Dowell v. Safe Auto Insurance Co.

Opinion of the Court by

Chief Justice LAMBERT.

This Court granted discretionary review of the Court of Appeals decision, wherein it affirmed a grant of summary judgment in favor of Appellee, Safe Auto Insurance Co. (Safe Auto). Debra Dowell and Tama-tha Hasting, Appellants, seek reversal of the Courts below. The issue is whether Safe Auto must pay pursuant to the uninsured motorist coverage of the Dowell insurance policy for damages caused by a hit and run driver.

On April 19, 2001, while driving her vehicle insured by Safe Auto, Dowell was *874rear-ended by a vehicle she described as a burgundy or red Chevrolet Blazer on Preston Highway in Louisville. Hasting was a passenger in the Dowell vehicle at the time of the accident. Both Dowell and Hasting suffered injuries as a result of the collision. Dowell testified that after the collision the driver of the other vehicle briefly exited his vehicle to look at the damage caused by the wreck. Almost immediately however, the driver of the other vehicle returned to his vehicle and fled the scene of the collision before the police arrived. Neither Dowell nor Hasting had an opportunity to talk with the other driver, and they were unable to identify him. A police accident report was prepared, but the police were unable to locate the unidentified driver or his vehicle. Since the other driver could not be identified, no liability insurance was ascertainable.

As required by law, Ms. Dowell had her own automobile insurance policy. She was insured by Safe Auto and she paid the additional premium required for uninsured motorist (UM) coverage. Both Ms. Dowell and Ms. Hasting made claims for UM benefits under the Dowell policy with Safe Auto for injuries sustained in the accident. Safe Auto acknowledged that UM coverage was in effect, and also that Appellants were “insureds” under the policy since both Dowell and Hasting were “occupying” an insured vehicle. Safe Auto likewise assumed, for summary judgment purposes, the facts alleged by Appellants i.e., that the unidentified motorist caused property damage and that Appellants were injured. Appellants acknowledged that they do not know the identity of the hit and run driver, nor do they know whether he or the vehicle had liability insurance.

Safe Auto denied coverage. It contended that Dowell and Hasting could not prove, as required by Part V of the policy, that “no bodily injury liability bond or policy applie[d]” to the unidentified hit and run driver or the vehicle he was driving. It is undisputed that neither the police nor Appellants have discovered the negligent motorist’s insurance coverage status because he fled the scene and remains unidentified.

Both Dowell and Hasting brought litigation against Safe Auto in the Jefferson Circuit Court. In due course Safe Auto sought a motion for summary judgment on the coverage issue. The trial court rendered an opinion and order granting Safe Auto’s motion for summary judgment on May 29, 2003. In its opinion and order, the trial court held that our UM statute1 does not require insurers to provide coverage for hit and run vehicles, and that insurers have no obligation to indemnify an insured for injuries caused by an unidentified motorist where liability insurance status cannot be determined. It also held that the Safe Auto policy did not provide UM coverage in hit and run accidents.

Appellants appealed to the Court of Appeals. In its opinion, that court affirmed the trial court’s summary judgment in favor of Safe Auto. The Court of Appeals held that the trial court correctly discovered no coverage for Appellant’s claims because the policy did not specifically cover accidents involving unidentified drivers, and that the UM statute does not require insurers to provide such coverage. The Court of Appeals relied on our recent decision in Burton v. Farm Bureau Ins. Co.2 *875to hold that Appellants had failed to demonstrate that Safe Auto, as a matter of public policy, is required to cover hit and run accidents. Similarly, the Court of Appeals relied on a decision from the United States District Court for the Western District of Kentucky3 and adopted that court’s view that there were no material ambiguities in Safe Auto’s policy language.

This case involves construction of Kentucky Statutes and a written insurance contract. In such circumstances our review is de novo and we have no obligation of deference to the lower courts.4 “It is well established that construction and interpretation of a written instrument are questions of law for the court.”5 We will consider the views of the United States District Court for the Western District of Kentucky on the issue before us as instructive.6

Litigation over uninsured motorist coverage, and specifically the hit and run feature of it, is not new to this Court. Throughout our jurisprudence we have been called upon to address such issues many times, and interpret several different insurance policies. Our case law will be discussed and applied to this case, but we note that insurance policies are constantly evolving, and we must frequently construe new policy language. So it is with this case. The insurance policy at issue here must be reviewed within the framework of our decisions, but with the understanding that those decisions do not address the specific language we are called upon to examine here.

Part V of the Dowell policy, Uninsured/underinsured Motorist Coverage, creates the insuring agreement:

Subject to the limits of liability, if you pay a premium for Uninsured Motorist Coverage, we will pay for damages, other than punitive or exemplary damages or attorney fees, which an insured person is entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury:
1. physically sustained by an insured person
2. caused by accident; and
3. arising out of the ownership, maintenance, or use of an uninsured motor vehicle.

