Terrance L. Smith
Hammond, IndianaAttorneys for Appellee
Terrance L. Smith
UNITED NATIONAL INSURANCE
Appellant (Plaintiff Below),
ADELE M. DEPRIZIO,
Appellee (Defendant Below).
) Supreme Court No.
Terrence DePrizio was fatally injured on the job by an uninsured motorist. DePrizio collected the policy limits from his employer's auto insurance carrier and sought to collect additional damages from its umbrella insurance carrier. The umbrella carrier responded that
its policy did not cover excess uninsured motorist claims. In response to a certified question,See footnote
we hold that Indiana's underinsured motorist statute requires an umbrella policy that
covers excess third-party automobile liability claims to also cover excess uninsured motorist
Terrance DePrizio was an officer of Track. While on Track business in December,
1995, he was fatally injured in an automobile accident with a fifteen-year-old driver insured
by State Farm Insurance Company. Shortly after the accident, State Farm tendered its
$100,000 policy limits to the Estate of Terrence DePrizio. Because the damages resulting
from Mr. DePrizio's death exceeded the limits of that policy, the Estate made a claim for
underinsured motorist coverage under Track's Business Auto Policy. Liberty Mutual
subsequently tendered the balance of its policy limits, reduced by the amount paid by State
Farm, to the Estate. Finding that these payments were still insufficient to compensate for
the loss of Mr. DePrizio, the Estate made a claim for excess coverage under Track's umbrella policy.
In a letter dated June 21, 1996, United National responded to this claim by advising the Estate that the umbrella policy did not provide uninsured, underinsured, personal injury, or any similar type coverage. Subsequently, United National filed suit in the United States District Court for the Northern District of Indiana, seeking a declaration that its policy does
not provide uninsured/underinsured motorist coverage.
By order dated February 20, 1998, the U.S. District Court ruled that the umbrella
policy did not provide underinsured coverage by its own terms. However, it found the issue
of whether Indiana's uninsured/underinsured motorist statute applies to umbrella liability
policies to be one of first impression in the State of Indiana and appropriate for certification.
We agreed to accept the question by order dated March 6, 1998.
The task before us does not require an interpretation of the provisions of United National's umbrella policy. It is undisputed that the umbrella policy afforded coverage to the insured in excess of the limits of the underlying policies for liability to third persons.See footnote 2
Given that one such underlying policy was for automobile liability, this excess coverage
clearly included liability arising out of the ownership, maintenance or use of a motor
vehicle by or on behalf of the insured.See footnote
And, in earlier proceedings, the District Court
interpreted the umbrella policy as one that does not expressly provide for
uninsured/underinsured motorist protection.See footnote
Instead, the question for this Court is to interpret Indiana's uninsured/underinsured
The insurer shall make available, in each automobile liability or motor vehicle liability policy of insurance. . . insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person and for injury to or destruction of property to others arising from the ownership, maintenance, or use of a motor vehicle, or in a supplement to such a policy, the following types of coverage:
(1) in limits for bodily injury or death and for injury to or destruction of property not less than those set forth in IC 9-25-4-5 [See footnote 5 ] under policy provisions approved by the commissioner of insurance, for the protection of persons insured under the policy who are legally entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles be
cause of bodily injury, sickness or disease, including death, and for the protection of persons insured under the policy who are legally entitled to recover
from damages from owners or operators of uninsured motor vehicles for
injury to or destruction of property resulting therefrom; or
(2) in limits for bodily injury or death not less than those set forth in
IC 9-25-4-5 under policy provisions approved by the commissioner of insurance, for the protection of persons insured under the policy provisions who
are legally entitled to recover damages from owners or operators of uninsured
or underinsured vehicles because of bodily injury, sickness or disease, including death resulting therefrom.
