policy and express legislative intent embodied in this state’s uninsured motorist and stacking statutes.” Welch, 122 Wis. 2d at 181.
*659When this court considered the question of the portability of an UIM policy in Schwochert, 139 Wis. 2d at 348, we stated “[t]here is no statute that reflects any legislative intent that underinsured motorist coverage be portable. The portability of (sic) aspects of underin-sured motorist coverage is solely dependent upon the provisions of the insurance contract that establishes it.” Clearly the insurance contract in this case, the Dodge B200 policy, does not provide for portable UIM coverage. Only the Aries policy promises to indemnify Wood for this loss. Thus, sec. 631.43(1), Stats., which is dependent on a circumstance when two or more policies promise to indemnify an insured, a situation that does not exist in this case, cannot apply and the “drive other car” clause should be held valid.
In addressing the validity of the reducing clause, the majority, in dicta, incorrectly concludes that sec. 631.43(1), Stats., may apply to both indemnity and liability policies. Majority opinion at page 651. Section 631.43(1) only applies when two policies “promise to indemnify” an insured. As the court of appeals has correctly recognized, liability insurance is distinct from indemnity insurance. Landvatter v. Globe Security Insurance Co., 100 Wis. 2d 21, 26, 300 N.W.2d 875 (Ct. App. 1980). Had it chosen to, the legislature could have applied sec. 631.43(1) to all insurance policies, but it did not. Both the statute’s express language and its legislative history make this conclusion inescapable.
Section 631.43(1), Stats., originated as sec. 203.11, Stats. (1973), which pertained only to fire insurance. In 1975, that statute was broadened to include all indemnity coverage. The majority insists that the legislature did not have in mind the “historical definitions of indemnity and liability insurance” because it refers to policies which “promise to indemnify” rather than to *660"indemnity" policies. Majority opinion at pages 650-651. The majority has misread the legislative intent. The committee note to the 1975 amendment unequivocally states the legislative purpose in expanding the provision to its present form when it declares "[t]his section is adapted from s. 203.11, but extended to all indemnity coverage, including the indemnity coverages in disability insurance." Ch. 375, sec. 631.43, Stats. (Note), 1975 Wis. Laws 1177 (emphasis added). Both the text of the amendment and legislative history of the provision lead me to conclude that the legislature deliberately retained the traditional distinction between liability and indemnity coverage.
While the majority insists that sec. 631.43(1), Stats., applies to liability policies, it concludes that the provision does not invalidate the reducing clause in this case. However, although it contradicts the circuit court's opinion on this issue, the majority also concludes that the valid reducing clause in this UIM policy reduces benefits by “subtracting from the total damages sustained by the insured the amount received by the insured from the underinsured driver’s liability policy." Majority opinion at page 657.
In reaching its conclusion, the majority insists that the insurance policy is ambiguous. An examination of the Woods’ policy in this case, however, reveals that its terms are absolutely clear. The policy plainly prohibits the recovery allowed by the majority opinion. The reducing clause is effective to reduce the amount payable under the policy limit by the amount received from the underinsured driver’s liability policy. The clause does not subtract the amount received from the total amount of damages. The policy carefully explains the policy limits. It then states:
*661[w]e will pay no more than these máximums no matter how many vehicles are described in the declarations, insured persons, claims, claimants or policies or vehicles are involved in the accident.
Any amounts payable will be reduced by:
1. A payment made by the owner or operator of the underinsured motor vehicle or organization which may be legally liable.
There can be no doubt that the words “amounts payable” have clear reference to the limits of the policy. Interpreting the contract in a straightforward and clear way, the conclusion is inescapable that under the plain terms of the contract, the “amounts payable” consist of benefits payable under the limits of the policy reduced by the amount received from the underinsured motorist’s liability policy. The insured will never receive less in compensation than the amount of the UIM coverage limit. The UIM policy will make up the amount of damages not covered by the tort-feasor’s insurance up to that limit. It is improper for this court under the guise of interpretation to modify this clear and unambiguous insurance contract which was freely negotiated and consummated by both parties.
For these reasons I respectfully dissent.
I am authorized to state that Justice Donald W. Steinmetz joins in this dissenting opinion.