For purposes of this review, the case turns on whether “Uninsured Motor Vehicle,” as defined in the policy, covers the other vehicle involved in the accident.7 Said otherwise, was the hit and run vehicle an uninsured motor vehicle under the Dowell policy.

*876“Uninsured Motor Vehicle” is defined in Part V of the policy at page 21 as follows: Uninsured motor vehicle means a land motor vehicle or trailer of any type:

1. to which no bodily injury liability bond or policy applies at the time of the accident;
2. to which a bodily injury liability bond or policy applies at the time of the accident, but the bonding or insuring company;
a. denies coverage; or
b. is or becomes insolvent; or
3. to which bodily injury liability bond or policy applies at the time of the accident, but its limit of liability for bodily injury is less than the minimum limit of liability for bodily injury required under the Kentucky Motor Vehicle Reparations Act.8

Under Kentucky law uninsured motor vehicle coverage is mandatory, and it may not be eliminated unless rejected in writing by the insured.9 While an “uninsured motor vehicle” is not explicitly defined in KRS 304.20-020, the phrase is given its common meaning and the statute articulates three instances where an insured motor vehicle is deemed uninsured for purposes of the statute. Notably, “KRS 304.20-020(1) does not require coverage for damages caused by an ‘unidentified motor vehicle,’ e.g., a ‘hit and run’ vehicle, whose insurance status is unknown, and KRS 304.20-020(2) does not include such a vehicle within the additional definitions of an ‘uninsured motor vehicle.’ ”10 Our recent case law, as well as older eases, reaffirm this proposition.11

However, the statute includes the phrase “subject to the terms and conditions of such coverage” to “recognize that individual insurers may, by contractual definitions, provide coverages and terms and conditions in addition to those required by the statute.”12 Most insurance policies include hit and run vehicles within the definition of uninsured motor vehicle.13 However, as our cases illustrate, insurance companies are at liberty to define what an “uninsured motor vehicle” is, so long as they do not violate the statute. Safe Auto argues that when it defined “uninsured motor vehicle” in its policy, it purposefully and unambiguously left out “hit and run” vehicles. Whether its attempt to leave out this traditional coverage was effective is the crux of this case.

Under Part V of the Dowell policy, an uninsured vehicle is a motor vehicle “to which no bodily injury liability bond or policy applies at the time of the accident.” This critical language is not included in KRS 304.20-020(2), but Safe Auto argues that it simply defines the most basic instance where UM coverage is afforded i.e., when the tortfeasor does not have liability insurance. Safe Auto contends that its policy extends UM coverage only to those situations mandated by statute. However, as the language quoted above is not in the statute, we do not accept the Safe Auto interpretation at face value. As Safe Auto chose to include that language, we must say what it means.

Appellants argue that the word “applies” is not defined by Safe Auto, and as such, the word must be given its plain and ordinary meaning. According to Webster’s *877Third New International Dictionary Unabridged, the word apply is defined as “to make use of as suitable, fitting or relevant ... to put to use especially for some practical purpose ... to bring into action.” Appellants contend that under the plain and ordinary meaning of “applies,” no liability policy was “put to use” or was brought “into action”, nor could it have been, because the tortfeasor concealed himself and his motor vehicle. Similarly, no liability insurance, if any there was, of the tortfeasor was “relevant,” because no insurance policy “related to the matter at hand.”14 Safe Auto chose the word “applies” for use in its policy. The meaning of that word fails to satisfy the purpose for which Safe Auto seeks to use it, or it is at best ambiguous. Practically speaking, when an unidentified negligent motorist causes bodily injury and thereafter conceals himself, no liability insurance applies.

In Allen v. Safe Auto Ins. Co.,15 the United States District Court, construing identical language to that before us here, determined that Safe Auto had narrowly tailored its coverage to include only the minimum required by KRS 304.20-020. Perhaps that was the intent, but it is undeniable that Safe Auto included language not required by the statute. As such, we are unable to agree with the Allen court that the language used was unambiguous and without need of further clarification or construction.

The uncertainty associated with the word “applies” is further exacerbated by other language in the Safe Auto policy. Following the definition of “uninsured motor vehicle,” Safe Auto identifies nine exclusions from coverage. The policy provides that the definition of “uninsured motor vehicle” does not include any vehicle or equipment:

1. Owned by, or available for regular use by the insured;
2. Owned by or operated by a self-insurer under any applicable vehicle law, except a self-insurer that is or becomes insolvent;
3. Owned by any governmental unit or agency;
4. Operated on rails or crawler treads;
5. Designed mainly for use off public road, while not on public roads;
6. While used as a residence or premises;
7. Shown on the declarations page of this policy;
8. Not required to be registered as a motor vehicle; or
9. That is an underinsured motor vehicle

Thereafter, the policy identifies fifteen additional exclusions applicable to both uninsured and underinsured motorist coverage. None of those twenty-four exclusions disclose that injury inflicted by a hit and run vehicle is not covered. Safe Auto could have used an unambiguous definition of a hit and run vehicle in its exclusions section, or simply excluded “hit and run vehicle,” but it did not.

