Dullenty v. Rocky Mountain Fire & Casualty Co. , 111 Idaho 98 ( 1986 )

SHEPARD, Justice.

This is a review of a decision of the Court of Appeals which reversed a summary judgment granted by the district court against plaintiff-appellant Dullenty. Dullenty had brought an action against his insurance carrier under the provisions of an automobile policy relating to uninsured motorist coverage. We reverse the Court of Appeals and reinstate the summary judgment granted by the district court.

The facts are stipulated and we are presented solely with a question of law. Dullenty owned three motor vehicles, a 1966 International truck, a 1974 Chevrolet Blazer, and a 1979 Subaru. Only the International truck was insured by respondent Rocky Mountain Fire and Casualty Company. The Blazer and the Subaru were insured by United Pacific Reliance Insurance Company. The automobile liability policy issued by Rocky Mountain Fire and Casualty Company contained an uninsured motorist coverage supplement. The automobile liability policy covering the Blazer and the Subaru issued by United Pacific Reliance Insurance Company also contained uninsured motorist coverage.

While Dullenty was operating the Chevrolet Blazer he was injured in a collision with an automobile owned and operated by an uninsured motorist. Dullenty filed a claim with Rocky Mountain, asserting benefits under the uninsured motorist supplement to the policy issued by Rocky Mountain. Based on exclusionary language contained in the policy, Rocky Mountain denied ■ Dullenty’s claim. Dullenty then filed suit in district court. The district court held that the exclusion was unambiguous and entered summary judgment against Dullenty.

That decision was appealed to the Idaho Court of Appeals who reversed, holding that the exclusionary language relied on by Rocky Mountain violated public policy. This Court granted a review of the decision of the Court of Appeals. State Farm Mutual Automobile Insurance Company was granted leave to appear amicus curiae. The sole question presented is whether as held by the Court of Appeals, the specific exclusion relied upon by Rocky Mountain which denies coverage in these circumstances, is void as against public policy. We hold the exclusionary language of the policy is not inconsistent with public policy, and hence reverse the decision of the Court of Appeals.

The district court found that the language of the Rocky Mountain policy was clear and unambiguous and that no coverage was afforded thereunder to Dullenty under the instant circumstances. We agree. In that portion of the policy dealing with uninsured motorist coverage, a number of exclusions appear, one of which provides:

“This supplement [uninsured motorist coverage] does not apply:

“(c) to any other vehicle or automobile owned by or furnished for regular use to the named insured and while resident of the same household, his spouse and relatives of either____”

We affirm the decision of the district court that such language excludes uninsured motorist coverage when Dullenty is injured while occupying a vehicle owned by or furnished for the regular use of Dullenty, but which is not described in the declaration section of the policy. It is undisputed that the Chevrolet Blazer Dullenty was driving at the time of the accident in question was not described in the declaration section of the Rocky Mountain policy, and was owned by Dullenty. Under the somewhat inartfully drawn language of the policy, it is arguable that Dullenty was insured against damage caused by an uninsured motorist while he, Dullenty, was an occupant of a motor vehicle owned by someone outside the Dullenty household, while Dullenty was a pedestrian, or while Dullenty was sitting on his front porch. However, the Rocky Mountain policy unambiguously excludes uninsured motorist coverage while Dullenty is occupying a vehicle owned by him and not described in the policy.

The decision of the Court of Appeals, Dullenty v. Rocky Mountain Fire and Casualty Company, 107 Idaho 777, 692 P.2d 1209 (1984), focused on its view that the Rocky Mountain policy was “repugnant” to public policy as expressed in our statutes because the policy purported to limit its uninsured motorist coverage by excluding injuries sustained at the hands of an uninsured motorist while the insured was occupying vehicles owned by the insured’s household but not covered by the Rocky Mountain policy. Therein the Court of Appeals relied heavily on its decision in Hammon v. Farmers Insurance Group, 107 Idaho 770, 692 P.2d 1202 (1984), issued but a few days before its decision in Dullenty.

