Thompson later acknowledged that he was, in fact, excluded from UIM coverage under his friend’s auto policy. Nevertheless, he argued that excluding the covered auto from the definition of an underinsured vehicle was a violation of both Washington law and public policy.

The court disagreed for two reasons. First, under Rev. Code Wash. §48.22.030(2), an auto policy must include UIM coverage, but that UIM coverage is not required to extend to “a motor vehicle owned or available for the regular use by the named insured or any family member, and which is not insured under the liability coverage of the policy” (emphasis added). The highlighted language indicates that UIM coverage is not required for those already covered under the liability portion of the same policy.

Second, in Millers Casualty Insurance Co. of Texas v. Briggs, 665 P.2d 891 (Wis. 1983) and again in Blackburn v. Safeco Insurance Co., 794 P.2d 1259 (Wis. 1990), the Wisconsin Supreme Court had allowed insurers to enforce exclusions that denied UIM coverage to third-party passengers. The justices in Millers pointed out that third-party passengers who suffer injury due to the actions of the named insured may seek redress through the named insured’s liability coverage. Underinsured motorist coverage, on the other hand, was for the named insured and others who suffered harm at the hands of a third-party driver who was driving an underinsured vehicle. The Blackburn case noted that third parties could purchase their own UIM coverage, and insurers are not obliged to offer that coverage to individuals who already had a chance to purchase it. In both cases, the justices also ruled that “excluding third-party guest passengers from UIM coverage did not violate Washington's UIM statute” (emphasis added).

In this case, Thompson had already been paid under the third-party liability coverage part of his friend’s policy, so it was permissible for Progressive to deny his UIM claim. Even then, Thompson persisted in his argument that he was entitled to UIM benefits from Progressive, claiming updates to Washington law enacted after Millers and Blackburn specifically included third-parties injured while “occupying or using the insured automobile with the permission of the named insured” in the definition of “insured” that applied to the UIM statute. (Rev. Code Wash. §48.22.005(5)(b)(i); emphasis added).

The court acknowledged this update but said Thompson had taken it out of context. The statute had been updated based on how the Wisconsin Supreme Court had defined “insured” in the Blackburn case; the UIM statute hadn’t changed since the 1980s. The determination of who qualified as an insured under a policy was not at issue in either Millers or Blackburn. The crux of those cases was the same as it was for Thompson’s case: could a third-party who suffered bodily injury “caused by the operation of a covered vehicle” be refused UIM benefits under the policy covering that vehicle?

The answer in Blackburn and Millers had been “no.” The answer for Thompson was the same. The UIM coverage insurers were required to offer under Rev. Code Wash. §48.22.030(2) applied to damages and injuries inflicted by third-party vehicles, not a covered auto.

The decision of the trial court was reversed and remanded with orders to enter judgment for Progressive.

Editor’s Note: As the court stated, Progressive’s exclusion of UIM coverage for third-party passengers injured in a covered vehicle was permissible when the policy covering the vehicle had already provided liability coverage to that passenger. This is exactly what happened in Thompson’s case. Progressive had paid him the policy liability limits he was due. Since he had received these benefits, Rev. Code Wash. §48.22.030(2) allowed for the exclusion.

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