The uninsured and underinsured motorist coverage must be provided by
insurers for either a single premium or for separate premiums, in limits at least
equal to the limits of liability specified in the bodily injury provisions of an
insured's policy, unless such coverages have been rejected in writing by the
insured.. . . Uninsured motorist coverage or underinsured motorist coverage
may be offered by an insurer in an amount exceeding the limits of liability
specified in the bodily injury and property damage liability provisions of the
Ind. Code §27-7-5-2(a) (1998). Although the statute specifies that its provisions apply to automobile liability or motor vehicle liability polic[ies] of insurance, it does not define these terms.See footnote 6 As a result, we must ascertain whether the statute contemplates the inclusion
of umbrella liability policies in its purview, thereby requiring such policies that cover excess
third party automobile claims also to provide uninsured and underinsured motorist coverage.
automobile within the state. (Plaintiff's Br. at 6) Finding that the holder of such comprehensive excess insurance receives the protection of Indiana's uninsured/underinsured
motorist statute, United National argues, goes beyond the intent of the legislature.
In support of these arguments, United National cites decisions from several jurisdictions interpreting the scope of their respective uninsured/underinsured motorist statutes.
Among them, United National directs us to a decision of the Connecticut Supreme Court
We are persuaded that excess or umbrella policies . . . serve a purpose distinct from that served by policies that exclusively cover liability from damages arising out of the ownership, maintenance or operation of an automobile. While the [insured's] personal excess policy provides, among other coverages, coverage for automobile liability, this does convert it into an automobile liability policy within the meaning of § 38-175c. Rather, the language of the personal excess policy indicates that it was intended as excess insurance designed solely to protect [the insured] from the infrequent occurrence of catastrophic judgements against [them].
Mass v. U.S. Fidelity and Guaranty Co., 610 A.2d 1185, 1191 (Conn. 1992) (citation
To accept United National's position requires this Court to look beyond the plain language of the statute, interpret its provisions, and ultimately find that the Legislature intended to exclude umbrella policies from Indiana's uninsured/underinsured motorist law. Although the Legislature has not defined automobile liability or motor vehicle liability policy, it has clearly outlined the type of coverage that triggers the statute's application.
The fact that an umbrella policy depends on a primary policy or that the policy covers other
types of losses does not negate this. What is dispositive is whether the policy provides
coverage for loss resulting from liability to third parties for bodily injury, death or property
damage arising from the ownership, maintenance or use of a motor vehicle. We see nothing
in the statute suggesting that a policy which provides such coverage should escape the reach
of the statute merely because it depends on a primary policy or covers additional types of
Wright v. Fidelity and Casualty Co. of New York, 155 S.E.2d 100, 106 (N.C. 1967). Similarly, underinsured motorist coverage is designed to provide individuals indemnification in the event negligent motorists are not adequately insured for damages that result from motor vehicle accidents, and has generally been integrated into a given state's uninsured
motorist legislation by modifying the definition of an uninsured motorist. See generally
Alan I. Widiss, Uninsured & Underinsured Motorist Coverage (2nd ed., vol. 3, §32.1, 1995).
Together, these coverages serve to promote the recovery of damages for innocent victims of
auto accidents with uninsured or underinsured motorists. Given the remedial nature of these
objectives, uninsured/underinsured motorist legislation is to be liberally construed. United
Farm Bureau Mutual Ins. Co. v. Runnells, 328 N.E.2d 1015, 1017 (Ind. Ct. App. 1978)
(citation omitted). Moreover, like all statutes relating to insurance or insurance policies,
uninsured/underinsured motorist statutes are to be read in a light most favorable to the
insured. Canon v. American Underwriters, Inc., 275 N.E.2d 567, 569 (Ind. 1971); United
Farm Bureau Mutual Ins. Co., 328 N.E.2d at 1017.
