Halpin v. American Family Mutual Insurance Co.

THOMAS, Judge,

concurring.

I concur both in the rationale and the result of the majority opinion. I would express the impact of the public policy of the Financial Responsibility Law upon the insurance policy in a slightly different manner. The public policy inherent in the statute creates an implicit agreement in American Family’s policy that, to the extent of the limits required by the Financial Responsibility Act, the provisions concerning coverage will automatically change to conform to any changes in the law of Missouri related to “the liability imposed by law for damages arising out of ... use of such motor vehicle,” (the language of § 303.-190). This is not a matter of changing the terms of the policy retroactively; when American Family chose to write a policy in a state with a financial responsibility law such as Missouri’s, it undertook to insure pursuant to whatever changes in the common law may occur during the term of the policy.

American Family’s household exclusion clause is overbroad on its face because it purports to exclude liability for damages to “any person related to [Mr. and Mrs. Hal-pin] and residing in [their] household.” Despite this apparent broad exclusion, the exclusion is actually no broader than the immunity law of Missouri with regard to liability between such persons. The outer limits of this exclusion clause are far more likely to be defined by the outer limits of the law of Missouri on liability between such persons than they are to be defined by the language of the insurance policy. As the Missouri liability law changed, the scope of this exclusion clause automatically changed with it. American Family is deemed to have impliedly agreed to this flexible approach to coverage as a part of having agreed to insure Mr. and Mrs. Hal-pin in Missouri where the Financial Responsibility Act is applicable. To the extent of the scope and amount of coverage required by the Act, American Family is deemed to *484 have agreed to this coverage just as if it had rewritten the policy to conform to our holding in Hartman v. Hartman, 821 S.W.2d 852 (Mo. banc 1991).

The dissent points out that American Family had every reason to believe that parental immunity was the law of Missouri when it agreed to insure the Halpins and determined the premium it would charge to provide the coverage that it contracted to provide. Because the coverage contemplated by the express provisions of the policy at the time the premium was set did not include liability to the Halpin children for the negligence of their parents, the dissent would not retroactively impose such liability. While it is true that American Family did not know at the time it wrote the policy that the law would change with respect to parental immunity, it knew that it was writing the insurance policy in Missouri where the Financial Responsibility Act required coverage of “liability imposed by law for damages arising out of ... use of such motor vehicle,” and it knew that this law is subject to change from time to time. The cost of increased coverage by reason of an expansive change in the law must fall upon either American Family or its insured. I believe that the public policy of the Act dictates that this cost should fall upon American Family. 1

. I would observe that in the event of a change in the Missouri liability law that contracts liability, as opposed to the abrogation of parental immunity in Hartman that expands liability, American Family will reap the benefit of the lesser exposure to liability. Although the premium will have heen set at the beginning of the policy term on the basis of the law at that time, a change in the law that limits liability and thereby benefits defendants will not require a refund of a portion of the premium by American Family. Also, because our decision today is limited to the coverage limits required by the Financial Responsibility Act ($25,000 for injury to one person, $50,000 for injury in one accident and $10,000 property damage), the cost of any increased risk above these limits will be borne by the insured. I do not cite these results as the basis for the decision of the Court today, which is instead based upon the public policy of the statute, but I make this observation to point out that under our ruling today the "cost" of the change in the law occasioned by our decision in Hartman will be spread over both parties and, to some extent, may be mitigated by past or future changes in the law that limit, rather than expand, tort liability in Missouri.