Opinion
No. 106,101.
2012-08-10
Christopher RUNTE, Appellee, v. SHELTER INSURANCE COMPANIES, Appellant, and Farm Bureau Mutual Insurance Company, Appellee.
Appeal from Seward District Court; Kim R. Schroeder, Judge. Michael J. Norton and Rachel Parr, of Foulston Siefkin LLP, of Wichita, for appellant Shelter Insurance Companies. Randall E. Fisher, of Wichita, for appellee Christopher Runte.
Appeal from Seward District Court; Kim R. Schroeder, Judge.
Michael J. Norton and Rachel Parr, of Foulston Siefkin LLP, of Wichita, for appellant Shelter Insurance Companies. Randall E. Fisher, of Wichita, for appellee Christopher Runte.
Bradley C. Ralph, of Williams, Malone & Ralph, P.A., of Dodge City, for appellee Farm Bureau Mutual Insurance Company.
Before GREENE, C.J., GREEN and BUSER, JJ.
MEMORANDUM OPINION
GREEN, J.
Christopher Runte, the plaintiff, was injured in a two-car accident in Liberal, Kansas. He was a front seat passenger in a car driven by Nancy Guzman. The car was insured by Shelter Mutual Insurance Companies (Shelter). The tortfeasor, who caused the collision, was insured by State Farm Mutual Automobile Insurance Company (State Farm), and he carried bodily injury liability limits of $25,000 per person. State Farm tendered to Runte the $25,000 policy limits. Runte was insured under an automobile policy with Farm Bureau Mutual Insurance Company (Farm Bureau). Runte suffered personal injury and noneconomic damages in excess of $100,000. Runte's Farm Bureau policy had underinsured motorist (UIM) limits of $100,000. Guzman's Shelter policy had UIM limits of $50,000.
When Runte made a UIM claim against Farm Bureau for payment of the $75,000 in UIM coverage available under his policy, Farm Bureau denied Runte's claim. Farm Bureau contended that it was not required to pay any UIM benefits until Runte recovered from Shelter under the policy of insurance that insured Guzman. Shelter denied that its policy furnished UIM coverage to Runte. Runte filed suit against both Shelter and Farm Bureau.
Shelter and Farm bureau both moved for summary judgment. The trial court granted summary judgment in favor of Farm Bureau based on the ambiguous language of Shelter's policy. On appeal, Shelter contends that the trial court erred in granting summary judgment to Farm Bureau. We agree. Accordingly, we reverse and remand to the trial court with directions to enter summary judgment in favor of Shelter.
On July 15, 2007, Runte was a passenger in a car driven by Guzman. Guzman's car collided with a car driven by Vernon Lewis. As a result of this accident, Runte was injured. Lewis' car was insured by State Farm. State Farm tendered the policy liability limits of $25,000 to Runte.
Guzman's car was insured by Shelter, and it carried UIM limits of $50,000 per person. Runte was insured by a policy with Farm Bureau that carried UIM limits of $100,000 per person. Runte made a claim for UIM benefits under Shelter's policy, but Shelter denied Runte benefits arguing that Runte did not qualify as an “insured” under Shelter's policy. Runte also made a claim for UIM benefits under Farm Bureau's policy, but Farm Bureau denied the benefits because Farm Bureau believed that Shelter had the primary policy of coverage and that Shelter should pay the UIM benefits first and then Farm Bureau would cover any excess amount owed. Runte filed suit against Shelter and Farm Bureau, and both Shelter and Farm Bureau moved for summary judgment.
The trial court granted summary judgment in favor of Farm Bureau finding that the definition of “use” in Shelter's policy was ambiguous and it violated public policy. The trial court further found that Runte was an insured under Shelter's policy, and as a result, the trial court determined that Shelter had the primary policy and must pay its UIM limits first.
Did the Trial Court Err in Granting Summary Judgment to Farm Bureau, Holding That Shelter's Insurance Policy Furnished UIM Benefits to Runte?