Indiana Code § 27-7-5-2 is a mandatory coverage, full-recovery, remedial statute. It is directed at insurers operating within Indiana and its provisions are to be considered a part of every automobile liability policy the same as if written therein. Indiana Insurance Company v. Noble, 265 N.E.2d 419, 425 (Ind. Ct. App. 1970) (citations omitted); accord Patton v. Safeco Ins. Co. of America, 267 N.E.2d 859, 863 (Ind. Ct. App. 1971). Moreover, [e]ven where a given policy fails to provide such uninsured motorist coverage, the insured is entitled to its benefits unless expressly waived in the manner provided by law. Indiana Ins. Co., 265 N.E.2d at 425. Presently, the statute requires insurers to provide uninsured and underinsured motorist coverage in limits at least equal to the limits of liability specified in the bodily injury liability provisions of an insured's policy, unless such coverages have
been rejected in writing by the insured. Ind. Code § 27-7-5-2 (a)(2). However, this has not
always been the case and we find the evolution of the statute instructive. A fundamental
rule of statutory construction is that an amendment changing a prior statute indicates a
legislative intention that the meaning of the statute has changed. Such an amendment raises
the presumption that the legislature intended to change the law unless it clearly appears that
the amendment was passed in order to express the original intent more clearly. Bennett v.
Ind. Life and Health Ins., 688 N.E.2d 171, 179 (Ind. Ct. App. 1997); see also New York
Cent. R. Co. v. Johnson, 127 N.E.2d 603, 234 Ind. 457 (Ind. 1955) (statutory amendment
which changes language of prior statute indicates a legislative intention that the meaning of
the statute has been changed).
As originally enacted,See footnote 7 Indiana's Uninsured Motorist Statute mandated that insurance carriers offer uninsured motorist coverage in an amount equal to Indiana's minimum financial responsibility requirements.See footnote 8 In 1982, the Legislature replaced the statute with Ind. Code § 27-7-5-2 requiring that insurers not merely offer but provide uninsured motorist coverage in an amount equal to the minimum financial responsibility
requirements (but not exceeding the bodily injury and property damage limits) of the insured's policy.See footnote
We held that the purpose of this version of Ind. Code § 27-7-5-2 was to put
injured parties in the same position they would have been had the tortfeasor complied with
our financial responsibility law. City of Gary v. Allstate Ins. Co., 612 N.E.2d 115, 117 (Ind.
1993) (construing Ind. Code § 27-7-5-2 as in effect on December 9, 1986).
In 1987, the Legislature broadened the scope of the statute by requiring insurers to
provide underinsured motorist coverage in addition to uninsured motorist coverage.See footnote
amendment also mandated that insurers provide coverage in limits equal to the limits of
liability specified in the bodily injury and property damage provisions of an insured's
policy. Insureds were also allowed to purchase coverage in excess of those limits, transforming the act a into full recovery statute.See footnote
This development is critical: no longer did
the statute limit recovery to the bodily injury and property damage limits of the insured's
policy as had been the case when we construed the statute's meaning in City of Gary.
United National relies on Marshall v. Universal Underwriters, 673 N.E.2d 513 (Ind.
Ct. App. 1996), and Hastings Mutual Ins. Co. v. Webb, 659 N.E.2d 1049 (Ind. Ct. App.
1995) _ both of which reflect our holding in City of Gary _ for the proposition that the
purpose of Indiana's uninsured/underinsured motorist statute is to provide coverage only
to the extent of the financial responsibility law. (Br. of Plaintiff at 10). United National
argues that requiring primary automobile liability policies to provide uninsured and underinsured motorist coverage fully achieves this purpose, thereby removing any need for umbrella
policies to provide such coverage. We disagree.
Although the interpretation articulated in City of Gary accurately represents the
purpose of Ind. Code § 27-7-5-2 as then in effect, the language of the statute has changed
and the resultant modifications evince a modified legislative intent. To the extent that
decisions of the Court of Appeals fail to make this distinction, they are disapproved and
United National's reliance upon them is misplaced.
