Court Opinion

ID: 9522643
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:29:52.879857+00
Date Added: 2024-06-11T13:03:27.085001
License: Public Domain

JUSTICE BILANDIC, dissenting: I respectfully dissent. The majority’s decision contravenes accepted principles of law governing the construetion of insurance policies. In construing an insurance contract, the primary purpose is to give effect to the intentions of the parties as expressed in the contract. (Outboard Marine Corp. v. Liberty Mutual Insurance Co. (1992), 154 Ill. 2d 90, 108.) If the terms of an insurance policy are unambiguous, a court must give them effect as written. (United States Fidelity & Guaranty Co. v. Wilkin Insurance Co. (1991), 144 Ill. 2d 64, 74.) Ambiguous terms, on the other hand, will be construed in favor of the insured and against the insurer who drafted the policy. Western Casualty & Surety Co. v. Brochu (1985), 105 Ill. 2d 486. In determining whether an ambiguity exists, the court must not interpret the policy in a vacuum but, rather, is required to consider the particular factual setting in which the policy was issued. (Goetze v. Franklin Life Insurance Co. (1975), 26 Ill. App. 3d 104, 108.) This court has recognized that “[w]hat at first blush might appear unambiguous in the insurance contract might not be such in the particular factual setting in which the contract was issued.” Glidden v. Farmers Automobile Insurance Association (1974), 57 Ill. 2d 330, 336. The undisputed facts in this case establish that Shirley Dungey obtained the policy under which coverage is sought in 1981. At the time this original policy was issued, Shirley was required to sign a “named driver exclusion” endorsement, which excluded her husband from coverage under the policy. The bottom of that endorsement contained the symbol or notation “CE— 180.” The following year, Shirley renewed the policy. At that time, Shirley signed a second exclusion endorsement which differed from the first in several respects. Most notably, the second endorsement contained a different symbol or form notation than that which appeared on the endorsement attached to the original policy. It is Economy’s position that this second exclusion endorsement (i.e., form number “CE — 303”) became part of the original insurance contract and, thus, was a term of the contract during the 1983, 1984 and 1985 renewal periods. The majority accepts Economy’s argument and concludes that the terms of the disputed policy are unambiguous. In support of this determination, the majority purports to apply the general rule that, when a policy renewal is made, the terms of the original policy become part of the renewal contract of insurance, unless indicated otherwise. (155 Ill. 2d at 337.) The factual circumstances surrounding the renewal of the policy in 1982, however, clearly demonstrate that the parties did not intend for the original exclusion endorsement, which Shirley executed in 1981, to become part of the renewal contract of insurance in 1982. On the contrary, Economy specifically required Shirley to execute a new endorsement. Thus, the general rule upon which the majority relies is simply inapplicable in the present circumstances. Economy nevertheless claims that the parties intended that this second exclusion endorsement would form a part of the insurance contract during each renewal period. Economy claims that the parties’ intent was adequately conveyed in the declaration sheet which Economy sent to Shirley Dungey in 1983, 1984 and 1985. The key inquiry in construing policy coverage, however, is not what the drafters actually intended, but whether that alleged intent was expressed in the language of the policy itself so that it was understandable to the person purchasing the insurance policy. (Economy Fire & Casualty Co. v. Kubik (1986), 142 Ill. App. 3d 906.) Because the insurer drafts the provisions of an insurance contract, any lack of clarity in the meaning of the contract will be construed against the insurer. (Wahls v. Aetna Life Insurance Co. (1983), 122 Ill. App. 3d 309.) The rule that insurers should gain no advantage from their own drafting ambiguities is most rigorously applied to exclusionary provisions. Our courts have held that exclusions from the general coverage provided by an insurance policy must be stated in such clear, definite and explicit language as to warrant the conclusion that the insured understood and accepted them. Protective Insurance Co. v. Coleman (1986), 144 Ill. App. 3d 682; J.M. Corbett Co. v. Insurance Co. of North America (1976), 43 Ill. App. 3d 624, 627. Applying these principles here, it is evident that an ambiguity exists regarding whether the parties intended to make the second exclusion endorsement, which Shirley executed when she renewed her policy in 1982, a part of the insurance contract during subsequent renewal periods. Economy points to the declaration sheets which it sent to Shirley Dungey upon renewal of the policy in 1983, 1984 and 1985. Those sheets contain the language “Endorsements,” followed by a number of symbols, among which appears the symbol “CE — 303.” Economy claims that this