Progressive Casualty Insurance v. Jester

Dimmick, J.

In Mutual of Enumclaw Ins. Co. v. Wiscomb, 97 Wn.2d 203, 213, 643 P.2d 441 (1982), we reserved for another day the question of the validity of motor vehicle insurance policy exclusions consciously bargained for *79by the insurer and its insured. That day has arrived. We hold public policy is not violated by a motorcycle insurance policy provision which excludes liability coverage for claims made by passengers, when the insured intentionally rejected that coverage when offered. We therefore affirm the trial court in holding the exclusion valid.

The facts are undisputed. The late Kelly Jester obtained a policy of motorcycle insurance from the respondent, Progressive Casualty Insurance Company (Progressive). The policy excluded liability coverage for claims made by passengers. The agent who sold the policy to Jester explained the passenger exclusion to him and advised him to obtain guest passenger liability coverage for an additional $23 premium. Jester declined the additional coverage, apparently believing he would not have occasion to have someone else ride with him.

On August 19, 1982, Jester was involved in a 1-vehicle accident while carrying Carolyn Wendt as a passenger on his motorcycle. Jester was killed; Wendt was seriously injured. Wendt filed a personal injury suit against Willard Jester, personal representative of the estate of Kelly Jester. Progressive filed this action seeking a declaration that the policy it had issued to Kelly Jester provided no liability coverage for Wendt's claims, and that it had no duty to defend Wendt's personal injury suit or to pay any sums recovered by Wendt.

Thereafter, Progressive moved for summary judgment. Wendt countered with her own motion for summary judgment, arguing that the passenger exclusion contained in Progressive's policy was void as against public policy. The trial court granted Progressive's motion for summary judgment and denied Wendt's motion for summary judgment. Wendt appealed; Progressive's motion to transfer Wendt's appeal to this court was granted.

The rule is well settled that we may not modify clear and unambiguous language in an insurance contract. Tucker v. Bankers Life & Cas. Co., 67 Wn.2d 60, 66, 406 P.2d 628, 23 A.L.R.3d 1098 (1965). In this case, the policy Progressive *80sold to Jester contains clear and unambiguous language excluding liability coverage for claims made by passengers. Nevertheless, contract provisions are subject to limitation and invalidation if they contravene public policy. Whitaker v. Spiegel, Inc., 95 Wn.2d 661, 667, 623 P.2d 1147, 637 P.2d 235 (1981). Recognizing this principle, Wendt bases her case almost entirely on Mutual of Enumclaw Ins. Co. v. Wiscomb, supra. Wiscomb held that family or household exclusion clauses in automobile insurance policies, which purported to exclude liability for bodily injury to family members of the insured residing in his household, violated Washington's public policy of assuring compensation to the victims of negligent and careless drivers. In an attempt to extend the Wiscomb holding, Wendt argues that the passenger exclusion in Progressive's policy violates this same public policy.

Wendt's argument ignores an essential difference between her case and Wiscomb. In Wiscomb, we were concerned about the parties' lack of bargaining power in contracting with the insurer. The insurer in that case, the Mutual of Enumclaw Insurance Company, would not sell a policy without the family or household exclusion. We noted that such a state of affairs undercut any assertion that the parties were free to contract for additional coverage for family or household members if they wished. Wiscomb, at 211. We therefore held that the strength of Washington's public policy in favor of compensating the victims of negligent and careless drivers overrode any "'freedom of contract' analysis — at least when the parties to the insurance contract had not truly bargained for such an exclusion." (Italics ours.) Wiscomb, at 213.

Here, on the other hand, Kelly Jester and Progressive did truly bargain for the passenger exclusion in the motorcycle insurance policy. Affidavits on file indicate Jester was offered the opportunity to purchase guest passenger liability coverage for a modest premium; indeed, the insurance agent urged him to do so. He decided not to buy the additional coverage. Under these circumstances, the *81reasoning of Wiscomb does not apply, and the passenger exclusion does not violate public policy. See Greer v. Northwestern Nat'l Ins. Co., 36 Wn. App. 330, 341, 674 P.2d 1257 (1984).

