Wisconsin Lawyer
Vol. 79, No. 6, June 2006

Supreme Court Digest

by Prof. Daniel D. Blinka &
Prof. Thomas J. Hammer

Insurance

Vieau v. American Family Ins. Co., 2006 WI 31 (filed 19 April 2006)

Vieau was seriously injured while a passenger in a truck driven by SK, whom Vieau claimed was intoxicated at the time of the single-vehicle crash. American Family had issued a liability policy to Vieau's mother, Kathy, but refused to pay underinsured motorist (UIM) coverage limits on the ground that Vieau "was not a `relative' entitled to coverage because the policy's definition of `relative' did not include anyone who owned a motor vehicle" (¶ 6). The circuit court granted summary judgment in favor of American Family, and the court of appeals affirmed.

The supreme court, in an opinion authored by Justice Wilcox, affirmed. First, the court held that "it is appropriate to apply § 632.32(6)(b)1. to Kathy Vieau's policy as she was issued UIM coverage as part of a policy containing liability insurance" (¶ 21). The court explicitly withdrew "the language in [Peabody v. American Family Mut. Ins. Co., 220 Wis. 2d 340 (Ct. App. 1998)] which states that § 632.32(6)(b)1. applies only to liability insurance, but we do not overrule the opinion in its entirety" (id.).

Second, the court took up whether the policy's "own-other-vehicle" exclusion contravened the statutes. "It is unfortunate that Vieau did not purchase enough UIM coverage to fully cover his medical expenses under his own motor vehicle insurance policy, but it does not follow that he should be able to also tap into his mother's UIM coverage to make up the difference. Under § 632.32(5)(e), we believe American Family's definitional exclusion is valid because it is properly focused on relatives who own their vehicles, with their own corresponding insurance, and who can consider for themselves how much UIM insurance to purchase to fully protect themselves from inadequately insured tortfeasors. In other words, although American Family's exclusion may not allow certain persons related by blood to share in the UIM coverage of the policy, such an exclusion is incidental to its central purpose" (¶ 28).

Several cases, including Peabody, had facts "essentially identical to the facts of this case" (¶ 35). "Indeed, most policies seemingly contravene § 632.32(6)(b)1. by excluding blood relatives who live outside the household. Section 632.32(6)(b)1., on its face does not allow for limiting coverage to relatives who live in the household, but past precedent has placed this gloss on § 632.32(6)(b)1. in the face of this subsection's broad requirement that `[n]o policy may exclude from the coverage afforded … [p]ersons related by blood[.]' We believe such an absolutist view of § 632.32(6)(b)1. is contrary to the language of § 632.32(5)(e) and our past decisions, which have permissibly allowed restrictions to the coverage of relatives living in the household. Thus, we conclude that under the facts and circumstances of this case American Family's definitional exclusion, which denies Vieau the UIM coverage under his mother's policy, is permissible. Were we to decide this case otherwise, a family of five with five vehicles could pay one premium on one policy with UIM coverage and potentially collect UIM proceeds five times. We cannot support such a result" (¶¶ 39-40).

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