Stanley v. Safeco Insurance Co. of America , 109 Wash. 2d 738 ( 1988 )

Brachtenbach, J. —

The issue is whether the loss of function of a foot caused by an accidental severance of the spinal cord comes within the coverage of an insurance policy which provides payment for "loss of ... a foot if the loss was by actual severance at or above . . . the ankle joint"? We hold that benefits are payable.

Plaintiff was injured while jogging when he was struck by an automobile. He suffered an immediate loss of motor power and sensation distal to the umbilicus area. An undisputed medical report reveals a 1-centimeter subluxation of the body of the 12th thoracic vertebra on the first lumbar. The report concludes that the plaintiff has a functional severance of the spinal cord with resulting permanent paralysis, including paralysis of the feet.

The trial court granted summary judgment to defendant Safeco Insurance Company of America. The Court of Appeals reversed by an unpublished opinion, Stanley v. Safeco Ins. Co. of Am., noted at 46 Wn. App. 1047 (1987). We affirm the Court of Appeals.

Safeco issued a group policy which provided coverage to the employees of 109 school districts and four associated educational entities. Plaintiff was a covered employee. The policy is 33 pages long and untitled. It provides noncontributory life insurance and contributory supplemental life insurance. Additional coverage is provided on page 20 of the policy which is entitled "Accidental Death and Dismemberment Insurance".

The pertinent coverage provision of the policy is as follows:

Loss Amount

(Expressed as a % of the amount shown in the schedule)

One hand, one foot, or sight of one eye 50%

More than one of the above losses 100%

Conditions

2. Safeco will only pay for loss of ... a foot if the loss was by actual severance at or above . . . the ankle joint.

There is no definition of "actual severance" or "loss of a foot."

The policy language establishes three conditions or events which must occur for there to be a benefit payable. First is what must happen, i.e., actual severance; second, where it must occur, i.e., actual severance at or above the ankle joint; third, the result, i.e., loss of a foot.

The essence of Safeco's argument is that the policy is a dismemberment policy which requires amputation of the foot as a condition of coverage. Focusing on the caption or title of the policy coverage page, it distinguishes Neer v. Fireman's Fund Am. Life Ins. Co., 103 Wn.2d 316, 692 P.2d 830 (1985) and Morgan v. Prudential Ins. Co. of Am., 86 Wn.2d 432, 545 P.2d 1193 (1976), both of which were relied upon by the Court of Appeals.

In Morgan the life insurance policy provided payment for "the loss by severance of both hands at or above the wrists". Morgan, at 434. The court held that an insurance policy should be given a practical and reasonable rather than a literal interpretation; that is, a fair and sensible construction, consonant with the apparent object and intent of the parties; a construction such as would be given by the average person purchasing insurance. Morgan, at 434. If the policy is ambiguous, a meaning and construction most favorable to the insured must be applied. Morgan, at 435. A policy provision is ambiguous when it is fairly susceptible to two different interpretations, both of which are reasonable. Morgan, at 435.

In Morgan we held that the policy language required for coverage must be a loss of use or function of the hands at the wrist for all substantial or practical purposes which must occur as a result of the substantial severance of the hands. Morgan, at 437. We did not consider the effect of the type of policy in which the coverage was provided, nor the caption of the particular loss provision involved. Morgan establishes that a "loss" may occur as a result of loss of use or function.

In Neer we construed a "Loss of Life Accident Indemnity" policy which provided coverage for loss of both feet. "Loss" was defined as '"complete severance through or above the . . . ankle joint.'" Neer, at 317-18. The insured, as a result of an accident, lost all nerve and muscle function below his mid back. The doctors could not prove that there was actual severance of the spinal cord, but knew there was no function below mid back. Similarly in this case the doctor, absent surgery, could not be certain of actual severance of the spinal cord, but the substantial subluxation together with all loss of use and function led him to conclude that plaintiff was completely and permanently paralyzed.

In Neer we held that the policy was not ambiguous, but found there was coverage because severance did not require amputation. Like the policy involved here, the Neer policy language requiring "complete severance" had no object after it. Like this policy, the policy involved in Neer provided only where severance must occur, not what must be severed.

In Neer, we distinguished cases from other jurisdictions on the basis that the policies involved in those cases were for dismemberment, or for loss described as dismemberment. Neer, at 319. The distinctions drawn in Neer, however, are not controlling here. For example, cases involving policies where the coverage required dismemberment are not in point. Similar policy language has been construed differently. See Annot., Accident Insurance: What is "Loss" of Body Member, 51 A.L.R.4th 156 (1987). A more liberal construction of such provisions is dictated by the rationale of Morgan and Neer.

Safeco would have us deny coverage here on the basis of the language in the caption at the top of the coverage page entitled "Accidental Death and Dismemberment Insurance". Thus, Safeco focuses on the heading or caption of the coverage page as limiting the operative words in the body of the policy.

As discussed above, the language in the body of the policy provides what must occur (loss of foot) and how or where the loss is sustained (actual severance at or above the ankle joint). Safeco's interpretation would modify the language of the body of the policy by taking from the caption the word "dismemberment" and inserting it in the coverage language. If carried to its logical extreme the caption would provide coverage only for "accidental death and dismemberment. "

We conclude that under the rationale of Morgan and Neer the language in the body of the policy is not ambiguous; it covers the plaintiff's loss. Even if the caption is a controlling part of the coverage language, the provision becomes ambiguous and is construed against Safeco. It has long been our rule that the caption "should never of itself be taken to override the intention of the parties to an insurance policy as shown by the provisions and clauses inserted thereunder." National Indem. Co. v. Giampapa, 65 Wn.2d 627, 633, 399 P.2d 81 (1965), quoting Thompson v. State Auto. Mut. Ins. Co., 122 W. Va. 551, 558,11 S.E.2d 849 (1940).

The Court of Appeals is affirmed; the matter is remanded to the trial court for entry of judgment consistent with this opinion.

Pearson, C.J., and Utter, Dore, Andersen, and Good-loe, JJ., concur.