The language added by Safe Auto “to which no bodily injury liability bond or policy applies at the time of the accident” is not contained within KRS 304.20-020(2). If Safe Auto wished to limit UM coverage to the statutory minimum requirement there was no need to include this uncertain language. Under these circumstances we will rely on settled rules of construction that favor the insured; “[i]t is a fundamental rule in the construction of insurance *878contracts that the contract should be liberally construed and any doubts resolved in favor of the insured.”16

Safe Auto argues that it is unknowable whether the tortfeasor had liability insurance because he absconded. Consequently, it contends that Appellants cannot sustain their burden of proof to establish that the tortfeasor was an uninsured motorist. Generally, plaintiffs have the burden of proving each element of their claims. As previously explained however, the use of the word “applies” in the policy makes it clear that since the tortfeasor cannot be located, his actual insurance status is not controlling. In any event “applies” should be given the meaning that most favors Appellants.17 As a matter of law, since the hit and run driver cannot be located, no insurance policy “applied” at the time of this accident. As such, Appellants met their burden to show that there was no applicable liability insurance, and the burden shifted to Safe Auto to prove otherwise. This was the holding in Motorists Mutual Ins. Co. v. Hunt18 as follows:

Since the absence of insurance upon the offending vehicle and its driver is a condition precedent to the applicability of the uninsured driver endorsement, we hold that the burden of proving such absence is upon the claimant. However, we must keep in mind that proving a negative is always difficult and frequently impossible and that, consequently, the quantum of proof must merely be such as will convince the trier of facts that all reasonable efforts have been made to ascertain the existence of an applicable policy and that such efforts have proven fruitless. In such an event, and absent any affirmative proof by petitioner (the insurance company), the inference may be drawn that there is in fact no insurance policy in force which is applicable.

Based on the language “to which no bodily injury liability bond or policy applies at the time of the accident,” this Court concludes that an unidentified hit and run vehicle is not excluded from the UM coverage of this policy. As such, coverage is deemed applicable to Appellants.

Accordingly we reverse the summary judgment of the trial court and remand for further proceedings consistent with this opinion.

GRAVES, McANULTY, NOBLE, SCOTT, and WINTERSHEIMER, JJ., concur. MINTON, J., dissents by separate opinion.

. KRS 304.20-020.

. 116 S.W.3d 475 (Ky.2003) The dissenting opinion relies heavily on Burton. While the language quoted suggests applicability to this case, the facts in Burton and this case differ substantially. In Burton, there was express hit-and-run coverage and the case was decided on the lack of physical contact between the *875fleeing vehicle and the claimant. The court merely reaffirmed the requirement of physical contact between the hit-and-run vehicle and the uninsured motorist benefit claimant. Here, physical contact is not in doubt. Thus, Burton and other no-contact cases would appear to be of dubious authority. Moreover, the dissenting opinion has cited “ubiquitous television commercials” and a commercial website maintained by Appellee. This would seem to be an unwise practice unless the record contains evidence of the truth of such advertising. Fundamentally, advertising is self-serving. Advertised "facts" would not meet the standard required by KRE 201 "not subject to reasonable dispute.”

. Allen v. Safe Auto Ins. Co., 332 F.Supp.2d 1044 (W.D.Ky.2004).

. Cinelli v. Ward, 997 S.W.2d 474, 476 (Ky.App.1998).

. Id. citing Morganfield National Bank v. Damien Elder & Sons, 836 S.W.2d 893 (Ky.1992).

. See Allen 332 F.Supp.2d 1044.

. We recognize that Safe Auto conceded certain facts only for purposes of its summary judgment motion, and that whether such facts are actually disputed will have to be resolved on remand.

. Emphasis added.

. KRS 304.20-020.

. Burton, 116 S.W.3d at 478

. Id.; See also Shelter Mut. Ins. Co. v. Arnold, 169 S.W.3d 855 (Ky.2005); Jett v. Doe, 551 S.W.2d 221 (Ky.1977).

. Id.

. See id.

. Webster’s II New College Dictionary 936 (2001).

. 332 F.Supp.2d 1044.

.Davis v. American States Ins. Co., 562 S.W.2d 653, 655 (Ky.App.1977); see also Eyler v. Nationwide Mut. Fire Ins. Co., 824 S.W.2d 855, 859 (Ky.1992) (stating that "[a]ny doubt as to the coverage or terms of a policy should be resolved in favor of the insured”).

. Aetna Life & Cas. Co. v. Layne, 554 S.W.2d 407 (Ky.App.1977).

. 549 S.W.2d 845, 847 (Ky.App.1977) (quoting Merchants Mutual Ins. Co. v. Schmid, 56 Misc.2d 360, 288 N.Y.S.2d 822 (1968)).