Shelter argues that the trial court erred in granting summary judgment to Farm Bureau based on its finding that Runte qualified as an insured under Shelter's policy.
This court's standard of review is well established:
“ ‘ “Summary judgment is appropriate when the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. The trial court is required to resolve all facts and inferences which may reasonably be drawn from the evidence in favor of the party against whom the ruling is sought. When opposing a motion for summary judgment, an adverse party must come forward with evidence to establish a dispute as to a material fact. In order to preclude summary judgment, the facts subject to the dispute must be material to the conclusive issues in the case. On appeal, we apply the same rules and where we find reasonable minds could differ as to the conclusions drawn from the evidence, summary judgment must be denied.’ “ [Citations omitted.]” Nungesser v. Bryant, 283 Kan. 550, 566, 153 P.3d 1277(2007).
The parties stipulated to the facts and agreed that the facts are undisputed. The disputed issue involves the trial court's conclusions of law, particularly its interpretation of the Shelter insurance contract. This court has unlimited review of questions of law. See Nungesser, 283 Kan. at 566–67.
Coverage Issue
When, as in this case, an insured files suit against its insurer seeking coverage under a policy of insurance, the insured has the burden of proving he or she falls within the coverage provisions of the policy. Brumley v. Lee, 265 Kan. 810, 816, 963 P.2d 1224 (1998). More specifically, “ ‘the insured has the burden of proof to establish the nature and extent of any loss and that the loss claimed was caused by one of the perils insured against (“covered”) by the policy.’ “ Kansas Farm Bureau Ins. Co. v. Reynolds, 16 Kan.App.2d 326, 328, 823 P.2d 216 (1991). Assuming the insured can satisfy this burden, the insurer then has the burden of proving that any exclusionary clauses within the policy apply to preclude coverage. Exploration Place, Inc. v. Midwest Drywall Co., 277 Kan. 898, 906, 89 P.3d 536 (2004).
In its first issue on appeal, Shelter contends that the trial court erred in finding that Runte qualified as an insured under Shelter's policy.
The resolution of the issue of coverage requires an interpretation of the Shelter insurance policy. The interpretation of a written insurance policy based on stipulated facts is a question of law over which an appellate court has unlimited review. Colfax v. Johnson, 270 Kan. 7, 10, 11 P.3d 1171 (2000).
It is undisputed that when the accident occurred Runte was a passenger in Guzman's car. Does Runte qualify as a “user” under Shelter's policy when he was a passenger in the car? If Runte is a user under the policy, then he qualifies as an insured and is entitled to receive UIM benefits from Shelter. To answer this question, we must consider the terms of Shelter's insurance policy and determine whether Runte fits within the policy's definition of “user.”
Shelter's policy for the underinsured motorist coverage states: “If an insured sustains bodily injury as a result of an accident involving the use of a motor vehicle, and is entitled to damages as a result of that bodily injury, we will pay the uncompensated damages, subject to the limit of our liability stated in this Coverage.”
The term “insured” is further defined as follows: “(a) You; (b) any relative; and (c) any other individual using the described auto with permission.”
Shelter's policy defines “use” as “operation and maintenance.” The policy further defines “operate” as follows: “physically controlling, having physically controlled, or attempting to physically control, the movements of a vehicle.” The policy also defines “maintenance” as follows: “[T]he performance of services which are necessary to keep a motor vehicle in working order or to restore it to working order. It does not include the installation or servicing of equipment which is not usual and incidental to the operation of an auto.”
In denying Runte's claim for UIM benefits, Shelter stated that Runte did not meet the policy's definition of the term “insured” as defined in the policy.