In Hammon, the Court of Appeals was presented with the following circumstances. The Hammons owned two vehicles, both of which were insured by separate policies issued by Farmers Insurance Group. Each policy contained uninsured motorist coverage. Each policy contained a requirement that if there was a “hit and run” type of accident and an unidentified tortfeasor, there must have been a physical contact for the uninsured motorist provision to be effective. Secondly, each policy provided that, as here, the uninsured motorist coverage would not be effective while the insured was occupying a vehicle owned by the Hammon household, but not listed as a described vehicle in the particular policy.

The Hammons were injured when their vehicle was allegedly forced off the road by another vehicle, but there was no physical contact. Therefore, the first question to be decided by the Court of Appeals was whether the requirement of physical contact was a valid restriction on the otherwise uninsured motorist coverage, or whether such requirement was void as against public policy. The Court of Appeals held that the physical contact requirement was contrary to public policy as enunciated by I.C. § 41-2502. Only thereafter did the Court of Appeals find it necessary to consider the coverage question at issue in the instant case, i.e., the policy language excluding uninsured motorist coverage when the insured is occupying a vehicle owned by the family household but not described in the policy.

The court held that such restrictions on otherwise uninsured motorist coverage are repugnant to I.C. § 41-2502 stating, “The uninsured motorist coverages in both policies must be deemed to protect the Hammons as occupants in either of their vehicles, as pedestrians, or in any other circumstance where they suffer injury caused by an uninsured motorist.” Thus, the Court of Appeals held that consistent with Sloviaczek v. Estate of Puckett, 98 Idaho 371, 565 P.2d 564 (1977), that the uninsured motorist coverage of both policies could be “stacked” and the Hammons thereby recover under both policies.

This Court also granted review in Hammon and reversed the decision of the Court of Appeals. This Court held, “Because we hold that the physical contact requirement is not void as contrary to the Idaho uninsured motorist statute, we find it unnecessary to address the stacking issue.” Hence, this Court’s decision in Hammon provides no guidance on the issue presented in the instant case, i.e., whether the policy provision excluding uninsured motorist coverage while insured is occupying a vehicle owned by the family household but not described as a covered vehicle in the policy, is or is not void against public policy as was held by the Court of Appeals in its decisions in Hammon and Dullenty.

The decision of the Court of Appeals in the instant case indicated that the question presented is virtually identical to that in the Court of Appeals’ decision in Hammon v. Farmers Insurance Company, supra, and that for the reasons set forth in Hammon, the Court of Appeals reversed the summary judgment in the instant case. As above noted, this Court reversed the decision of the Court of Appeals in Hammon, however the resolution of the validity of the exclusion at issue here was found by the Supreme Court in its decision in Hammon as not necessary to be resolved.

The Court of Appeals’ decision in Hammon indicated a split among the various jurisdictions on the question presented, and that the numerical majority of cases from other jurisdictions have agreed with the view adopted by the Court of Appeals.

The Court of Appeals in Hammon held, “The uninsured motorist coverages in both policies must be deemed to protect the Hammons as occupants in either of their vehicles, as pedestrians, or in any other circumstance where they suffer injury caused by an uninsured motorist.” We need not decide today whether the Court of Appeals’ decision was correct in the above broad statement. We are not concerned here with the question of whether an uninsured motorist policy provides coverage in the event that a named insured, while a pedestrian, is struck by an uninsured motorist; whether the uninsured motorist policy language covers an insured who was sitting on his front porch is struck by an uninsured motorist; or whether the uninsured motorist policy language affords coverage to an insured while he is occupying any motor vehicle which is not owned by or furnished for the regular use of he or a member of his household. Arguably the policy language can be so interpreted. However, the sole question presented today is whether the uninsured motorist policy language provides coverage to an insured while he is occupying a vehicle which he owns, but is not described in the policy, and is struck by an uninsured motorist. Even more pointedly the question becomes whether under such circumstances the clause in the policy purporting to exclude such coverage is void as against public policy.

