Insurers May Limit Coverage to only Those Insureds who are Injured

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State Farm Mutual Automobile Insurance Company (State Farm) asked the Wisconsin Supreme Court to reverse the court of appeals decision reversing the circuit court’s grant of summary judgment in favor of State Farm. In Elliot Brey v State Farm, 2022 WI 7, No. 2019AP1320, Supreme Court of Wisconsin (February 15, 2022) the uninjured Elliot sued for the loss of his uninsured father in a car neither owned nor used by Elliot nor involved in the accident.

The trial court determined the State Farm automobile liability insurance policy issued to Elliot Brey’s mother and her husband (the Policy) did not provide underinsured motorist (UIM) coverage to Elliot Brey (Brey) for the death of his father, Ryan B. Johnson (Johnson), in an automobile accident. The Court of Appeal reversed and the Supreme Court took the case.

BACKGROUND

Johnson died from injuries sustained in an automobile accident in 2015, leaving behind his minor son, Elliot Brey. State Farm insured Brey as a resident relative under the Policy issued to Hannah and Jake Brey, Brey’s mother and her husband, covering a 2007 Honda CRV. That vehicle was not involved in the accident. Johnson, who was a passenger in a vehicle driven by Channing H. Mathews, was not insured under any State Farm policy.

DISCUSSION

The Supreme Court concluded that the Court Of Appeals erred by strictly construing the statutory definition in isolation rather than interpreting it in the context of the Omnibus Statute’s pertinent text as a whole. In doing so it rejected the hyper-literal approach.

The Supreme Court noted: “Interpreting § 632.32(2)(d) to apply anti-stacking provisions only to injured insureds while allowing uninjured insureds to circumvent them would be nonsensical.”

Nothing in Wis.Stat. § 632.32(2)(d) precludes insurers from affording coverage to only those insureds who are injured in an auto accident.

CONCLUSION

Brey’s father was not insured under the Policy. While Brey is an insured under the Policy, he was not involved in the accident in which his father was killed and therefore sustained no bodily injury. Wisconsin Stat. § 632.32(2)(d) plainly does not preclude an insurer from limiting UIM coverage to insureds who sustain bodily injury or death.

ZALMA OPINION

Although it is often said that “for every wrong there is a remedy” there is not insurance for every wrong. The Supreme Court of Wisconsin did the right thing. It refused to rewrite the policy.

© 2022 – Barry Zalma

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