language put the Dungeys on notice that the second endorsement was part of the insurance contract during the 1983, 1984 and 1985 renewal periods. This language is not defined in the original policy or on the declaration sheet. Therefore, this court must afford it its plain, ordinary and popular meaning. (Canadian Radium & Uranium Corp. v. Indemnity Insurance Co. of North America (1952), 411 Ill. 325, 332.) As one authority on insurance law has written: “ ‘Usual and ordinary meaning’ has been stated variously to be that meaning which the particular language conveys to the popular mind, to most people, to the average, ordinary, normal [person], to a reasonable [person], to persons with usual and ordinary understanding, to a business[person], or to a lay[person].” (2 Couch on Insurance 2d §15:18 (rev. 1984).) The reference to “CE — 303” contained in the declaration page sent to the plaintiffs when they renewed their insurance policy had no “usual and ordinary meaning” and would be virtually incomprehensible to the average, ordinary person. The majority nevertheless adopts Economy’s argument that this symbol informed the plaintiffs that John Dungey was excluded from coverage. The majority cites the decision in Economy Fire & Casualty Co. v. Pearce (1979), 79 Ill. App. 3d 559, as support for this proposition. In that case, however, the declaration sheet expressly informed the insured in large type that the symbol “CE — 90” referred to the “FORM NUMBER[ ] OF PRINTED ENDORSEMENTS ATTACHED TO THE POLICY.” The insured simply had to refer back to the original policy to discover the terms of that endorsement. Here, on the other hand, there was nothing to alert the insured that “CE — 303” was a form number of the second endorsement which Shirley Dungey signed when she renewed the policy in 1982. Even assuming that the Dungeys realized that “CE — 303” was the form number of an endorsement, they could not refer back to the original policy to discover the terms of that endorsement. The undisputed facts establish that the exclusion endorsement attached to the original 1981 policy bore the form number “CE — 180,” while the declaration sheets listed the endorsement form number as “CE — 303.” Thus, the plaintiffs had no way of knowing how to decipher the code which Economy used on the declaration sheet sent to them upon renewal of the policy. I must conclude that the cryptic symbol which appeared on the declaration sheet was not sufficient to put the plaintiffs on notice that the second endorsement which Shirley Dungey signed in 1982 was a term of insur anee contract during subsequent renewal periods. I concur with the views expressed by the dissenting justice in Pearce: “These hieroglyphics are so cryptic, in my opinion, to the average insurance consumer that it cannot be said [the insured] could have understood their meaning or importance without the endorsement being attached to the certificate. *** The facts in this case preclude a finding that [the insured] comprehended and accepted a continuation of the endorsement ***.” (Pearce, 79 Ill. App. 3d at 568 (Harrison, J., dissenting).) Although Economy certainly knew what the symbol meant, it failed to provide the Dungeys with any means of deciphering the code. The sole reference to “CE— 303” was incomprehensible to the insured and was therefore ambiguous as a matter of law. Because the terms of the policy are ambiguous, they must be construed strictly against the insurer and in favor of coverage. Economy Fire & Casualty Co. v. Kubik (1986), 142 Ill. App. 3d 906; Great Central Insurance Co. v. Bennett (1976), 40 Ill. App. 3d 165; Rivota v. Kaplan (1977), 49 Ill. App. 3d 910. Such a construction is particularly appropriate here, because Economy’s actions led the Dungeys to believe that the particular exclusion at issue would not apply. The circumstances surrounding the issuance of the original policy and the renewal of the policy one year later created a reasonable expectation that Economy would exclude John Dungey from coverage only if Shirley executed a new endorsement at the beginning of each renewal period. The mere fact that Economy sent Shirley declaration sheets which contained the unexplained symbol “CE — 303” does not demonstrate that Shirley understood and accepted that endorsement during the 1983, 1984 and 1985 renewal periods. The majority’s holding contravenes not only the principles of law applicable to insurance contracts, but also the long-standing judicial policy favoring a liberal interpretation of insurance coverage. Accordingly, I dissent. Although unnecessary to a proper decision in this case, I would also urge our court to find as a matter of policy that, when an insured renews an insurance policy, the insurance company must attach a copy of any endorsements to the certificate which it sends to the insured upon renewal. At a minimum, an insurer must briefly describe the nature of an endorsement in the renewal certificate. A renewal certificate which simply lists the form designation which the insurer has adopted for a particular endorsement is inherently ambiguous and should be construed against the insurer.