Churchill v. New Hampshire Insurance

Citations: 68 Wash. App. 564; 844 P.2d 459; 1993 Wash. App. LEXIS 41Docket: No. 29744-9-I

Court: Court of Appeals of Washington; February 1, 1993; Washington; State Appellate Court

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Churchill's estate is seeking underinsured motorist (UIM) benefits from New Hampshire Insurance Company following the death of Jason Churchill, who was killed as a passenger in a single-vehicle accident. The driver, who lacked a driver's license and insurance, had unlawfully obtained the vehicle. New Hampshire's liability policy did not cover the driver since he was using the truck without the owner's permission. Cora Churchill, the decedent's mother, claimed UIM benefits, arguing that the vehicle was underinsured due to the lack of coverage for the driver. New Hampshire denied the claim based on a policy exclusion stating that an underinsured motor vehicle does not include any vehicle that is a covered 'auto' for liability coverage. The court upheld the trial court's summary judgment in favor of New Hampshire, referencing a statutory definition of an underinsured motor vehicle, which requires either no liability coverage at the time of the accident or insufficient liability limits to cover the damages. The decision aligns with a precedent case, Blackburn v. Safeco, where a similar policy exclusion was upheld, affirming that insurers are not required to provide UIM coverage for vehicles also covered under liability insurance. The court concluded that requiring such coverage would effectively convert UIM insurance into denied liability coverage, which is not supported by legal or common sense.

The Supreme Court revisited its decision in Millers Cas. Ins. Co. v. Briggs concerning underinsured motorist (UIM) coverage after a single-car accident resulted in one fatality and one injury. In Millers, the insurer denied UIM claims based on a policy exclusion that defined underinsured vehicles as those to which the liability coverage applied. The court ruled that this exclusion barred recovery under UIM coverage, emphasizing that liability insurance is meant to protect passengers from negligent driving, while UIM coverage is designed for damages caused by underinsured vehicles. Allowing dual recovery would effectively convert UIM coverage into liability insurance, leading to increased costs for consumers. 

The court identified three public policy reasons against UIM coverage in such circumstances: (1) the injured party has not paid a premium for coverage from that insurer, thus preventing a windfall; (2) the injured party has already received compensation from liability coverage; and (3) if the injured party has their own automobile insurance, they can claim under that policy's UIM coverage. 

Churchill distinguishes her case from Blackburn by arguing that the exclusion language differs, claiming that "liability coverage" implies UIM benefits are only disclaimed to the extent of actual payments made under liability coverage. The court disagreed, asserting that definitions of "coverage" and "liability insurance" from Black's Law Dictionary indicate that both terms broadly encompass the insurer's risk and do not support a narrower interpretation of the exclusion.

If 'coverage' implies actual payment for a loss, then the vehicle in question is not a 'covered auto' under the policy because New Hampshire did not make a payment. Consequently, Jason Churchill would not qualify as an 'other insured' and would lack grounds for a claim under the UIM provision, rendering his argument flawed. Churchill attempts to differentiate the case from Blackburn by claiming the New Hampshire exclusion is 'buried' at the end of the endorsement, unlike Blackburn's more prominent placement. However, the endorsement is only 2½ pages long, and the exclusion is not obscured. 

Churchill also argues that her minor son could not have purchased UIM insurance, suggesting this distinction influenced the Blackburn decision. Nonetheless, the ability to purchase UIM coverage was just one of many factors in Blackburn, and its absence does not inherently violate public policy. Neither the driver nor Churchill paid a premium for coverage from the insurer, and as stated in Blackburn, an insurance company is not obligated to provide coverage without compensation. 

Churchill further cites Stonewall Ins. Co. v. Denman, where a victim without separate insurance was denied UIM coverage despite being covered under a liability policy as a permissive user. The court ruled that a victim who is not a first-party insured may be excluded from UIM coverage if covered under the liability portion. Churchill contends that since New Hampshire denied liability coverage, Denman supports her claim for UIM benefits. However, it is rejected that an 'other insured's' UIM recovery is contingent on liability insurance payouts under the policy, disagreeing with Denman's dicta.

Churchill's claim for underinsured motorist (UIM) benefits is precluded because she is not a named insured under the policy, as established by the Blackburn ruling. The court affirmed this decision, with both Chief Justice Webster and Justice Grosse concurring, and noted that review was denied in 1993. Churchill's argument that she and her son were misled by the policy is invalid since they were not parties to the contract. She contends that the exclusion clause is ambiguous due to other clauses suggesting that a 'covered auto' could also qualify as an underinsured vehicle. However, the court found the insurer's offset provisions consistent with the UIM exclusion, rejecting Churchill's claims of ambiguity. The Blackburn court highlighted three rationales for its decision: the policy's exclusion of covered autos from the definition of underinsured vehicles, the inadequacy of public policy arguments for recovery, and alignment with common understanding of coverage. Additionally, Chief Justice Callow's concurring opinion in Tissell emphasized that a victim who is not a named insured may be excluded from recovering UIM benefits if compensated through liability coverage. Churchill's reliance on First Nat'l Ins. Co. v. Perala is deemed irrelevant, as the Supreme Court has consistently noted the distinctions between uninsured and underinsured motorist insurance.