Cae Law Update: Underinsured Motorist Coverage - Statutory Minimum Coverage

WDC Journal Edition: December 2001
By: Civil Trial Counsel of Wisconsin

Brunson v. Ward
___ Wis.2d ___, 628 N.W.2d 916 (2001)
Decided July 6, 2001

The plaintiff, Scott Brunson, was seriously injured in an automobile accident in January 1996. The defendant had $100,000 in liability coverage. His insurer offered the full policy limits to Brunson. Brunson had Underinsured Motorist (UIM) insurance from Progressive Northern Insurance Company and the declaration page of the policy stated that it provided UIM coverage in the amount of $25,000 per person and $50,000 per accident. Before the policy was purchased, the Wisconsin legislature enacted 1995 Wis. Act that created Wis. Stats. §632.32(4m)(d), requiring all UIM policies to provide a minimum of $50,000 coverage per person and $100,000 per accident. The Progressive policy had a provision providing that the terms of the policy that were in conflict with the statutes of Wisconsin were "hereby amended to conform to the statutes."

After the accident, Progressive notified Brunson by letter that although the declaration page of the policy specified $25,000 of UIM coverage, the policy actually provided $50,000 of UIM coverage because it was required to do so by state law. The letter went on to explain that the defendant's vehicle was not underinsured, as defined in the policy, because the $100,000 limits exceeded Brunson's $50,000 UIM limits. The case was certified to the supreme court on the following issue:

"Does the remedy in Meyer v. Classified Insurance Co., 192 Wis.2d 463, 531 N.W.2d 416 (Ct. App. 1995), prohibiting illusory insurance coverage, still hold where an insurer fails to update its underinsured motorist (UIM) insurance coverage pursuant to Wis. Stats. §632.32 (4m) (1995-96), but has included a provision stating that the policy shall conform to the Wisconsin Statutes?" (Footnotes omitted.)

The supreme court answered the certified question, "no." In Meyer, the court of appeals determined that an underinsured motorist policy written in the amount of $25,000 with a reducing clause, is an illusory contract. As a result, the remedy fashioned by Meyer was to add $25,000 of UIM coverage regardless of the liability limits of the tort feaser. In this case, due to the statutory reformation of the policy in question, the supreme court found the policy was not illusory and the remedy in Meyer was not applicable.