Nielsen v. O'REILLY

STEWART, Justice,

Dissenting.

The majority opinion holds that an insurance company may sell two uninsured motorist coverages to an insured, charge two premiums for those coverages, and then never have to pay out under one of them. The majority condones what I submit is unconscionable conduct that is tantamount to fraud on the plaintiff and the public.

The plaintiff purchased an automobile insurance policy that provided separate coverages on each of his two automobiles. The policy provided two uninsured motorist coverages for which the insured paid two separate premiums. Each coverage had a policy limit of $250,000. The plaintiff was injured by an uninsured motorist and suffered damages in the amount of $707,595. The plaintiff contends that he is entitled to recover $250,000 under each coverage for a total of $500,000, because he bought and paid for two coverages. This Court holds that the plaintiff is entitled to recover under only one uninsured motorist coverage because the “other insurance clause” in *671the policy relieves the insurance company from liability under the second coverage.1

Uninsured motorist coverage, unlike liability and collision coverages, is not tied to the insured’s automobile, but covers injuries to the insured whether the injury occurs in his automobile or elsewhere. Thus, “[cjoverage is available to the insured while occupying any motor vehicle, whether owned or nonowned, insured or uninsured, or while the insured is on foot or on horseback.” 3 Irvin E. Schermer, Automobile Liability Insurance § 31.02[8], at 31-18.2 (2d ed. 1992); see also Tucker v. Government Employees Ins. Co., 288 So.2d 238, 241 (Fla.1973); Allstate Ins. Co. v. Morgan, 59 Haw. 44, 575 P.2d 477, 479 (1978); Chaffee v. United States Fidelity & Guar. Co., 181 Mont. 1, 591 P.2d 1102, 1104 (1979); Federated Am. Ins. Co. v. Raynes, 88 Wash.2d 439, 563 P.2d 815, 820 (1977).

Under the most elementary concepts of honesty and fair dealing, an insured who pays for two coverages and the insurance company collects two premiums, ought to have the benefit of both coverages.2 The Supreme Court of Kansas has stated: “When we pay double premium[s] we expect double coverage. This is ... in accord with general principles of indemnity that amounts of premiums are based on amounts of liability.” Sturdy v. Allied Mut. Ins. Co., 203 Kan. 783, 457 P.2d 34, 42 (1969).

In my view, it is unconscionable to allow an insurance company to collect a second premium and give nothing in return on the ground that the insured consented to the fraud by virtue of a provision in the insurance contract. This is particularly so when the coverage is mandated by statute and the insured has not expressly waived it.

