Farmland Insurance Companies of Des Moines v. Heitmann

MILLER, Chief Justice

(dissenting).

It is my view that Heitmann’s policy is not inconsistent or contradictory to the statutes. Rather, the policy is more favorable to Heitmann in this particular provision. My research has disclosed no case in which this Court has held that an explicit provision of a policy which is more favorable to the insured than an incorporated statutory provision, is “in conflict with, or repugnant to, statutory provisions[.]” I dissent from the majority writing which in effect does so now.

I agree with the majority in its adoption of the trial court’s holding which cited Alexander v. Home Ins. Co., 53 S.D. 305, 308, 220 N.W. 525, 526 (1928) which in turn relied on Epiphany Roman Catholic Church v. German Ins. Co., 16 S.D. 17, 20, 91 N.W. 332, 333 (1902): “In South Dakota insurance statutes in force at the time an insurance contract is entered into become a part of the contract as if the statute had been incorporated into the policy itself.” In an opinion authorized by Justice Wuest, we recently repeated the often-stated rule that “where the provisions of an insurance policy are fairly susceptible of different interpretations, the interpretation most favorable to the insured should be adopted.” Prokop v. North Star Mut. Ins. Co., 457 N.W.2d 862, 864 (S.D.1990). Clearly, Heit*627mann’s explicit policy provision is more favorable to Heitmann than the incorporated statutory provision and must be given the more favorable interpretation.

The South Dakota Legislature has not defined “underinsured motor vehicle.” However, Farmland’s contract of insurance defines that term as follows:

“Underinsured motor vehicle” means a land motor vehicle or trailer of any type to which a bodily injury liability bond or policy applies at the time of the accident but the amount paid for “bodily injury” under that bond or policy to an “insured” is not enough to pay the full amount the insured is legally entitled to recover as damages.

Farmland’s definition is misleading to purchasers of Underinsured Motor Vehicle (UIM) coverage, such as Heitmann, in that they are lead into thinking they are purchasing a type of protection which in fact they are not getting. Heitmann should get the benefit of the bargain. As noted by another court, under this definition’s language,

a purchaser of UIM coverage might reasonably believe he or she is gaining protection against any case where the tort-feasor’s liability coverage is insufficient to compensate fully for all damages. Yet, the existence of damages in excess of the tortfeasor’s liability limits does not, as we hold today, guarantee availability of the added protection of UIM benefits.... Only where the limits of the UIM coverage (as well as damages) exceed the tortfeasor’s liability limits will UIM benefits be available.

Brotan v. Western Nat. Mut. Ins., 428 N.W.2d 85, 90 (Minn.1988) (Yetka, J., concurring specially). The result of the majority’s writing today is as Justice Yetka observed: “Although a particular vehicle may fall within this definition [of ‘underinsured motor vehicle’], and a person injured by such a vehicle may have purchased UIM coverage, there is no guarantee UIM benefits will be available.” Id.

As Justice Henderson notes in his dissent, Farmland “[Ijnsurance [Cjompany is a professional with professional staff and lawyers to support it and to draft its policy.” Insurance companies draft misleading policy provisions at their peril. Insurance purchasers must get the type of protection which they reasonably think they are purchasing.

This court has said: “The provisions of the uninsured motorist statutes are construed liberally in favor of coverage.” Clark v. Regent Ins. Co., 270 N.W.2d 26, 29 (S.D.1978). So it is with UIM statutes. I believe the purpose of UIM coverage is to make a victim whole to the extent his/her policy provides, as long as the policy is not less favorable than otherwise required by statute. Heitmann’s policy is not less favorable than otherwise required.