In the years since its inception, Indiana's uninsured/underinsured motorist statute has undergone significant modification. It began requiring insurers to offer uninsured and underinsured coverage. It later mandated insurers to provide this coverage. And, central to our inquiry, the law has moved from imposing limits on such coverage to allowing full recovery. We find that this history of expanding the availability of uninsured and underinsured motorist coverage manifests an intent by our legislature to give insureds the opportunity for full compensation for injuries inflicted by financially irresponsible motorists. To
hold that an umbrella policy which by its terms covers risks above those insured in an
underlying automobile policy does not apply to the underlying uninsured or underinsured
motorist coverage would contravene that intent.
statutory minimum.See footnote
Some courts reason that because the legislative purpose of these
statutes is satisfied when policies compensate the victim to the same extent as they would
have been had the tortfeasor had complied with the minimum requirements of the state's
financial responsibility laws, application of the statute to underlying policies is sufficient.
See Hartbarger v. County Mutual Ins. Co., 437 N.E.2d 691 (Ill. App. 1982). Other courts
rely on what they find to be the fundamental difference between umbrella liability policies
and automobile liability policies. See Rowe v. Travelers Indemnity Co., 800 P.2d 157
However, we conclude that the language of the Indiana statute, which allows for a full recovery by insureds, compels a contrary inference to that drawn by courts in jurisdictions with minimum recovery statutes. We are not alone in this view, as many jurisdictions with full recovery statutes similar to our own have adopted the view that umbrella policies are subject to the requirements of uninsured/underinsured motorist laws.See footnote 15
For instance, in Cincinnati Ins. Co. v. Siemens, 474 N.E.2d 655 (Ohio App. 1984), the court found that excess or umbrella liability policies that provide automobile liability coverage are required to provide uninsured motorist coverage pursuant to Ohio's uninsured motorist statute.See footnote 16 In reaching this conclusion, the court considered the language of Ohio's uninsured motorist statute, which requires coverage from policies that insure against liability arising out of the ownership, maintenance, or use of a motor vehicle and found that umbrella policies that did such were themselves automobile liability policies. Id. at 657. As to arguments that umbrella policies were inherently different from automobile liability policies _ designed to insure against catastrophic loss exceeding the coverage of underlying policies _ the court found this to be a distinction without a difference. Id. at 657. Ohio's Supreme Court later approved this holding in Duriak v. Globe American
Casualty Co., 502 N.E.2d 620, 623 (Ohio 1986).
In Bartee v. R.T.C. Transp., Inc., 781 P.2d 1084 (Kan. 1989),See footnote
the Kansas Supreme
Court found that the Kansas uninsured motorist statute required that a personal liability
umbrella policy which required an underlying primary automobile liability policy, must
include uninsured motorist coverage even though such coverage was not expressly
Id. at 1095. Again, the court noted that originally the statute had provided a
minimum level of recovery, but subsequent amendments removing the limits on recovery
showed the intent of the Kansas legislature to allow for full recovery. Id. at 1094. In
reaching this conclusion, the court cited approvingly an unreported federal district court
The whole purpose behind umbrella coverage is to assure that adequate coverage exists, i.e., that umbrella coverage picks up where the underlying policy leaves off . . . This court fails to see how UM [uninsured motorist] coverage could exist under the underlying policy but not under the umbrella
policy . . . As part of the underlying policy, it is part of the umbrella policy
because the umbrella policy specifically identifies the underlying policy. In
addition the umbrella policy professes to continue as underlying insurance at
the exhaustion of coverage in the underlying policy.
Id. at 1094 (citing Smith v. Ruiz, No. 83-6018-K (D. Kan. Sept. 19, 1984)).
We find the reasoning of these decisions consonant with our analysis of the language of the Indiana statute. And while at least three full recovery jurisdictions have found that their uninsured/underinsured motorist statutes do not apply to umbrella policies, those cases have rested upon a perceived uniqueness of umbrella policies that remove them from the realm of automobile liability insurance.See footnote 19 As we have stated in part I-A, supra, we find that distinction to be of less consequence than the coverage actually provided by the policy. The Indiana legislature clearly did not intend to limit the amount of uninsured and underinsured motorist protection available to consumers, and, in fact, has required that purchased coverage at least equals overall automobile liability limits. Absent an express directive from our legislature, we decline the invitation to carve out an exemption for particular policies.
umbrella insurance carrier.