The inequity of allowing insurance companies to charge a premium on a coverage for which they will never have to pay out has led a large majority of courts to allow insureds to “stack” two or more coverages. See Great Central Ins. Co. v. Edge, 292 Ala. 613, 298 So.2d 607 (1974); Farm Bureau Mut. Ins. Co. of Ark. v. Barnhill, 284 Ark. 219, 681 S.W.2d 341 (1984); Yacobacci v. Allstate Ins. Co., 33 Conn.Supp. 229, 372 A.2d 987 (1976); Sellers v. United States Fidelity & Guar. Co., 185 So.2d 689 (Fla.1966); State Farm Mut. Auto. Ins. Co. v. Murphy, 226 Ga. 710, 177 S.E.2d 257 (1970); American Ins. Co. v. Takahashi, 59 Haw. 59, 575 P.2d 881 (1978); Kaufmann v. Economy Fire & Casualty Co., 76 Ill.2d 11, 27 Ill.Dec. 742, 389 N.E.2d 1150 (1979); Patton v. Safeco Ins. Co. of Am., 148 Ind.App. 548, 267 N.E.2d 859 (1971); Sturdy v. Allied Mut. Ins. Co., 203 Kan. 783, 457 P.2d 34 (1969); Meridian Mut. Ins. Co. v. Siddons, 451 S.W.2d 831 (Ky.1970); Bourgeois v. Government Employees Ins. Co., 316 So.2d 804 (La.Ct.App.1975); Langston v. Allstate Ins. Co., 40 Md.App. 414, 392 A.2d 561 (1978); Cardin v. Royal Ins. Co. of Am., 394 Mass. 450, 476 N.E.2d 200 (1985); Government Employees Ins. Co. v. Brown, 446 So.2d 1002 (Miss.1984); Cameron Mut. Ins. v. Madden, 533 S.W.2d 538 (Mo.1976); Chaffee, 181 Mont. 1, 591 P.2d 1102; Allstate Ins. Co. v. Maglish, 94 Nev. 699, 586 P.2d 313 (1978); Sutton v. Aetna Casualty & Sur. Co., 325 N.C. 259, 382 S.E.2d 759 (1989); Richardson v. Allstate Ins. Co., 619 P.2d 594 (Okla.1980); Sones v. Aetna Casualty & Sur. Co., 270 Pa.Super. 330, 411 A.2d 552 (1979); Bryant v. State Farm Mut. Auto. Ins. Co., 205 Va. 897, 140 S.E.2d 817 (1965); American States Ins. Co. v. Milton, 89 Wash.2d 501, 573 P.2d 367 (1978); see also Vernon v. Harleysville Mut. Casualty Co., 244 S.C. 152, 135 S.E.2d 841 (1964); Fidelity & Casualty Co. of New *672York v. Gatlin, 470 S.W.2d 924 (Tex.Civ.App.1971).

Indeed, courts have specifically allowed insureds to stack coverages despite clear policy language that purported to prohibit stacking, whether by way of “other insurance,” “exclusionary,” “excess coverage,” “anti-stacking,” or other limiting clauses. See, e.g., Edge, 298 So.2d at 608; Maglish, 586 P.2d at 314-15; Brown, 446 So.2d at 1006; Chaffee, 591 P.2d at 1104; Santos v. Lumbermens Mut. Casualty Co., 408 Mass. 70, 556 N.E.2d 983 (1990); Blakeslee v. Farm Bureau Mut. Ins. Co., 388 Mich. 464, 201 N.W.2d 786 (1972); Raynes, 563 P.2d 815.

Although the Utah statute requiring uninsured motorist coverage sets minimum limits for coverage, it does not fix a maximum limit. Utah Code Ann. § 41-12-21.1 (1981 & Supp.1983). The Michigan Supreme Court has held that a similar statute requiring uninsured motorist coverage cannot be limited by clauses in the policy aimed at limiting liability. Blakeslee, 201 N.W.2d at 791. That court stated:

It would be unconscionable to permit an insurance company offering statutorily required coverage to collect premiums for it with one hand and allow it to take the coverage away with the other by using a self-devised “other insurance” limitation. Nothing could more clearly defeat the intention of the legislature.

Id.; see also Boettner v. State Farm Mut. Ins. Co., 388 Mich. 482, 201 N.W.2d 795, 798 (1972). In Tucker v. Government Employees Insurance Co., 288 So.2d 238 (Fla.1973), the Florida Supreme Court addressed the issue of stacking two coverages issued under one policy in the context of statutorily mandated uninsured motorist coverage. That court stated in language that is applicable here:

The total uninsured motorist coverage which the insured has purchased for himself and his family regardless of the number of vehicles covered by his auto liability policy inures to him or any member of his family when injured by an uninsured motorist. Moreover, according to Sellers v. United States Fidelity & Guaranty Co., [185 So.2d 689 (Fla.1966),] such total coverage is applicable to any uninsured motorist negligently injuring the insured or any member of his family covered thereby. The statute admits of no authority in the insurer by a provision in the policy to limit coverage on the presumed basis that the uninsured motorist would only have covered himself with the minimum auto liability coverage required under F.S. Section 324.-021(7), F.S.A. The determinant of the amount of coverage is the total which the insured purchases pursuant to the authority of the statute and not that which the insurer otherwise attempts to limit by a provision in the policy.
An insured under uninsured motorist coverage is entitled by the statute to the full bodily injury protection that he purchases and for which he pays premiums. It is useless and meaningless and uneconomic to pay for additional bodily injury insurance and simultaneously have this coverage cancelled .by an insurer’s exclusion. The premium rates are standard and uniform on a per car basis. The insured’s full protection cannot be whittled away by exclusions or limitations ....

