Feb. 18, 2022 – State law does not prohibit an insurer from limiting underinsured motorist coverage (UIM) to persons insured under the insurer’s policy, the Wisconsin Supreme Court has ruled.

In Brey v. State Farm Mutual Automobile Insurance Company, 2019AP 1320 (Feb. 15, 2022), the supreme court unanimously held that the son of a man killed in an automobile accident could not recover because the man was not an insured under the policy against which the son sought to recover.  

Son Intervenes

While riding as a passenger in a vehicle driven by Channing Mathews in 2015, Ryan Johnson was killed in an accident.

Johnson’s parents sued Mathews, as well as the owner of the vehicle Mathews was driving and their auto insurers. Elliot Brey, Johnson’s minor son, intervened in the lawsuit.

State Farm Mutual Automobile Insurance Company (State Farm) insured Brey as a “resident relative” under a policy issued to Hannah Brey, Eliot’s mother, and her husband Jake Brey for a 2007 Honda CRV (the Honda was not involved in the accident).

Only Insureds Covered

When he intervened, Brey added State Farm as a defendant. Brey sought to recover against the State Farm policy on claims of negligence, loss of society and companionship, and wrongful death.

A provision in the Breys’ State Farm policy specified that in order to collect UIM damages, an insured must have sustained bodily injury caused by an accident involving an underinsured vehicle.

State Farm moved for summary judgment. Brey argued that Wis. Stat. section 632.32(2)(d) rendered the UIM provisions in the State Farm policy unenforceable.

The circuit court granted summary judgment for State Farm. The court of appeals reversed the circuit court. 

Strict Construction was Erroneous

Section 632.32(2)(d) reads: “’Underinsured motorist coverage’ means coverage for the protection of persons insured under that coverage who are legally entitled to recover damages for bodily injury, death, sickness, or disease from owners or operators of underinsured motor vehicles.”

The court of appeals held that that wording unambiguously prohibits insurers from limiting UIM coverage to persons who sustain bodily injury, because Brey was an insured; was legally entitled to recover damage; and had a wrongful death claim against the owner or operator of a motor vehicle.

In an opinion by Justice Rebecca Grassl Bradley, the supreme court held that the court of appeals erred by “strictly construing the statutory definition in isolation rather than interpreting it in the context of the [statue’s] pertinent text as a whole.”

When construed in context with related statutes, Justice R.G. Bradley wrote, “UIM coverage exists only when an insured suffers bodily injury or death.”

Interpretation Clashes With Other Sections

The literal interpretation given by the court of appeals clashed with other sections of the state’s omnibus automobile insurance statute, Justice R.G. Bradley explained.

For instance, under section 632.32(5), insurers may limit UIM coverage under nine situations.

“Read in the context of these paragraphs, section 632.32(2)(d) does not require insurers to extend UIM coverage when no insured has suffered bodily injury or death,” Justice R.G. Bradley wrote.

In particular, explained Justice R.G. Bradley, section 632.32(5)(f) – which allows insurers to prohibit an insured from “stacking” policies to boost the aggregate coverage limit– links UIM coverage to bodily injury or death suffered by a person in an accident.

“Interpreting section 632.32(2)(d) to apply anti-stacking provisions only to injured insureds while allowing uninjured insureds to circumvent them would be nonsensical,” Justice R.G. Bradley wrote.

The same was true with regard to section 632.32(5)(j), which allows policy provisions that except from UIM coverage insureds who are injured while driving a vehicle not covered under the policy.

Furthermore, the supreme court had upheld a policy exclusion that denied UIM coverage to a man who was covered under his mother’s policy because he owned his own vehicle.

“Given that an otherwise injured accident victim can be excluded from UIM coverage under his mother’s policy because of the insurer’s ‘own-other-car’ exclusion, it would be incongruous for the same statutory scheme to mandate that insurers provide UIM coverage for an accident victim who is not insured under any policy,” Justice R.G. Bradley wrote.

A Look at Statutory History

The relevant statutory history supported the supreme court’s interpretation of section 632.32(2)(d), Justice R.G. Bradley explained.

Contrary to Brey’s assertion, legislation enacted in 2011 that repealed section 632.32(2)(e) defining “underinsured motorist coverage” “did not broaden UIM coverage for tort victims, but rather increased coverage flexibility for insurers,” Justice R.G. Bradley wrote.

There was nothing in the 2011 legislation that indicated the legislature intended persons in Brey’s situation to be provided UIM coverage, Justice R.G. Bradley wrote.

“Collectively, these 2011 enactments evince a ‘textually or contextually manifest’ purpose to permit greater limitations on UIM coverage and expanded insurer flexibility – goals entirely inconsistent with a mandate that insurers provide UIM coverage to insureds who are not involved in any accident at all.”

Precedent Precludes Coverage

Because Johnson could not have recovered damages against the UIM coverage in the Breys’ policy, Brey could not maintain his wrongful death action, because wrongful death actions are derivative, Justice R.G. Bradley explained.

Supreme court precedent is clear that without possessing an independent claim for UIM coverage, an accident victim cannot maintain a wrongful death action, Justice R.G. Bradley wrote.

“Other decisions by this court similarly link the insured to the bodily injury sustained in the accident for purposes of UIM coverage … Nothing in section 632.32(2)(d) precludes insurers from affording coverage to only those insureds who are injured in an auto accident.”