The trial court concluded that Runte did meet the policy requirements for coverage and granted summary judgment to Farm Bureau based on Shelter's definition of “use” being too narrow and against public policy. In concluding that Shelter was required to provide UIM coverage to Runte as a user and, therefore, as an insured, the trial court reasoned:
“28. The term ‘use’ in a coverage clause of an insurance agreement is given a broad, general and comprehensive meaning affecting broad coverage and it includes any exercise of control over the vehicle regardless of its purpose, extent, or duration. [Citation omitted.]
....
“33. To this Court the term ‘use’ is not ambiguous but how Shelter Insurance is choosing to apply it to a passenger under its policy is.
....
“35. The Shelter policy is an attempt to dilute the intent of K .S.A. 40–284 and K.S.A. 40–3107(b) to deny coverage when a passenger is riding in its insured's car and struck by an underinsured motorist.
“36. This Court agrees it cannot rewrite the policy, but in the same token the policy cannot change the intended application of the statute to provide broad coverage by our legislature and violate public policy.”
Shelter argues that its policy does not furnish UIM coverage to Runte. Shelter contends that the term “use” as defined in its policy is not ambiguous because it is clearly defined in the policy. Shelter argues that Kansas courts have consistently allowed, and even encouraged, insurance carriers to define the term “use” in their insurance policies. Shelter maintains that Runte does not fit within the policy's definition of “use” because he was not maintaining or operating the car.
We interpret the terms of an insurance policy by applying the following rules of construction:
“The language of an insurance policy, like any other contract, must, if possible, be construed in such way as to give effect to the intention of the parties. [Citations omitted.] In construing a policy of insurance, a court should consider the instrument as a whole and endeavor to ascertain the intention of the parties from the language used, taking into account the situation of the parties, the nature of the subject matter, and the purpose to be accomplished. [Citation omitted.]
“ ‘Because the insurer prepares its own contracts, it has a duty to make the meaning clear. If the insurer intends to restrict or limit coverage under the policy, it must use clear and unambiguous language; otherwise, the policy will be liberally construed in favor of the insured. [Citations omitted.] If an insurance policy's language is clear and unambiguous, it must be taken in its plain, ordinary, and popular sense. [Citation omitted.] In such case, there is no need for judicial interpretation or the application of rules of liberal construction. [Citation omitted.] The court shall not make another contract for the parties and must enforce the contract as made. [Citations omitted.]
“ ‘However, where the terms of an insurance policy are ambiguous or uncertain, conflicting, or susceptible of more than one construction, the construction most favorable to the insured must prevail. [Citations omitted.]
“ ‘ “To be ambiguous, a contract must contain provisions or language of doubtful or conflicting meaning, as gleaned from a natural and reasonable interpretation of its language. Ambiguity in a written contract does not appear until the application of pertinent rules of interpretation to the face of the instrument leaves it genuinely uncertain which one of two or more meanings is the proper meaning.” [Citation omitted.]
“ ‘Whether a written instrument is ambiguous is a question of law to be decided by the courts. [Citation omitted.] Courts should not strain to create an ambiguity where, in common sense, there is not one. [Citation omitted.] The test in determining whether an insurance contract is ambiguous is not what the insurer intends the language to mean, but what a reasonably prudent insured would understand the language to mean.’ [Citations omitted.]” (Emphasis added.) American Family Mut. Ins. Co. v. Wilkins, 285 Kan. 1054, 1058–59, 179 P.3d 1104 (2008).
The determinative issue is whether Runte qualifies as an insured under Guzman's insurance policy with Shelter. It is clear that the policy contains a provision that limits the UIM coverage to insured persons. The policy provides that insured persons include: (1) the policyholder; (2) a relative of the policyholder (as defined by the policy); or (3) any other individual using the described automobile with permission (as defined by the policy). Runte concedes that he is not the policyholder and that he is not a relative of the policyholder, who was Guzman. Therefore, for Runte to qualify as an insured he must have been using Guzman's car with permission.
