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IN Auto-Owners Insurance Company v. Michael Cook, Michael Schuster and Highland Auto Glass, Inc., no. 21-cv-348-JPG, United States District Court, SD Illinois (March 9, 2023) Auto-Owners Insurance Company’s motion for summary judgment sought declarations that its policy owed neither defense, indemnification, nor uninsured motorist coverage to the defendants.
BACKGROUND
Schuster and Cook on one side and Devin Dahmer on the other were involved in a car accident. Schuster, president and sole shareholder of Highland, was driving a van he and Highland owned with Cook as a passenger. Both Schuster and Cook were injured in the accident. Cook sued Highland, Schuster and Dahmer for negligence.
Auto-owners seek declarations regarding a “tailored protection” policy. Auto-owners argued that the Auto-owners Garage Policy does not cover vehicles owned by Highland or Schuster such as the vehicle involved in this accident.
FACTS
Schuster was driving a Ford Econoline van that he and Highland jointly owned; Cook was his passenger. Dahmer pulled his van into the roundabout in front of the Highland van and narrowly missed the van. On the way, Dahmer stopped and Schuster pulled the Highland van to the side of the road several car lengths in front of Dahmer’s van. Schuster got out, and then Dahmer drove his van into the Highland van, injuring Schuster and Cook. Dahmer’s insurance paid its limits to Schuster, and then Schuster made a claim for defense, indemnity and UIM coverage under the Highlands Garage Policy.
The garage policy
When obtaining insurance from Auto-owners, Highland paid premiums for coverage under Division II only, which limited the coverage available.
ANALYSIS
To determine whether the underlying lawsuit alleges a situation potentially covered by the policy, the court must compare the complaint with the relevant provisions of the policy. If any theory of recovery in the underlying complaint falls within coverage, the insurer has a duty to defend.
The garage policy is clear that the policy covers bodily injury arising out of a car”not owned, leased, rented or registered by the insured or an officer, if it is a company.”
Highland was the insured and Schuster was an officer of Highland, and they both owned the Econoline van so there was no coverage under that section for bodily injury arising from the Econoline van, including from the collision between Dahmer and the van. The only garage policy identified that would potentially cover bodily injury arising from automobiles owned by the insured is Division I coverage, which Highland did not purchase. Since there is no coverage for the Econoline van under Section II, there is also no underinsured motorist coverage that occurs in an accident involving that van.
Schuster agreed but argued that the “exclusion,” at least to the extent it precludes UIM coverage, violates public policy. The insured bears the heavy burden of showing that an insurance is contrary to public policy. Schuster pointed to nothing in the garage policy that violates Illinois public policy. Rather, he asked the court to grant him the coverage he refused to purchase. It does not violate public policy to exclude coverage that an insured expressly declined to purchase when it was available.
The court also noted that Schuster was not left without a remedy for injuries caused by an underinsured motorist. Schuster maintained a separate personal auto insurance policy from Owners Insurance Company, a subsidiary of Auto-Owners, as required by the Financial Responsibility Act and owners paid UIM coverage under that policy.
The court granted Auto-Owner’s motion for summary judgment and directed the Clerk of Court to enter judgment accordingly, including declarations that: Auto-Owners had no duty to defend or indemnify defendants Highland Auto Glass, Inc. and Michael Schuster in connection with the suit Cook v. Highland, in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois; and Plaintiff Auto-Owners Insurance Company does not owe Michael Schuster any underinsured motorist coverage under the Auto-Owners policy.
A person seeking insurance is faced with the obligation to decide which insurance coverage to purchase before an accident occurs where the insurance is needed. The insureds chose limited insurance coverage, declined to purchase more extensive insurance coverage, and after an accident tried to get the court to cure the mistake and – arguing that the insurance is against public policy – and give them the insurance they refused to buy. Courts are bound to interpret insurance contracts they are not bound to, nor will they ever rewrite a policy.
(c) 2023 Barry Zalma & ClaimSchool, Inc.
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Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and zalma@zalma.com
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