Bethke v. Auto-Owners Insurance

SHIRLEY S. ABRAHAMSON, C.J.

¶ 58. {dissenting). The majority opinion struggles mightily, but unsuccessfully, in my opinion, to justify awarding funds to the sympathetic innocent victims of an auto accident. Tragically, Kathryn Bethke died. Andrew Bethke was seriously injured. I agree with the majority that a fairer result, and perhaps one more in line with the theoretical goals of Underinsured Motorist Coverage (UIM), is for Ms. Bethke's insurance company to compensate the Bethkes. But that result is not consistent with the policy that Ms. Bethke purchased and that the insurance company issued. As much as my sympathies pull me to the result the majority reaches, I cannot join the majority opinion in rewriting the insurance policy to create coverage where none exists under the plain text of the policy.

*557¶ 59. Kathryn Bethke bought $500,000 of under-insured motorist coverage for a premium of $7.17 per year. The majority opinion explains (without any basis in the record) that Ms. Bethke took every reasonable action that could be expected of her to protect herself from an underinsured motorist. Majority op., ¶ 46.

¶ 60. The Bethke policy has high coverage limits for underinsured motorist coverage and a low premium. As might be expected under these circumstances, the underinsured motorist provision in this insurance policy contains numerous exceptions and exclusions limiting coverage and recovery under the underinsured motorist provision.

¶ 61. Indeed, the vehicle at issue is an underinsured automobile as defined in the policy.1 The Bethke policy also includes a lengthy list of automobiles excluded from the definition of an underinsured automobile and thus excluded from underinsured motorist coverage. One exclusion in the Bethke policy provides that an "underinsured automobile does not include an automobile owned or operated by a self-insurer under any automobile law"2 (emphasis added).

*558¶ 62. Other underinsured motorist policies may be available for purchase in Wisconsin, may cost more, and may have fewer exclusions than the Bethke policy. Nothing in the record shows that all automobile liability policies available in Wisconsin exclude self-insurers from underinsured motorist coverage.

¶ 63. As fate would have it, however, the Bethke policy does not cover the eventuality that occurred. Ms. Bethke collided with a rental car owned by Avis Rent-A-Car, a self-insurer under a Wisconsin automobile law, and operated by an uninsured driver who was unable to compensate the Bethkes for the damages inflicted.

¶ 64. The majority opinion characterizes as ambiguous the policy language declaring that an "under-insured automobile does not include an automobile owned or operated by a self-insurer under any automobile law."

¶ 65. I agree with the circuit court and court of appeals. Both concluded that the exclusion of self-insured vehicles does not function as an impermissible reducing clause and that the policy language excluding "a self-insurer under any automobile law" is not ambiguous.

¶ 66. The policy refers to a self-insurer under any automobile law. Wisconsin Stat. § 344.16 is just such an automobile law. It unambiguously grants Avis the opportunity to be a self-insurer under Wisconsin law. Avis has qualified as a self-insurer and has received a Wisconsin certificate of self-insurance. Majority op., ¶ 10. If there is an ambiguity, I have not found it. As I read *559the plain words of the policy (and these plain words are not prohibited by Wis. Stat. § 632.32(6)), the Bethkes cannot recover from their insurance company under the underinsured motorist coverage for damages arising from this auto accident because the vehicle at fault was owned by Avis, a self-insurer under an automobile law. Even though the Bethkes were not fully compensated by the at-fault driver, the underinsured motorist coverage will not provide coverage because the auto accident involved a self-insured vehicle.

¶ 67. Rather than looking at the plain language of the policy, the majority opinion turns to analyzing the purpose of the statutes governing car rental companies and self-insurers. The statutes do not establish the scope of UIM coverage or impose a definition of a UIM vehicle. Nevertheless, the majority opinion ominously declares that the statutes regarding limited liability, self-insurers, and underinsured motorists are on a collision course: "A self-insured car rental company cannot at the same time enjoy limited liability and be expected to fully satisfy judgments. There is a disconnect because one statute [§ 344.51] makes Avis statutorily liable for a minimum amount... while the other statute [§ 344.16] seeks to ensure that Avis has the financial resources to fully satisfy judgments against it." Majority op., ¶ 37.

¶ 68. There is no collision course. There is no disconnect. The fatal flaw in the majority opinion is that it seems to assume that Avis would be fully liable to Ms. Bethke but for the statutory "limit on liability." This is simply not so. Wisconsin Stat. § 344.51 does not act as a "limit on liability," but rather expands Avis's obligation to compensate an innocent victim; Avis is liable without any proof that it (rather than the driver who rented the vehicle) is at fault.