Because there is no dispute that Runte was an invited passenger in Guzman's car, Runte focuses his argument on the definition of “use.” As stated earlier, Shelter's policy defines the word “use” as “operation and maintenance.” Both Farm Bureau and Runte cite several cases in support of their argument that Shelter's definition of “use” is ambiguous and too narrow. See Alliance Mutual Casualty Co. v. Boston Insurance Co., 196 Kan. 323, 328, 411 P.2d 616 (1966) (“use” is synonymous with benefit and employment, and to use has been defined as to hold, occupy, enjoy, or take the benefit of); Kemper Ins. Co. v. Weber, 38 Kan.App.2d 546, 555, 168 P.3d 607 (2007) (passenger was found to be using car at time of accident), rev, denied 1178 (2008); United States Fidelity & Guar. Co. v. Farm Bureau Mut. Ins. Co., 2 Kan.App.2d 580, 582, 584 P.2d 1264 (1978) (the term “use” is given broad, general and comprehensive meaning affecting broad coverage and is designed to include all proper uses of a car; found “use” includes any exercise of control over the vehicle regardless of its purpose, extent, or duration).
While these cases may support the contention that in the context of motor vehicle liability insurance, the term “use” may have a broader meaning than operation and maintenance, especially when applied to passengers, these cases are not determinative here because there is no indication in those cases that the policies included the restrictive definition of “use” found in the Shelter UIM policy coverage.
Both Runte and Farm Bureau rely on Weber to support their argument that as a passenger Runte was using the car. In Weber, our court held that Taylor, the passenger who had rented the car, was using the car when the accident occurred even though she was not driving. 38 Kan.App.2d at 555. In reaching this conclusion, our court relied on the Fidelity case that found that use includes any exercise of control over the vehicle regardless of its purpose, extent, or duration. Weber, 38 Kan.App.2d at 555. To support its conclusion, our court noted that in addition to finding that Taylor was “ ‘using’ “ the car to transport her and her friends to a football game, she was also the “ ‘trip boss' “ because she determined who was driving and when. Moreover, she required all of the passengers to wear their seatbelts. 38 Kan.App.2d at 553, 555.
Weber, however, can easily be distinguished from this case. First, and most important, the insurance policy at issue in Weber did not define the term “use.” Caselaw clearly states that in the absence of a definition of “use” in a policy, or when the definition is ambiguous, a broad definition is applied. See Wilkins, 285 Kan. at 1058–59. Second, the issue in Weber was whether the rental car qualified as an “insured car” under the insurance policy. And finally, although Weber, like our case, involved the issue of whether a passenger was using a car, it is clear that the passenger in Weber was not simply a mere passenger. The Weber court found that the passenger had exercised some indirect control over the car. There are no similar facts in our case to show that Runte exercised any control, direct or indirect, over the car insured by Shelter.
In promoting a broad interpretation of the word “use,” Farm Bureau and Runte fail to recognize a significant distinction: that Shelter's policy explicitly limits UIM coverage to people operating or maintaining the car when the accident occurs. Under a broad reading of the term “use,” Farm Bureau and Runte may have established that Runte was using the car when the accident occurred; however, a broad definition does not apply to this case because “use” was properly defined in the policy. As stated earlier,
“ ‘[i]f an insurance policy's language is clear and unambiguous, it must be taken in its plain, ordinary, and popular sense. [Citation omitted.] In such case, there is no need for judicial interpretation or the application of rules of liberal construction. [Citation omitted.] The court shall not make another contract for the parties and must enforce the contract as made. [Citations omitted.]’ “ Wilkins, 285 Kan. at 1059.
There is no ambiguity as to the meaning of who is covered under Shelter's policy as an insured. As stated earlier, “ ‘[t]he test in determining whether an insurance contract is ambiguous is not what the insurer intends the language to mean, but what a reasonably prudent insured would understand the language to mean.’ “ Wilkins, 285 Kan. at 1059. The policy specifically defines “insured” to include any person using the car with permission if that person is operating or maintaining the car. Here, the evidence is undisputed that Runte was simply a passenger and that he was not operating or maintaining the car. Thus, the trial court erred in granting summary judgment in favor of Farm Bureau on this issue.