In the Court of Appeals’ decision in Hammon, it is asserted that the liability portion of an automobile insurance policy protects third persons from damage caused by an insured while driving a named motor vehicle. That assertion is, of course, overly broad. The third party is not “protected” by the liability policy but rather it is the tortfeasor owner-operator of the named vehicle who is protected against financial loss when and if a damaged third party makes a claim against the insured owner-operator. That distinction is not merely one of semantics, albeit it is clear that the legislative intention was to require a motor vehicle to be operated only when its owner-operator possessed liability insurance in at least a minimum amount.

The Court of Appeals’ decision then asserted that such liability insurance protecting the owner-operator against financial loss was operative in protecting third persons regardless of what motor vehicle the damaged third person might have been occupying, or whether or not the third party was a pedestrian, or in any other circumstance when the third person was injured by the operation of the insured motor vehicle. With that assertion there can be no quarrel since such was the policy coverage and the obvious legislative intent. The Court of Appeals held that any attempt by an insurance carrier to exclude coverage if while owning-operating the named motor vehicle the operator struck a pedestrian, crashed into a house, or any other circumstance involving the operation of the named motor vehicle would be void. Again we agree. The Court of Appeals then held that uninsured motorist coverage “reciprocates” liability coverage and hence “by a parity of reasoning” uninsured motorist coverage is statutorily mandated to also afford coverage to an insured whenever and wherever the insured is injured by an uninsured vehicle. We disagree.

We deem the legislative intent in the field of automobile insurance to be relatively clear. It is the public policy of this state that any owner or operator of a motor vehicle, with certain self-insured exceptions, purchase automobile liability insurance. Therein it is contemplated that if a third party suffers damage by reason of the operation of that specific motor vehicle, the owner or operator of the vehicle is insured against loss by reason of a recovery by the injured third party. While obviously such a scheme contemplates insurance against a risk of such monetary loss on the part of the owner or operator of the insured vehicle, it carries out a further public policy of providing some protection to the general public who may be injured as a result of the operation of the named motor vehicle, by providing an assured fund from which a member of the general public may recover for at least part of his damage.

Further provisions of the statutory scheme provide that when a potential insured contemplates purchasing liability insurance from a carrier, that the carrier must offer the potential insured as an addition to or supplement to the liability policy on the specific motor vehicle, uninsured motorist coverage, i.e., insurance against the risk of damage to the insured caused by a third party uninsured tortfeasor. I.C. § 41-2502.

It is further provided that for the purpose of protection for those who purchase automobile insurance, that policies must be uniform in form and content, and must be approved by the director of the Department of Insurance. There is no indication in the instant case that the policy at issue does not conform to the above strictures, and hence we assume that the policy is in a form and content approved by the commissioner of insurance.

Although the Court of Appeals held otherwise, we find nothing in the legislative language that mandates that when a carrier offers uninsured motorist coverage to a potential insured, that it must do so in language which covers the insured in all circumstances wherein the insured suffers damage at the hands of an uninsured motorist, or that policy language which attempts to limit the coverage to less than all circumstances is void as against legislative public policy.

There is, of course, respectable authority in a large number of jurisdictions holding to the contrary. Likewise there is respectable authority, albeit in the lesser number of decisions, which agrees. We have reviewed the opinions of the courts of other jurisdictions which deal with the issue presented in the ease at bar. The clear numerical majority of such courts have reached the same result as the Court of Appeals in the instant case. See State Farm Automobile Insurance Co. v. Reaves, 292 Ala. 218, 292 So.2d 95 (1974); Mullis v. State Farm Mutual Automobile Ins. Co., 252 So.2d 229 (Fla.1971); Kau v. State Farm Mut. Auto. Ins. Co., 58 Hawaii 49, 564 P.2d 443 (1977); Nygaard v. State Farm Mutual Automobile Ins. Co., 301 Minn. 10, 221 N.W.2d 151 (1974); Lowery v. State Farm Mutual Automobile Ins. Co., 285 So.2d 767 (Miss.1973); Shepherd v. American States Ins. Co., 671 S.W.2d 777 (Mo.1984); Jacobson v. Implement Dealers Mut. Ins. Co., 196 Mont. 542, 640 P.2d 908 (1982); State Farm Mutual Automobile Ins. Co. v. Hinkel, 87 Nev. 478, 488 P.2d 1151 (1971); Fernandez v. Selected Risks Ins. Co., 163 N.J.Super. 270, 394 A.2d 877 (1978); Chavez v. State Farm Mutual Automobile Ins. Co., 87 N.M. 327, 533 P.2d 100 (1975); Bankes v. State Farm Mutual Automobile Ins. Co., 216 Pa.Super. 162, 264 A.2d 197 (1970); Hogan v. Home Insurance Co., 260 S.C. 157, 194 S.E.2d 890 (1973); Federated American Ins. Co. v. Raynes, 88 Wash.2d 439, 563 P.2d 815 (1977). A smaller number of courts have reached a contrary result. See Holcomb v. Farmers Insurance Exchange, 254 Ark. 514, 495 S.W.2d 155 (1973); MFA Insurance Companies v. Whitlock, 572 S.W.2d 856 (Ky.1978); Beliveau v. Norfolk & Dedham Mut. Fire Ins., 120 N.H. 73, 411 A.2d 1101 (1980).

