UM Policy Restrictions Not in Violation of State Law
In Bush v. State Farm Mut. Auto. Ins. Co., 2009 WL 1351821 (Ind.) , Leonard Bush, Jr. was killed as a passenger in a single-vehicle accident caused by the negligence of the driver, who was uninsured. Leonard also had no insurance covering the accident or the vehicle.
Leonard's parents, Leonard Bush, Sr. and Maggie Bush were not involved in the accident. They were insured under an automobile policy issued by State Farm Mutual Automobile Insurance Company that provided uninsured motorist coverage.
State Farm defined “insured” for purposes of its UM coverage to include the Bushes and their “relatives,” defined as persons related by blood, marriage, or adoption who “reside primarily” with them. Leonard did not reside with his parents at the time of the accident so was not an “insured” under the Bushes' policy.
The Bushes sued State Farm, claiming that they sustained damages arising out of the conduct of an uninsured motorist, and State Farm's failure to provide UM benefits was a breach of contract.
Both parties moved for summary judgment on the issue of the Bushes' right to recover under the State Farm policy. The Bushes argued that State Farm's requirement that an insured sustain bodily injury violated Indiana's UM statute, and State Farm responded that its requirement was a permissible limitation of coverage that had implicitly been approved by Indiana courts. The trial court granted summary judgment to State Farm, concluding that Leonard was not covered by the policy because he did not meet the policy's definition of “relative,” and therefore was not an “insured.” The trial court did not address the Bushes' contention that State Farm's policy violated the UM statute.
The court of appeals reversed, holding that State Farm's exclusion of coverage for Leonard violated Indiana 's UM statute. The court reasoned that the Bushes were insureds who were legally entitled to recover damages for their son's death. The Supreme Court of Indiana granted transfer.
The issue before the Indiana high court was whether State Farm's UM policy, by requiring that bodily injury be sustained by an insured, violated Indiana 's UM statute and was therefore unenforceable. This was an issue of first impression in Indiana .
According to the court, the statute itself made clear that it contemplated UM coverage only for the “insured's” bodily injury. It defined the “maximum amount payable for bodily injury under uninsured or underinsured motorist coverage” by reference to “the insured's bodily injury.” State Farm's policy was therefore consistent with the UM statute by requiring that the insured sustain bodily injury to trigger UM coverage, the court said.
Although the Bushes argued that State Farm's definition of “bodily injury” was ambiguous and could be construed as including emotional distress sustained by persons who did not sustain bodily injury, the court explained that Indiana case law had interpreted the same definition of bodily injury to include emotional distress only if it arose from a bodily touching.
In addition, although the Bushes contended that this language referred to bodily injury suffered by “any person,” including Leonard's death, the court stated that this language described those automobile liability policies that were required to make available UM coverage. It provided that if the Bushes were insured against liability for their injuring “any person,” UM coverage must be offered. But the “any person” language did not relate to or describe in any way the scope of the UM coverage.
The court further pointed out that its holding was also consistent with the public policy underlying the UM statute and its conclusion was consistent with the substantial majority of other states that had addressed the issue under their UM statutes.
Thus, the court affirmed the lower court's decision and held that a UM policy restricting coverage to bodily injury or death sustained by an insured did not violate Indiana 's UM statute.