I do not conclude, as the dissent does, that Shelter's policy definition of the term “use” “has created a brand new universe of persons who are not covered as our legislature intended.” The plain language of K.S.A. 40–284 affords no basis for the dissent to make this claim. For example, our legislature, under K.S.A. 40–284(c), allows a named insured to reject uninsured and UIM coverage in excess of the minimum bodily liability limits required by K.S.A. 40–3107. As a result, this court, in Ochs v. Federated Mut. Ins. Co., 43 Kan.App.2d 127, 133, 221 P.3d 622,rev. denied 290 Kan. 1094 (2010), recognized that this rejection provision seriously undermines any public policy argument that the legislature, under K.S.A. 40–284, intended to furnish UIM coverage to innocent victims (“ We are of course aware that because the rejection provisions of K.S.A. 40–284(c) detract from the public policy goals of protecting innocent victims, the rejection provisions are to be narrowly and strictly construed.” [Emphasis added.] ). If the rejection provisions of K.S.A. 40–284(c) are to be narrowly and strictly construed, this is a clear indication that our legislature has not mandated UIM coverage for a passenger of an insured vehicle.
Another indication that our legislature has yet to mandate UIM coverage for a passenger of an insured vehicle is that during the 2011 legislative session, a bill was introduced seeking to do just that. House Bill 2291 was introduced with the goal of modifying K.S .A. 40–284. If passed, House Bill 2291 would have required automobile insurers to provide UIM coverage for any person occupying the insured motor vehicle. After being introduced, this bill was referred to the Committee on Insurance, and then no further action was taken. We recognize that “legislative inaction is not necessarily indicative of legislative intent.” See U.S.D. No. 501 v. Baker, 269 Kan. 239, 246, 6 P.3d 848 (2000). Nevertheless, because the legislature failed to pass House Bill 2291, one could strongly argue that, for at least now, the legislature has made a clear policy choice not to furnish UIM coverage to passengers of insured vehicles. Thus, the dissent makes an unwarranted leap when it says that our legislature intended to furnish UIM coverage for a passenger of an insured vehicle such as Runte.
In essence, the dissent wants to rewrite K.S.A. 40–284 to require UIM coverage for all passengers of insured vehicles. To justify its reasoning, the dissent contends that the statutory provisions must be construed liberally. Nevertheless, the clear text of K.S.A. 40–284 does not require UIM coverage for passengers of insured vehicles. Because none of the parties have argued that K.S.A. 40–284 is ambiguous concerning UIM coverage and because there is no ambiguity as to the meaning of who is covered under Shelter's policy as an insured, the dissent's resort to liberal construction is unwarranted. Thus, the dissent's statutory argument is unwarranted as a matter of law and wrong as a matter of public policy.
Public Policy Argument
Next, Shelter contends that the trial court erred in finding that Shelter's policy definition for “use” impermissibly dilutes the ordinary meaning of the term and that it violates public policy. In reaching this conclusion, the trial court stated: “The term ‘use’ as used in both K.S.A. 40–284 and K.S.A. 40–3107(b) has to be given its normal and ordinary meaning which cannot be diluted. Use should mean use.”
Under the trial court's broad interpretation of “use,” any passenger sitting in a car is using the car and would qualify as an insured. The Shelter policy limits its UIM coverage to only those individuals operating or maintaining the car, therefore excluding mere passengers. As a practical matter, this means that any passenger who is not operating or maintaining the car must be a named insured on the policy or be a relative of a named insured to be covered by the UIM coverage. This does not violate public policy. Parties to the insurance contract can still determine who will be named as an insured.