Sheer numbers of decisions of other jurisdictions one way or the other on any given question are of course not controlling on this Court, and the decisions are persuasive only as they contain analysis and reasoning which recommends itself to this Court.

Unfortunately, few of the opinions of other courts which have addressed the issue, regardless of the result reached, contain what we perceive as any in-depth analysis or reasoning. Most of the opinions which hold that exclusionary clauses to otherwise uninsured motorist coverage are void as against a statutory public policy, merely state that as a fact, i.e., “everyone knows” that the legislature in enacting uninsured motorist statutes intended that an insured is covered when injured by an uninsured motorist in all circumstances, whether the insured be riding in the named vehicle, in an unnamed but owned vehicle, while occupying a vehicle not owned by the household, while a pedestrian, while sitting on his front porch, while riding a camel or horse, or while bouncing on a pogo stick. On the other hand, opinions holding such exclusionary clauses to be valid most often refer to the inequity of allowing a person who insures one vehicle with an insurance carrier to obtain a “free ride” by thereby obtaining coverage by that same carrier on one, two, or a fleet of vehicles upon which he has paid no premium to the carrier. Some courts upholding the validity of such exclusionary clauses opine that rewarding a plaintiff who himself is operating an uninsured vehicle is contrary to legislative policy.

For cases presenting the various viewpoints, see Aetna Insurance Company v. Hurst, 2 Cal.App.3d 1067, 83 Cal.Rptr. 156 (1969); State Farm Mutual Automobile Ins. Co. v. Robertson, 156 Ind.App. 149, 295 N.E.2d 626 (1973); Bradley v. Mid-Century Ins. Co. (Farmers), 78 Mich.App. 67, 259 N.W.2d 378 (1977); Nygaard v. State Farm Mutual Automobile Ins. Co., 301 Minn. 10, 221 N.W.2d 151 (1974); Lowery v. State Farm Mutual Automobile Ins. Co., 285 So.2d 767 (Miss.1973); Herrick v. Liberty Mut. Fire Ins. Co., 202 Neb. 116, 274 N.W.2d 147 (1979); Chavez v. State Farm Mutual Automobile Ins. Co., 87 N.M. 327, 533 P.2d 100 (1975); Ady v. West American Ins. Co., 69 Ohio St.2d 593, 433 N.E.2d 547 (1981); Cothren v. Emcasco Insurance Company, 555 P.2d 1037 (Okla.1976); Bankes v. State Farm Mutual Automobile Ins. Co., 216 Pa.Super. 162, 264 A.2d 197 (1970); Federated American Ins. Co. v. Raynes, 88 Wash.2d 439, 563 P.2d 815 (1977); Bell v. State Farm Mut. Auto. Ins. Co., 157 W.Va. 623, 207 S.E.2d 147 (1974).

Some courts, holding that an exclusionary clause to otherwise uninsured motorist coverage is void as against public policy, acknowledge freely that since the risk to carriers is thereby enhanced, and there is no “free lunch,” that such holdings will result in increased premium costs to all motor vehicle operators. It is suggested by those courts that such is a desirable result since it tends to alleviate the damage impact upon any individual, and spread the cost thereof over a broad segment of society. That approach at least has the virtue of realism. Ady v. West American Ins. Co., 69 Ohio St.2d 593, 433 N.E.2d 547 (1981); Bell v. State Farm Mut. Auto. Ins. Co., 157 W.Va. 623, 207 S.E.2d 147 (1974).

