The Eighth Circuit has ruled that a trial court erred in finding an ambiguity based on a summary of the renewal covering. The court found that similar to a declaration page, a summary is not controlling where the relevant policy language establishes otherwise. The case is Micheel v. American Family Mutual Ins. Co., No. 20-1800 (8th Cir. June 17, 2021).
Janet Micheel was injured in a car accident in December 2017. She suffered more than $150,000 in injuries. The other driver had an insurance policy that covered up to $50,000 in injuries, so Micheel contacted her insurer, American Family, to ask for $100,000 in UIM benefits.
The policy extended from July 2015 to January 2016 and had up to $100,000 in UIM coverage which included an offset provision reducing any UIM recovery by amounts paid "by or on behalf of the owner or operator of the underinsured motor vehicle." The policy period lapsed and Micheel renewed the insurance under a policy that allowed the policy to "be continued for successive policy periods by payment of the required premium on or before the effective date of each policy period. After renewal, American Family failed to send Micheel the terms of her new policy. She, instead, received a summary that did not discuss any limitations on coverage.
American Family refused to pay the full $100,000 referencing the offset provision and citing the $50,000 payment from the other driver and claiming that she was only entitled to $50,000 in UIM coverage.
Micheel sued and both sides moved for summary judgment on the application of the offset provision, and whether American Family owed Micheel an additional $50,000. The district court granted summary judgment to Micheel, finding that the summary created an ambiguity of the continued applicability of the offset provision. American Family appealed.
Micheel argued that American Family created ambiguity in the insurance policy by issuing the summary. The summary is by design similar to a declarations page, which "state[s] the policy's essential terms in an abbreviated form." According to Missouri law, "a policy is not ambiguous just because its broad statement of coverage in the declarations page is later cabined by policy definitions or exclusions."
According to the court, the terms of the original policy, which included the offset policy, govern in this case. The insured took out a "continuing" insurance policy, "which is renewable for successive coverage periods when premiums are paid as they fall due. . . While the renewal of an insurance policy constitutes a separate and distinct contract for the period of time covered by the renewal, it is nevertheless a contract with the same terms and conditions as those contained in the policy which is renewed."
By continuing to pay her premiums, Micheel obtained new policy periods, but the terms of the policy remained the same, including the offset provision.
The court reversed the judgment of the district court.
Editor's Note: This is still another example of how an insured should read a policy thoroughly to make sure the coverage they need is covered by the policy.