The Shelter policy also does not violate the two statutes that the trial court relied on. Those statutes are as follows:
K.S.A. 40–284(a) and (b) state:
“(a) No automobile liability insurance policy covering liability arising out of the ownership, maintenance, or use of any motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state, unless the policy contains or has endorsed thereon, a provision with coverage limits equal to the limits of liability coverage for bodily injury or death in such automobile liability insurance policy sold to the named insured for payment of part or all sums which the insured or the insured's legal representative shall be legally entitled to recover as damages from the uninsured owner or operator of a motor vehicle because of bodily injury, sickness or disease, including death, resulting therefrom, sustained by the insured, caused by accident and arising out of ownership, maintenance or use of such motor vehicle, or providing for such payment irrespective of legal liability of the insured or any other person or organization. No insurer shall be required to offer, provide or make available coverage conforming to this section in connection with any excess policy, umbrella policy or any other policy which does not provide primary motor vehicle insurance for liabilities arising out of the ownership, maintenance, operation or use of a specifically insured motor vehicle.
“(b) Any uninsured motorist coverage shall include an underinsured motorist provision which enables the insured or the insured's legal representative to recover from the insurer the amount of damages for bodily injury or death to which the insured is legally entitled from the owner or operator of another motor vehicle with coverage limits equal to the limits of liability provided by such uninsured motorist coverage to the extent such coverage exceeds the limits of the bodily injury coverage carried by the owner or operator of the other motor vehicle.”
Additionally, K.S.A. 40–3107(b) states:
“Every policy of motor vehicle liability insurance issued by an insurer to an owner residing in this state shall:
....
“(b) insure the person named and any other person, as insured, using any such vehicle with the expressed or implied consent of such named insured, against loss from the liability imposed by law for damages arising out of the ownership, maintenance or use of any such vehicle within the United States of America or the Dominion of Canada, subject to the limits stated in such policy.”
Neither statute requires that a Kansas automobile insurance policy provide UIM coverage for all passengers in the car. The statutes also do not expressly state that the UIM coverage extends to all passengers like the statute governing Kansas Personal Injury Protection (PIP). See K.S.A. 40–3107(0 (auto policy must include PIP coverage for all passengers in such motor vehicle). Based on the express language in K.S.A. 40–3107(f), if the legislature meant for the UIM benefits to cover all passengers it could have included that language in K.S.A. 40–284. Thus, this is an issue that should be resolved by the legislature. Until the legislature modifies K.S.A. 40–284 to require UIM benefits to cover all passengers, insurance companies are free to write their policies to define who shall be an insured for such coverage.
For all of the foregoing reasons, we find that the trial court's denial of Shelter's motion for summary judgment was error. Accordingly, we reverse the trial court's grant of summary judgment in favor of Farm Bureau and remand with directions to grant summary judgment in favor of Shelter on the UIM coverage issue.
Reversed and remanded to the trial court with directions to enter summary judgment in favor of Shelter.
* * *
GREENE, C.J., dissenting.
I respectfully dissent because the Shelter policy definitions violate statutory requirements for the underinsured motorist (UIM) coverage and are otherwise contrary to the public policy considerations underlying this coverage.
First, I agree with the majority in its holding that there is no ambiguity as to the meaning of who is covered under Shelter's policy and that, based purely on the policy definitions, passengers do not qualify for UIM coverage because they neither operate nor maintain the vehicle. But that is not the overarching question in this appeal; the penultimate question is whether by so narrowing the scope of UIM coverage, has Shelter violated Kansas law and public policy.
I begin by referencing the material aspects of the district court's journal entry denying Shelter's summary judgment motion:
“35. The Shelter policy is an attempt to dilute the intent of K .S.A. 40–284 and K.S.A. 40–3107(b) to deny coverage when a passenger is riding in its insured's car and struck by an underinsured motorist.
“36. This Court agrees it cannot rewrite the policy, but in the same token the policy cannot change the intended application of the statute to provide broad coverage by our legislature and violate public policy.