For our own part, however, we deem it necessary to examine our statutory scheme of automobile insurance, attempt to discern its legislative purpose, and decide if the exclusionary clause in the instant policy is contrary to that purpose and spirit.

Our statutes require owners of motor vehicles to provide motor vehicle liability insurance coverage. I.C. § 49-233. Such “motor vehicle liability policy” and its expressed, permitted and implied provisions, together with minimum amounts of coverage are contained in I.C. § 49-1521. Prior to the registration of any motor vehicle an applicant must certify the existence of such liability insurance and thereafter maintain such insurance. I.C. § 49-234. Operating a motor vehicle in this state without such liability insurance is a crime. I.C. § 49-235. Proof of such liability insurance must be carried in any motor vehicle operated in Idaho and be displayed on request to any peace officer, and failure to do so is also made criminal. I.C. § 49-245. A person in violation of the above statutes who is involved in an accident may suffer suspension of his operating license and vehicle registration. I.C. § 49-1505.

Our statutory scheme clearly mandates obtention of liability insurance in the operation of a motor vehicle. As before noted, such liability insurance is couched in terms of protecting the owner-operator of a vehicle from claims of damage suffered by others who have been injured by the operation of the vehicle, but clearly the intent of our legislature was to provide a source of funds from which a person damaged by the operation of the motor vehicle could obtain recourse.

We find nothing in our statutory scheme which mandates that the “motor vehicle liability policy” shall cover the insured regardless of what vehicle he may be operating, whether named or not in the policy. Rather, I.C. § 49-1521 only requires that the policy designate the vehicle or.vehicles which are covered and in addition “... shall insure the person named as insured therein against loss from the liability imposed upon him by law for damages arising out of the use by him of any motor vehicle not owned by him,____” (Emphasis added.) We interpret that statutory language to require liability coverage of the named insured while he be driving any motor vehicle designated in the policy and owned by him, or any other vehicle not owned by him. It does not require liability coverage while he be operating a vehicle owned by him but not designated in the policy. Hence, an insurance carrier could, in compliance with the statute, specifically exclude coverage while the insured was driving an owned but non-designated vehicle.

The issue of this case focuses on I.C. § 41-2502. That statute has not been changed in substance since 1967, and states:

41-2502. Uninsured motorist coverage for automobile insurance. — No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any natural person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death as set forth in section 49-1505, Idaho Code, as amended from time to time, under provisions approved by the director of the department of insurance, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, however, that the named insured shall have the right to reject such coverage, which rejection must be in writing; and provided further, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with a policy previously issued to him by the same insurer.

As noted above, that statute requires an insurance carrier offering a “motor vehicle liability policy” to offer uninsured motorist coverage “under provisions approved by the director of the department of insurance ...” Such offer of uninsured motorist coverage as a part of or supplemental to a “motor vehicle liability policy,” may be rejected by the insured. Hence, unlike a “motor vehicle liability policy,” uninsured motorist coverage is not statutorily required as a condition of registration of or operation of a motor vehicle.

The legislature has made obvious that a motor vehicle liability policy is mandatory, and has specified that the coverage extends beyond the operation of the vehicles specified in the policy but has also specifically indicated that the coverage need not be extended to the operation of a motor vehicle owned by the insured but not described in the policy. On the other hand, we find no language in the uninsured motorist coverage statute which specifically requires such policy to extend coverage against damage from an uninsured motorist while the insured is outside the vehicle described in the policy. Neither does the uninsured motorist coverage statute specifically permit an exclusion of uninsured motorist coverage while the insured is outside the vehicle described in the policy. Hence, we find no legislative intent one way or the other on the specific question involved in the instant case, i.e., the exclusion from uninsured motorist coverage when the insured is operating an owned motor vehicle not described in the policy.