*560¶ 69. At common law, a car rental company was not liable to an innocent third party for the negligent operation of the driver of its rented car.3 The statute, Wis. Stat. § 344.51(1m), that imposes liability on the car rental company partially abrogates the common law. The statute requires the car rental company to provide the specified compensation to the victim of a driver who rents its car, causes an injury, and is unable to pay the damages on his or her own.4 But for the existence of the statute mandating Avis to compensate the injured person in the specified amounts, Ms. Bethke likely would not have recovered a single dollar from Avis in the present case. Avis is a "source of payment" for victims only because the statute requires it to pay compensation, not because Avis is liable under common law principles of tort liability.

¶ 70. The statutory liability applies only to cars that Avis rents to drivers who are negligent, cause injury, and are unable to pay damages.

¶ 71. A car rental company like Avis is nonetheless fully liable for damages that are caused by its own wrongdoing. Thus, Avis may incur liability if, for example, its negligent maintenance of a rented car is a cause of injury. Avis may incur liability if its negligence in renting a car to a negligent driver is a cause of injury. Avis may incur liability if an Avis-owned car is negligently operated by an Avis employee.

*561¶ 72. The majority opinion complains that Avis's "limited liability" contravenes the purpose of the self-insurer exclusion — to enable the self-insured to pay damages against it in full — and asserts that therefore Avis does not fit the definition of a self-insurer.5 This assertion is wrong. Avis is a self-insurer under the law, whether it is required to provide compensation to an innocent victim for another's wrongdoing or whether it must pay damages when it is liable for its own wrongdoing.

¶ 73. There is no collision course or disconnect in the statutes. The statutes demonstrate a consistent legislative purpose: Car rental companies have statutory liability for negligent motorists who rent their cars, cause an injury, and are unable to pay the damages on their own. In the event that the car rental company is liable for its own wrongdoing, the State of Wisconsin is satisfied that it has the financial resources to pay any judgments against it. Whether Avis has statutory liability for the negligent operation of one of its vehicles by a driver who rented the vehicle or liability for its own wrongdoing, it is a self-insurer under a Wisconsin automobile law.

¶ 74. The majority, in my opinion, should stick to reading the insurance policy and the statutes. The result the majority reaches is not consistent with the policy that Ms. Bethke purchased and that the insurance company issued.

¶ 75. The majority reads the insurance policy based on its theoretical expectation of UIM coverage, and not the expectation of an insured who has read the self-insurer exclusion or the insurance company that issued the policy. The majority reads words into the *562insurance policy that are not there. It reads the policy as if it includes the following emphasized language: "Underinsured automobile does not include an automobile owned or operated by a self-insurer under any automobile law except an automobile law providing that when the self-insurer is a car rental company it has limited statutory liability for a driver's negligent operation of a rental car."

¶ 76. The law simply does not allow us to alter policy language to create coverage where none exists.6

¶ 77. For the reasons set forth, I dissent.

¶ 78. I am authorized to state that Justice N. PATRICK CROOKS and Justice MICHAEL J. GABLEMAN join this dissent.

The Bethke policy provides that "underinsured automobile" means "an automobile to which a bodily injury liability bond or liability insurance policy applies at the time of the occurrence in at least the minimum amounts required by the Financial Responsibility Law in the state where your automobile is normally garaged .... Underinsured automobile does not include an automobile . . . owned or operated by a self-insurer under any automobile law ...."

The vehicle at issue does not fall within the policy's definition of "uninsured automobile."

This policy exclusion from underinsured coverage is found in the standard personal auto policy. See 1 Susan J. Miller, Miller's Standard Insurance Policies Annotated 12 (Form PAP) (6th ed. 2012).

*558Wisconsin Stat. § 632.32(6) includes a list of exclusions that are prohibited in motor vehicle insurance policies. The self-insurance exclusion is not prohibited by Wis. Stat. § 632.32(6) or any other law.

City of Milwaukee v. Froelich, 196 Wis. 444, 445, 219 N.W. 954 (1928); Boatright v. Spiewak, 214 Wis. 2d 507, 520-21, 570 N.W.2d 897 (Ct. App. 1997); Am. Family Mut. Ins. Co. v. Reciprocal Ins. Serv. Exch. Mgmt. Co., 111 Wis. 2d 308, 310, 330 N.W.2d 223 (Ct. App. 1983).

Wis. Stat. § 344.51(lm). See also Am. Family Mut. Ins. Co., 111 Wis. 2d at 311.

Majority op., ¶ 38.

Bruchert v. Tokio Marine & Nichido Fire Ins. Co., Ltd., 2007 WI App 156, ¶ 12, 303 Wis. 2d 671, 736 N.W.2d 234.