“37. Shelter's position means a passenger in its insured car when struck by an uninsured/underinsured automobile who has no insurance of his or her own has no coverage. That cannot be the intent of our legislature.
“38. This Court was also directed to the case of Progressive Casualty Ins. Co. v. Farm Bureau Mut. Ins. Co., 27 Kan.App.2d 765, 767, 9 P.3d 565 (2000) where the Court there said:
“There is persuasive authority the insured of a vehicle involved in a collision has primary UM coverage for a passenger of that vehicle, with the insurer of a passenger providing excess coverage. See State Farm Mut. Auto Ins. Co. v. Powers, [169 Vt. 230,] 732 A.2d 730, 736–37 (Vt.1999). See Couch on Insurance 3d § 219:51, p. 219–65 (1999); 8C Appleman & Appleman, Insurance Law and Practice § 5102.65, pp. 492–93 (1981).' “
The purpose of the legislation mandating the offer of uninsured (UM) and UIM coverage is to fill the gap inherent in motor vehicle financial responsibility and compulsory insurance legislation. This coverage is intended to provide recompense to innocent persons who are damaged through the wrongful conduct of motorists who, because they are uninsured or underinsured and not financially responsible, cannot be made to respond in damages. Rich v. Farm Bur. Mut. Ins. Co., 250 Kan. 209, 215, 824 P.2d 955 (1992). This legislation was remedial in nature and must be liberally construed to provide broad protection. Simpson v. Farmers Ins. Co., 225 Kan. 508, 512, 592 P.2d 445 (1979).
K.S.A. 40–284 has been quoted in part by the majority and mandates this coverage “equal to the limits of liability coverage” for “payment of part or all sums which the insured ... shall be legally entitled to recover as damages from the uninsured [or underinsured] owner or operator” and “ arising out of ownership, maintenance or use ” of such motor vehicle “irrespective of legal liability of the insured.” (Emphasis added). The purpose of this statute is to provide an individual who is covered by the standard automobile liability policy with a right against his or her own insurer equal to that the insured would have against the uninsured or underinsured tortfeasor. Van Boozer v. Farmers Insurance Exchange, 219 Kan. 595, 600, 549 P.2d 1354 (1976). Exclusions or limitations that are permissible under the statute are specifically listed at K.S.A. 40–284(e)(1)–(6).
Additionally, K.S.A. 40–3107(b), also quoted by the majority, mandates that every motor vehicle liability insurance policy issued in Kansas shall “insure the person named and any other person, as insured, using any such vehicle” against loss “ arising out of the ownership, maintenance or use of any such vehicle.” (Emphasis added).
These statutory provisions are not only to be construed liberally, but any attempts not authorized by statute to condition, limit, or dilute the broad, unqualified mandated UM and UIM coverage are void and unenforceable. See Cannon v. Farmers Ins. Co., 274 Kan. 166, 169, 174, 50 P.3d 48 (2002).
So, the question is whether Shelter's definitions of “insured” and “use” have diluted the required statutory coverage. It is no secret that Shelter's policy definitions attempt to move Shelter out of the mainstream of UIM coverage provisions employed by other companies. As noted by the district court here, generally the insurer of a vehicle involved in a collision has primary UIM coverage for the passengers of that vehicle. See, e.g., McMurray v. Nationwide Mut Ins. Co., 878 N.E.2d 488 (Ind.App.2007); Elrod v. General Cas. Co. of Wisconsin, 566 N.W.2d 482 (S.D.1997); State Farm Mut. Auto. Ins. Co. v. Powers, 169 Vt. 230, 732 A.2d 730 (1999). Similarly, Kansas cases involving UM/UIM policies have reflected the common understanding that passengers who occupy a vehicle are considered “using” the vehicle. See, e.g., Hamidian v. State Farm Fire & Cas. Co., 251 Kan. 254, 258, 833 P.2d 1007 (1992); Sears v. Wilson, 10 Kan.App.2d 494, Syl ¶ 2, 704 P.2d 389 (1985). It appears that “use” may be defined differently for purposes of an automobile liability policy. See Colfax v. Johnson, 270 Kan. 7, Syl ¶ 4, 11 P.3d 1171 (1999).
