Injured Pedestrian not "Insured" under Father's UM Policy

In Carlson v. Allstate Insurance Co., 2008 WL 2131345 (Minn.), a pedestrian who was walking across a road shortly after exiting his father's vehicle was struck by an uninsured vehicle. He brought an action against his father's insurer and assigned servicing carrier for the Assigned Claims Bureau, seeking damages under his father's policy's uninsured motorist provisions. On the policy, the father and his wife were listed as the named insureds, and the injured pedestrian son was listed as the primary driver of a vehicle leased in his father's name. The insureds and son brought the action seeking no-fault and uninsured motorist benefits, and the district court granted summary judgment in favor of the insurer. The insureds appealed, and the court of appeals affirmed. The insureds sought further review, which was granted.

 The Supreme Court of Minnesota affirmed the holding. In its decision, the court first addressed the question of what coverage the policy by its terms afforded the insureds. The court explained that the policy provided uninsured motorist coverage to "an insured person" for damages that such person is legally entitled to recover from an uninsured motorist. "Insured person" was defined to include "You," and "You" in turn was defined as "the policyholder named on the Policy Declarations." The insureds relied on the fact that the declarations page nowhere used the term "policyholder" but rather identified "named insureds" and "drivers." The insureds argued that a reasonable person in their position would conclude that "policyholder" included the drivers listed on the declarations page. The insurer responded that a reasonable person would understand that "policyholder" referred to the "named insureds" rather than to the "drivers."

The court determined that the insureds' interpretation did not appear reasonable, as other than the fact that the drivers as well as the named insureds appeared on the declarations page, the insureds offered no basis for the conclusion that a reasonable person would read "policyholders" to include "drivers." A reasonable person, even one unversed in the law or insurance, would understand that "policyholder" referred to the policy's owner.

 Because the insureds' reading was not reasonable, the court concluded that the policy was unambiguous and that the term "policyholder" referred to the named insureds on the declarations page. Therefore, the injured pedestrian was not a policyholder, not "You," not "an insured," and in turn not entitled to uninsured motorist benefits under the plain language of the policy.

 Next, the court addressed whether the injured pedestrian was an insured under the language of Minn.Stat. § 65B.49 3a(5). The statute provided in relevant part, "If at the time of the accident the injured person is not occupying a motor vehicle or motorcycle, the injured person is entitled to select any one limit of liability for any one vehicle afforded by a policy under which the injured person is insured." The insureds argued that the injured pedestrian was insured under the insurer's policy and that therefore the Minnesota No-Fault Automobile Insurance Act compelled coverage in the situation.

The court explained that in deciding whether a No-Fault Act provision superseded a contrary policy provision, it would need to determine what the legislature intended by the relevant statute. The court concluded that, based on the overall structure and language of subdivision 3a(5), the statute was intended as a list of priorities, rather than as a basic definition of the scope of mandated coverage. That is, the subdivision described, for each of several categories of circumstances, which policy an injured person could look to for coverage, rather than describing what coverage each of those policies must provide. Under this reading, the court stated, the meaning of "insured" for purposes of an injured pedestrian depended upon the policy rather than the statute.

 Finally, the insureds argued that even if the insurance policy by its unambiguous terms did not afford uninsured motorist coverage to the pedestrian, he should receive coverage under the doctrine of reasonable expectations. The court, however, disagreed, holding that the doctrine did not apply to provide uninsured motorist coverage where the policy unambiguously denied coverage.

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