Nevertheless, Wendt argues that even a bargained-for exclusion violates public policy where it purports to deny coverage to any person not a party to the insurance contract. See Wiscomb, at 213. We decline to follow this dicta. Although we may question the wisdom of permitting insureds to contract away coverage for passengers, our Legislature has determined otherwise by refusing to require mandatory insurance coverage. Under our financial responsibility act, an individual need not prove financial responsibility until a vehicle owned or driven by him is involved in an accident resulting in bodily injury or death of any person, or property damage of $300 or more. RCW 46.29.060. Even after such an accident has occurred, proof of financial responsibility for the accident and in the future may be made in a number of ways, including, but not limited to, proof of liability insurance. RCW 46.29.070, .080, .450. Since the Legislature has not seen fit to require mandatory insurance coverage, we will not replace its assessment of public policy with our own.1 So long as an insured has the opportunity to purchase passenger coverage from an insurer, the public policy in favor of compensating the victims of negligent driving is not violated.

Wiscomb may also be distinguished on the basis that it dealt with a famify or household exclusion. We found this type of exclusion particularly disturbing in light of the fact that typical family relations made it impossible for family members to conform their activities to avoid the risk of *82riding with someone who, as to them, was uninsured. Wiscomb, at 208. This concern is not present where, as here, an unrelated adult voluntarily rides as a passenger on a motorcycle.

Wendt contends that the passenger exclusion in the Jester policy, like the family or household exclusion, focuses not on the risk associated with who is driving the vehicle, but on which parties are injured. Wiscomb, at 209. In view of the distinctions already noted between the facts of this case and Wiscomb, this one similarity is not sufficient to bring this case within the Wiscomb holding.

Finally, Wendt points out that insurers in this state need not provide underinsured motorist coverage to their insureds when they operate or occupy a motorcycle or motor-driven cycle. RCW 48.22.030(2). Therefore, she reasons, the public policy in favor of assuring compensation to the victims of negligent driving can be effected with respect to motorcycle passengers only by requiring the liability insurance policy of the motorcycle driver or owner to provide passenger coverage. Since nothing in RCW 48.22.030(2) prevents insurers from offering underinsured motorist coverage which would apply even when the insured was riding a motorcycle, Wendt's argument hinges upon proof that such coverage is in fact not available in Washington. Wendt did not provide the court with such proof. Thus, her argument must fail.

We are not insensitive to the suffering endured by innocent motorcycle passengers like Wendt who are injured only to discover that the motorcyclist's liability insurance excludes coverage for them. Nevertheless, we cannot require mandatory insurance where the Legislature has declined to do so.2

*83The judgment of the trial court is affirmed.

Utter, Dolliver, and Pearson, JJ., and Cunningham, J. Pro Tern., concur.

Attorneys on behalf of Washington State Trial Lawyers Association filed a brief in this case as amici curiae, urging us to hold, as a matter of public policy, that all motor vehicle insurance policies must provide the minimum liability coverage required by the financial responsibility act, whether they are certified as proof of future financial responsibility or not. We have rejected this suggestion twice before. See Royse v. Boldt, 80 Wn.2d 44, 46, 491 P.2d 644 (1971); Barkwill v. Englen, 57 Wn.2d 545, 548, 358 P.2d 317 (1961). We do not adopt it now.

With respect to the plight of the motorcycle passenger, we note that effective April 1, 1983, the Insurance Commissioner withdrew from use motorcycle liability insurance forms which contain a passenger exclusion. Insurance Commissioner Bulletin No. 82-9. The Insurance Commissioner is an elected official. RCW 48.02-.010. Generally, no insurance policy form may be used in this state absent his approval. RCW 48.18.100. By exercising his discretion to withdraw motorcycle *83liability insurance forms which exclude passenger coverage, the Commissioner, in his wisdom, has ensured that future motorcycle passengers will be protected. Thus, the Insurance Commissioner has acted where we may not.