State Farm Mutual Automobile Insurance v. Hinkel Ex Rel. Hinkel

Mowbray, J.,

dissenting:

I dissent.

The principal issue presented for our consideration on this appeal is whether Gordon John Hinkel, a minor, who was injured by an uninsured motorist while riding his Honda motorcycle, may recover in damages for those injuries under an insurance policy issued by the appellant, State Farm Mutual Automobile Insurance Company, to Gordon’s father, Donald Eugene Hinkel.

1. The Facts.

Gordon, acting through his father as guardian ad litem, and Donald commenced this action in the district court against State Farm to recover damages suffered by Gordon when the Honda motorcycle that he was riding collided with a vehicle driven by an uninsured motorist. The case was tried before the district judge, who entered judgment for the Hinkels and against State Farm for $9,848.90 plus attorney’s fees and costs. The trial judge held State Farm liable in damages for Gordon’s injuries under the uninsured motorist provisions of an insurance policy issued to Gordon’s father, Donald. Those provisions are, in relevant part:

“Coverage U — Damages for Bodily Injury Caused by Uninsured Automobiles. To pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile *485 because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile; . . .”

Gordon, who resided in his father’s home, claims that he is an insured within the meaning of the policy. The policy includes among the insured:

“(1) the first person named in the declarations and[,] while residents of his household, his spouse and the relatives of either;”.

State Farm agrees that Gordon is an insured under the policy’s definition of insureds, but argues that he is precluded from recovery in this case by the exclusionary provision of the uninsured motorist section of the policy, which states, in part:

“Insuring Agreement III does not apply:

“(b) to bodily injury to an insured while occupying or through being struck by a land motor vehicle owned by the named insured or any resident of the same household, if such vehicle is not an ‘insured automobile’;”.

The Hinkels contend (1) that Gordon is covered as an insured under the policy and that he is not barred from recovery by the exclusionary provisions of the policy and (2) that if Gordon is so barred, then the exclusionary provision is restrictive and contrary to the policy of the State of Nevada as enumerated in NRS 693.115, subsection 1, which provides: “No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed for bodily injury or death may be delivered or issued for delivery in this state unless coverage is provided or supplemental to such policy for the protection of persons insured under such policy who are legally entitled to recover damages from owners or operators of uninsured motor vehicles.”

Donald initially obtained from State Farm a policy of automobile liability insurance covering a 1963 Thunderbird. The policy included the aforementioned uninsured motorist coverage. Thereafter, Gordon purchased a Honda motorcycle for which he obtained an insurance policy from Balboa Insurance Company. Although offered the uninsured motorist coverage by Balboa, Gordon expressly waived it. At no time until the accident was State Farm aware of the fact that Gordon had purchased the Honda or that it was insured by Balboa.

2. The Uninsured Motorist Coverage.

In my opinion Gordon is precluded, by the exclusionary clause of the State Farm policy, from .recovery under the uninsured motorist coverage, in that the Honda motorcycle he *486 was riding at the time of the accident was not an “insured automobile” as that term is defined in the policy. The exclusionary clause is unambiguous, and I do not find such an exclusion so restrictive as to be contrary to the policy of the State as announced in NRS 693.115, subsection 1, supra.

I find nothing in the statute to require us to come to the conclusion that an insurance company — in this case, State Farm — may not issue a policy of insurance with that uninsured motorist coverage contemplated by the statute, designating the vehicles to be included in the policy and thereby limiting coverage to those vehicles so named. To rule as the majority has done means that an insured can obtain uninsured motorist coverage for a sole vehicle, then later obtain a fleet of cars and automatically have them covered by the initial policy of insurance. I do not think that the statute intended to go that far. The court in Spencer v. Traders & Gen. Ins. Co., 171 So.2d 723, 726 (La.App. 1965), put the reason for the rule rather well:

“. . . The purpose which the insurer had in excluding automobiles owned by residents of the same household from this type of coverage obviously is to protect itself against situations where an insured could pay for one policy providing uninsured motorist coverage on one vehicle, and then claim coverage while occupying any and all other vehicles owned by residents of the same household, . . .”

In Rushing v. Allstate Ins. Co., 216 So.2d 875, 876 (La. App. 1968), the court upheld a similar exclusionary clause and said:

“. . . Under the provisions of . . . [the uninsured motorist statute] uninsured motorists protection is extended only to those who are insured by automobile liability insurance. When Rushing occupied an owned motor vehicle, not insured, he was no longer protected by the Allstate policy which covered his other car. We can see nothing in the statute which requires an insurer to extend uninsured motorist protection under one policy to one who has elected not to insure another vehicle owned by him, so long as he occupies that vehicle. The exclusionary clause relied on by defendant is reasonable and not in violation of . . . [the uninsured motorist statute].” (Emphasis added.)

In a well reasoned opinion, the court in Shipley v. American Standard Ins. Co., 158 N.W.2d 238, 240 (Neb. 1968), ruled:

“An uninsured motorist endorsement should be interpreted in light of statutory requirements concerning coverage. The statute was designed to protect innocent victims of negligent *487 and financially irresponsible motorists. . . . An overriding public policy of protecting an owner-operator who inexcusably has no applicable bodily injury liability coverage is not presently discernible.

“An insurance contract should be interpreted in accordance with reasonable expectations of the insured at the time of the contract. ... He [Plaintiff] might expect the uninsured motorist endorsement to cover loss while he was operating his motorcycle, but such expectations are unreasonable.”

Finally, as the United States Court of Appeals said in Nationwide Mut. Ins. Co. v. Akers, 340 F.2d 150, 155, 156 (4th Cir. 1965):

“The coverage provided by the policy is more clearly manifested by a definition of ‘owned automobile’ which appears on the reverse of the declaration sheet. An ‘owned automobile’ is defined as a ‘private passenger, farm or utility automobile described in the policy.’ (Emphasis added.) This definition serves to restrict coverage in a situation like the present where all automobiles owned by the insured are not listed on the declaration sheet. The clear import of this language is to limit coverage of the policy to those automobiles owned by the insured and described in the policy declarations.

“. . . [Consequently, . . . [the insured] could own an unlimited number of cars and all would be insured[;] yet he would be paying premiums for coverage on only two [the two described in the policy]. Such reasoning is fallacious and would lead to a result beyond the intent of the contracting parties.” (Emphasis in original of Akers opinion.) 1

I would rule that the exclusionary clause of the uninsured motorist coverage provision is clear and binding in this case, that it is not so restrictive as to offend the policy announced in the related statute, and that Gordon cannot recover in damages from State Farm.

I agree. In my opinion the Legislature, in adopting NRS 693.115, never intended that an insured could purchase a single policy of uninsured motorist insurance on one motor vehicle but refuse to do so on any other vehicles that he or any resident member of his family owned then or at any subsequent time and intend that the initial coverage of the one vehicle would extend to all vehicles then owned or later acquired by members of the household. To so interpret the statute seems most unrealistic and unreasonable, for there would be no additional premium required or paid for the added coverage.