In affirming the trial court's judgment that plaintiff's umbrella policy did not include
uninsured and underinsured motorist coverage, the Seventh Circuit concluded:
Because IC sec. 27-7-5-2 does not define 'motor vehicle liability policy', and because that term can be read without violence to the language as limited to primary policies of auto insurance, our best estimate is that Indiana would follow the majority of other states and treat secondary insurance policies as outside the ambit of IC sec. 27-7-5-2.
Id. at 1117. As should be clear from the foregoing discussion, we reach the opposite
Most of the Seventh Circuit's analysis is devoted to a review of other states' courts' examination of this issue. To the extent the circuit court focuses on Ind. Code § 27-7-5-2 itself, the court draws a conclusion as to what it believes the legislature must not have intended in imposing a statutory requirement for uninsured and underinsured motorist coverage. This is, of course, the same perceived uniqueness of umbrella policies that removes them from the realm of automobile liability insurance that we discussed in part II, supra. We reiterate that to the extent an umbrella policy provides coverage for loss resulting from liability to third parties for bodily injury, death or property damage arising from the
ownership, maintenance or use of a motor vehicle, it should not escape the reach of the
statute simply because it covers additional types of liability as well.
With all due respect, we believe that the result in Schmitt does not represent the
majority rule in full recovery statute jurisdictions. Because each of the cases cited poses
a question of statutory interpretation, the language of the statute being interpreted is critical
to the result. We have identified in footnote 15, supra, eight states in which the courts have
read their full recovery statutes the same way we read ours.See footnote
And while the court in
Schmitt says that [c]ourts of seven states with laws essentially identical to Indiana's have
concluded that an umbrella policy need not include underinsured motorist coverage,
Schmitt, at 1116, three of those decisions interpret minimum recovery statutes unlike
Indiana's full recovery measure. O'Hanlon v. Hartford Accident & Indemnity Co., 639 F.2d
1019 (3d Cir. 1981) (Delaware law); Stoumen v. Public Service Mut. Ins. Co., 834 F.Supp.
140 (E.D.Pa. 1993); MacKenzie v. Empire Ins. Co., 782 P.2d 1063 (Wash. 1989). Another
interprets a statute that requires insurers merely to offer the coverage, as opposed to mandating insurers provide such coverage, as is the case in Indiana. Todd v. Federated Mutual
Insurance Co., 409 S.E.2d 361 (S.C. 1991).
SHEPARD, C.J., and DICKSON, SELBY, and BOEHM, JJ., concur.
contract . . .
Motor vehicle liability policy means an owner's policy of liability insurance or an
operator's policy of liability insurance that:
(1) is issued, except as provided in IC 9-25-5-10, by an insurance carrier duly authorized to transact business in Indiana to or for the benefit of the person named in the policy as insured; and
(2) insures against liability resulting from the ownership, maintenance, use or operation of a motor vehicle.
policies from uninsured and underinsured motorist coverage requirements. Ariz.Rev.Stat. sec.20- 259.01; Fla. Stat. sec.627.727(2); Kan. Stat. sec.40-284(a).
(A) No automobile liability or motor vehicle liability policy of insurance insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any 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 the state unless an equivalent amount of coverage for bodily injury or death is provided therein or supplemental thereto . . . for the protection of persons insured thereunder who are legally entitled to recover damages from owners of operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom. The named insured shall have the right to reject such uninsured motorist coverage . . . R.C. 3937.18 (1982).
(a) No automobile liability insurance policy covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in the state, unless the policy contains or has endorsed thereon, a provision with coverage limits equal to the limits of liability coverage for bodily injury or death in such automobile liability insurance policy sold to the named insured for payment of part or all sums which the insured or the insured's legal representative shall be legally entitled to recover . . . K.S.A.1988 Supp. 40-284.
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