My view that Shelter has diluted the mandated coverage is based on Shelter's definition of “insured” as “any other individual using the described auto with permission,” and then defining “use” as encompassing only “operation and maintenance.” In so doing, Shelter effected its dilution. The Kansas statutory scheme clearly employs liberally in each and every applicable and related UIM statute the phrase, “ arising out of operation, maintenance, or use.” Thus, by defining “use” as only “operation and maintenance”, Shelter has narrowed the ambit of the Kansas statutory scheme, which clearly contemplates “uses” beyond only mere operation and maintenance. When this narrowing is incorporated into the definition of “insured”, Shelter accomplishes it goal of restricting UIM coverage to a subuniverse of persons far fewer than contemplated and mandated by Kansas law.
As noted by both Runte and Farm Bureau in this appeal, we have never so limited the understanding or meaning of the term “use.” Our Supreme Court has held that the term
“ ‘has been held to be synonymous with benefit and employment, and practically synonymous with enjoyment [, citation omitted], and as a verb, it has a well-understood meaning and a legal significance, having been variously defined as meaning to employ, to employ for any purpose, to employ for the attainment of some purpose or end, to avail one's self of, to convert to one's service, or to put to one's use of benefit, and the infinitive to use has been defined as to hold, occupy, enjoy, or take the benefit of.’ [Citation omitted.]” Alliance Mutual Casualty Co. v. Boston Insurance Co., 196 Kan. 323, 328, 411 P.2d 616 (1966).
See Ball v. Midwestern Ins. Co., 250 Kan. 738, 745, 829 P.2d 897 (1992); Esfeld Trucking, Inc. v. Metropolitan Insurance Co., 193 Kan. 7, 10–13, 392 P.2d 107 (1964).
If UIM coverage is intended to “fill the gap inherent in motor vehicle financial responsibility and compulsory insurance legislation,” Shelter's policy definitions have reinstated a significant gap. If the majority's views are embraced, Shelter has created a brand new universe of persons who are not covered as our legislature intended. If a passenger in a vehicle insured by Shelter has no insurance of his or her own, perhaps because that person owns no vehicle or is underage for vehicle ownership or operation, and the passenger is injured by an uninsured or underinsured motorist, there is no compensation available above and beyond PIP benefits. This is precisely what is precluded by the statutory scheme, and Shelter has indeed diluted the broad, unqualified mandated UM and UIM coverage, and its narrow policy definitional scheme should be declared void and unenforceable.
The majority has criticized my suggestion that it has created a new universe of persons not covered as had been intended, calling my views “unwarranted” and “wrong.” Yet, I must respectfully emphasize that there is a big difference between an insured who elects to decline UIM coverage, with a resulting equal negative impact both on that insured and his or her passengers, and an insured who elects to accept and pay for UIM coverage, only to find—usually after a need for the coverage—that passengers were not included. Thus, the universe of persons not covered can easily be defined as those passengers of insureds who thought their acceptance and payment of premiums for UIM coverage would secure UIM coverage for all occupants of their vehicles. My bet is that the legislature fully intended for accepting insureds to have the coverage not only for themselves, but for their passengers. And the failure of House Bill 2291 to move through the legislature does not necessarily mean there was an intention to exclude passengers; in fact, its failure could just as easily be perceived to reflect the notion that the amendment was unnecessary because the coverage was already present—at least for those who do not decline UIM coverage. For these reasons, I must respectfully defend my views despite the characterization of them by the majority as “unwarranted” and “wrong.”
I would affirm the district court.