We then look to the conclusions that we perceive can be legitimately drawn either from the legislative language or from the lack of legislative language. An insurance carrier is, of course, not required to do business in the state of Idaho and may decline to do so. If an insurance carrier does desire to do business in Idaho, it must comply with our applicable statutes and the regulations of the Department of Insurance. Policies issued by carriers must be approved by the Department of Insurance. The policy at issue here has not been shown to have been disapproved by the Department of Insurance.

An insurance carrier doing business in Idaho may decline to engage in certain types of insurance coverage or decline to insure certain risk situations. It may decline to insure certain owners of motor vehicles, or may decline to insure certain types of vehicles. In the field of life insurance, a carrier may refuse to insure high-risk individuals, for example those with cancer, coronary or drug abuse history, or may write such coverage only at highly inflated premiums. A carrier may, by exclusions, exclude life insurance coverage when an insured engages in certain activities such as flying in private aircraft, skydiving, or ultrahazardous activity.

We view the business of insurance as relatively simple in concept but complex in its detail. One purchases insurance as a hedge against risk. Thereby that risk is transferred partly or wholly to an insurance carrier. An insurance carrier will only remain in business if it is able to adequately assess the reality and the magnitude of the risk, and through the underwriting process charge premiums which will adequately compensate the carrier for the risks assumed. If a carrier fails to adequately assess or charge for the risks assumed, it will not be long in business. While the problems of adequately assessing risk, and of underwriting that risk, may be complex and difficult, the above principles remain the same.

It is arguable that the principal risk from damage caused by an uninsured motorist exists when the insured is occupying a motor vehicle. The risk of being injured by an uninsured motorist while an insured is riding a horse, camel, pogo stick, or while a pedestrian or sitting on one’s front porch, may be relatively slight. Hence, a carrier may be willing to assume such additional slight risk without an increased premium. Arguably such is the case in the instant uninsured motorist policy which does not expressly exclude coverage under such situations.

We deem it obvious that a person is more likely to be occupying an owned vehicle than he is to be occupying a vehicle owned by someone else. Hence, an insurance carrier may be willing to assume risks which it perceives as relatively slight, i.e., being damaged by an uninsured motorist while occupying a non-owned vehicle, without an increase in premium. It might be unwilling to insure against a risk it perceives as substantial without an increase in premium. If an insured is required to insure against a risk of an undesignated but owned vehicle, or a different and more dangerous type of vehicle of which it has no knowledge, it is thereby required to insure against risks of which it is unaware, unable to underwrite, and unable to charge a premium therefor.

If the legislature had desired to place such a burden on insurance carriers, it could have required carriers to insure all applicants for motor vehicle liability policies at a uniform rate. Clearly such a mandate would result in very substantial premium increases for careful, low risk drivers. Likewise, the legislature could have required insurance carriers to issue uninsured motorist coverage to all applicants at one rate regardless of how many or what type of vehicle the applicant might own, and regardless of how many of the owned vehicles the carrier might insure under liability coverage. The legislature has not enacted such a requirement, and if it did so, undoubtedly owners of a single vehicle would sustain rate increases.

In sum, we find nothing in our statutory scheme of automobile insurance which specifically requires an insurance carrier to extend coverage to an insured occupying an owned vehicle which is not insured by the carrier under a motor vehicle liability policy. We find no public policy implicit in our statutory scheme of automobile insurance which should require such coverage and thus invalidate the exclusionary clause in the instant case. We do not speak to and specifically reserve the question in a circumstance as is presented in Hammon where an insured under two or more motor vehicle liability policies, each issued by the same carrier, and each of which insures a separate vehicle, and in each of which policies issued by the same carrier the insured has elected to and paid a premium for uninsured motorist coverage. Such a case, of course, would then involve the issue of stacking the coverages under each of the policies issued by the same carrier. Since we have held today that the exclusionary clause in the instant policy eliminates coverage while the insured is occupying another owned vehicle, uninsured by the same carrier, and have held that such exclusionary clause is not void as against public policy, we need not address the stacking issue in the instant case.

Judgment of the district court is affirmed. Costs to respondent.

DONALDSON, C.J., and BAKES, J., concur.