Id. at 242. In Cameron Mutual Insurance Co. v. Madden, 533 S.W.2d 538 (Mo.1976), the Missouri Supreme Court, quoting Great Central Insurance Co. v. Edge, 292 Ala. 613, 298 So.2d 607, 610 (1974), stated, “Cases should not and will not turn on how well the insurer drafts a limiting clause because the law does not permit insurers to collect a premium for certain coverage, then take that coverage away by such a clause no matter how clear or unambiguous it may be.” In American Insurance Co. v. Takahashi, 59 Haw. 59, 575 P.2d 881 (1978), the Hawaii Supreme Court construed a limiting clause that contained language similar to the one at issue in this case. That court stated:

[Sjeparate uninsured motorist insurance coverage must be provided in at least the minimum statutorily required amounts for each automobile insured under a single liability insurance policy. In Morgan, three automobiles were insured un*673der a single liability policy. We concluded that under the provisions of HRS §§ 431-448 and 287-7, $10,000 of per person uninsured motorist coverage was separately provided for each of the insured automobiles.
[[Image here]]
We hold that the limits of liability clause in the policy before us is invalid insofar as it attempts to defeat the statutory requirements of HRS § 431-448. American cannot reduce its liability for uninsured motorist coverage below the statutorily required minimum amounts for each insured vehicle. See Walton v. State Farm Mutual Automobile Insurance Co., 55 Haw. 326, 518 P.2d 1399 (1974). Therefore the limitation of uninsured motorist coverage to a maximum of $20,000 “regardless” of the number of automobiles to which the policy applies is null and void.

Id. 575 P.2d at 883-884; see also Cardin v. Royal Ins. Co. of Am., 394 Mass. 450, 476 N.E.2d 200 (1985); Bourgeois v. Government Employees Ins. Co., 316 So.2d 804 (La.Ct.App.1975).

It is indefensible to suggest, as this Court did in Martin v. Christensen, 22 Utah 2d 415, 454 P.2d 294 (1969), that the legislature intended to allow an insurance company to collect a premium for statutorily mandated coverage and then nullify that coverage with a clause in an adhesion contract. I would overrule Martin v. Christensen to the extent that it prohibits stacking when more than one premium has been paid.

Clauses in insurance policies that prevent stacking are inconsistent with the general statutory policy mandating uninsured motorist coverage. They are also unconscionable and should be stricken to the extent that they allow an insurance company to refuse coverage after collecting premiums for what appears to be statutorily mandated coverages. See generally Resource Management Co. v. Western Ranch, 706 P.2d 1028, 1040-42 (Utah 1985); Donald M. Zupance, Annotation, Doctrine of Unconscionability As Applied to Insurance Contracts, 86 A.L.R.3d 862 (1978).

I dissent.

DURHAM, J., concurs in the dissenting opinion of STEWART, J. HOWE, Associate C.J., does not participate herein; BENCH, Court of Appeals Judge, sat.

. The other insurance claim provides:

5. OTHER AUTOMOBILE INSURANCE AND METROPOLITAN.
With respect to any occurrence, accident or loss to which this and any other automobile insurance policy issued to the named insured by METROPOLITAN also applies, the tdtal limit of METROPOLITAN'S liability under all such policies shall not exceed the highest applicable limit of liability or benefit amount under any one such policy.

(Bold in original.)

. Clearly, a plaintiff should not be able to collect on more than one coverage when his damages do not exceed the first. The issue here, however, is not one of double recovery because the plaintiff’s injuries exceeded both coverages.