No Coverage for Third Party under Insured's UM/UIM

 

In Allstate Ins. Co. v. Fackett, 2009 WL 1181843 (Nev.), respondent Deborah Ann Fackett's mother, Barbara Testa, suffered fatal injuries when her car collided with uninsured driver Benjamin Bellville's car. Testa was insured under her own auto insurance policy and Fackett was insured with appellant Allstate Insurance Company.

 

Fackett sued Bellville for the wrongful death of her mother and received his $1,000,000 policy limit. Fackett then made a demand under her Allstate insurance policy for UM benefits for the death of her mother. Allstate denied coverage because Testa was not an insured person under the policy. Allstate then filed a declaratory relief action, requesting that the court find that the policy was valid and enforceable and Testa was not an insured and therefore Fackett could not recover for Testa's death. Both parties moved for summary judgment.

 

Fackett argued that she was entitled to summary judgment because (1) Nevada's UM statute must be construed broadly and strictly in favor of the insured, and (2) the policy was void and unenforceable because it violated public policy by restricting coverage to injuries suffered by insureds.

 

The district court granted Fackett's summary judgment motion and denied Allstate's motion. The district court found that states having UM statutes and public policies similar to Nevada allowed recovery in similar cases. As a result, the district court concluded that (1) NRS 687B.145 must be strictly construed in favor of the insured, (2) the statute does not require that the insured suffer physical bodily injury, and (3) the policy's requirement that the injured be an insured contravenes the statute.

Therefore, the district court found that Fackett was entitled to UM benefits for Testa's death.

 

In reviewing this decision, the Supreme Court of Nevada sought to determine whether Allstate's UM policy provision, which limited recovery to insureds who suffered bodily injury, was enforceable and whether the district court erred in granting summary judgment to Fackett.

 

First, the court examined whether the policy provision limiting recovery to insureds who suffered bodily injury was ambiguous. The court concluded that the policy was clear and unambiguous and limited recovery to insureds who suffer bodily injury.

 

Second, the court examined whether the policy limitations contravened Nevada 's UM statutory scheme or public policy. Noting that under Nevada law the purpose of the UM/UIM statutory scheme is to mitigate losses sustained by no-fault insureds who sustain injuries in a collision with an underinsured or uninsured driver through first-party benefits, the court concluded that neither NRS 687B.145(2) nor public policy required that UM coverage provide recovery for injury to uninsured third parties. Thus, Allstate's policy provision limiting recovery to insureds who suffer bodily harm was unambiguous, did not contravene NRS 687B.145(2), and therefore was enforceable.

 

Accordingly, the court reversed and remanded to district court with instructions to enter summary judgment in favor of Allstate.