UIM Coverage Is Limited Personal Accident Insurance
December 16, 2013
Anthony Vasquez, the president and majority owner of Benchmark Construction, held a business auto policy with American Fire and Casualty Company. The policy provided liability coverage for Benchmark's five employees, including Vasquez, and seven vehicles. Although Vasquez listed in the policy the 2007 Ford pickup that he bought and registered in his own name to use for both business and personal use, Vasquez was not a named insured under the business auto policy. He did not have a personal auto liability policy under which he was the named insured, and he was specifically excluded from the auto policy held by his wife. While on personal business, Vasquez was seriously injured when he was struck by an uninsured motorist when walking in a crosswalk. Having no other auto insurance, Vasquez filed a claim seeking UIM benefits under the business auto policy issued to Benchmark. This case is Vasqeuz v. American Fire and Casualty Co., 298 P.3d 94 (2013).
The liability coverage section of the business auto policy issued to Benchmark listed Benchmark (“You”) as the named insured and by endorsement designated other persons as insureds under specific, limited circumstances. However, none of the enumerated circumstances included a pedestrian in a crosswalk, not using a covered auto, and not being liable for the conduct of another insured under the policy. Accordingly, the action was dismissed by summary judgment and this appeal followed.
Citing Tissell By & Through Cayce v. Liberty Mut. Ins. Co., 795 P.2d 126 (1990)(finding coverage where under a personal auto policy the injured was also named insured), Vasquez argued that Washington's UIM statute does not allow insurers to deny UIM benefits based on the restrictions contained in the liability sections of the policy. As the “de facto” purchaser of the Benchmark policy, Vasquez claimed he was entitled to UIM coverage. The statute, in pertinent part, states that an insurer writing liability coverage with respect to any motor vehicle registered or principally garaged in the state must also provide underinsured motor coverage for the benefit of persons injured thereunder who are legally entitled to recover damages. RCW 48.22.030(2). In other words, the statute is threaded into the policy such that any person entitled to liability coverage is also entitled to UIM coverage (“rocking chair” coverage). The language of the statute is construed liberally and its application purposefully overwrites any exclusionary language in the policy that would bring UIM coverage under Washington's statutory requirement.
The court quickly distinguished Tissell from the facts of the case at bar, noting that the former involved a personal auto policy under which the injured was a named insured. The court stated that it was not prepared to adopt Vasquez's interpretation of the policy, which would effectually make the “business auto policy a personal policy for all employees.” In affirming the lower court's decision that Vasquez was not an insured under the Benchmark policy, it reasoned that while the statute is to be construed broadly, its limiting phrases must be given effect. Thus, language such as “while using” and “only to the extent of” made Vasquez an insured under the business auto policy only when the activity he was engaging in fit within those parameters.
Editor's Note: This case is important for its balancing treatment of policy language and statutory interpretation, as one is to be read narrowly and the other broadly. It also represents the premise that limiting policy language, especially those terms that are defined by the policy, does not “run afoul” of public policy.