This is a declaratory judgment action brought by Farmers
Insurance Company, Inc., to determine whether Stephen Gilbert,
its insured, is entitled to underinsured motorist benefits for
injuries he received while riding his motorcycle. Gilbert
contends that he is entitled to benefits under the uninsured
motorist coverage provided by his automobile liability policies.
Farmers contends that Gilbert's motorcycle policy is the only
applicable policy and that no benefits are due thereunder. The
trial court granted summary judgment for Farmers. Gilbert
appeals. We reverse.
The parties submitted the issue on stipulated facts. Stephen
Gilbert was injured when his motorcycle was struck by an
automobile driven by Debra Onofrio. Onofrio's negligence was the
sole cause of the collision, and Farmers Insurance Company, which
was also her liability insurer, paid Gilbert $25,000,
representing the limits of her policy. Gilbert's actual damages
and expenses, however, were in excess of $50,000.
Gilbert was insured by Farmers under separate liability
policies for his motorcycle, his van, and his automobile. The
liability limits on the policies for the van and automobile were
$50,000. The liability limit on the motorcycle policy, however,
was only $25,000. Each policy also provided coverage against
losses caused by uninsured or underinsured motorists. The exact
language of the "underinsured motorist protection" will be quoted
later. For now, it may be summarized as follows: If Gilbert were
to be injured by a motorist whose liability limits were less than
his own, Farmers would provide coverage for that portion of his
loss falling between his own liability limits and the liability
limits of the other motorist.
The issue is whether Gilbert may recover underinsured motorist
benefits under either of his two automobile policies. If either
of his two automobile policies applies, he is entitled to $25,000
in underinsured motorist benefits. If, however, his motorcycle
policy is the only policy that applies, Gilbert is not entitled
to any underinsured motorist benefits.
Because the facts were submitted by stipulation, and because
the construction of a written instrument is a question of law,
our standard of review is de novo. American States Ins. Co. v.
Accident & Indemnity Co., 218 Kan. 563, Syl. ¶ 4, 545 P.2d 399
(1976); Kansas Gas & Electric Co. v. Kansas Power & Light Co.,
12 Kan. App. 2d 546, 551, 751 P.2d 146, rev. denied 243 Kan. 779
Before taking up the issue raised by this appeal, a brief
review of uninsured and underinsured motorist coverage in Kansas
would be helpful.
As the automobile grew in popularity, a significant problem
developed as motorists without insurance caused injuries for
which they could not provide compensation. The Kansas Legislature
responded to this problem in 1968 by requiring insurers to offer
uninsured motorist coverage to all persons purchasing automobile
liability policies. Under this coverage, an insured motorist who
was injured by an uninsured motorist could collect the amount of
damages to which he was entitled from his own insurer up to his
policy limits. L. 1968, ch. 273, § 1 (codified as K.S.A. 40-284
[Weeks]); see Widiss, Uninsured Motorist Coverage, 40 J.K.B.A.
199 (1971). See generally 1 Widiss, Uninsured and Underinsured
Motorist Insurance § 1.1 et seq. (2d ed. 1990).
The Supreme Court recognized the remedial purpose of this
statute, and construed it liberally to provide coverage, holding:
"The purpose of legislation mandating the offer of
uninsured motorist coverage is to fill the gap
inherent in motor vehicle financial responsibility
and compulsory insurance legislation and this
coverage is intended to provide recompense to
innocent persons who are damaged through the wrongful
conduct of motorists who, because they are uninsured
and not financially responsible, cannot be made to
respond in damages. [Citation omitted.] As remedial
legislation it should be liberally construed to
provide the intended protection." Winner v. Ratzlaff,
211 Kan. 59, 63-64, 505 P.2d 606 (1973).
See Forrester v. State Farm Mutual Automobile Ins. Co.,
213 Kan. 442
, Syl. ¶¶ 1-3, 517 P.2d 173 (1973); Stewart v. Capps,
14 Kan. App. 2d 356, Syl. ¶ 1, 789 P.2d 563 (1990).
Despite the legislature's action and the liberal construction
followed by the courts>, two problems remained. First, a motorist
could reject uninsured motorist coverage and be left without
compensation if he were injured by an uninsured motorist. Second,
a motorist with a high level of coverage could be injured by a
motorist insured only to the legal minimum. If the damages to the
injured motorist exceeded the legal minimum, the injured
motorist would be unable to collect, either from the other
motorist or from his own insurer. In such a case, the injured
motorist would have been better off if the other motorist had
been entirely uninsured so that he would be able to collect under
his own uninsured motorist coverage. See 2 Widiss, Uninsured and
Underinsured Motorist Coverage § 31.1 et seq. (2d ed. 1990).
The legislature dealt with both of these problems in 1981, when
it amended K.S.A. 40-284 for the first time. Uninsured motorist
coverage became mandatory, although coverage above the statutory
minimum for liability coverage could still be rejected. Uninsured
motorist coverage was also required to contain "underinsured"
motorist coverage. Under this new coverage, if the other motorist
had liability insurance but the limits of liability were less
than the insured's damages and less than the insured's uninsured
motorist coverage, the insured could recover his excess damages
from his own insurer up to his policy limits. L. 1981, ch. 191, §
1; Jerry, New Developments in Kansas Insurance Law, 37 Kan. L.
Rev. 841, 878 (1989); Jerry, Recent Developments in Kansas
Insurance Law: A Survey, Some Analysis, and Some Suggestions, 32
Kan. L. Rev. 287, 343-44 (1984).
Although the 1981 amendments generally broadened coverage, the
legislature also authorized several new exclusions and
limitations. L. 1981, ch. 191, § 1. Many of these exclusions were
in apparent response to decisions finding coverage and had the
effect of overruling those decisions, at least in part. See
Jerry, 32 Kan. L. Rev. at 343-44. Two of these new exclusions or
limitations are applicable to this case and will be discussed in
detail later in our opinion.
The statute has since been amended in 1984, 1986, and 1988.
None of these amendments is material here.
Gilbert argues that underinsured motorist coverage is
"portable" in nature, not limited to the vehicle for which the
underlying liability policy is purchased; it applies to an
insured wherever he may be. Farmers argues that the automobile
policies do not provide underinsured motorist coverage when the
insured is operating a motorcycle; that coverage under his van or
auto policy is excluded when the insured is occupying an owned
vehicle not insured under those policies.
Farmers argues that the underinsured motorist coverage in the
two automobile policies does not protect Gilbert while he is
riding his motorcycle because a motorcycle is not a car. The
express provisions of the two automobile policies undermine
Farmers' argument. Coverage exists, subject to applicable
exclusions and limitations, under the unambiguous terms of the
policies. Farmers' argument to the contrary ignores the plain
language of the coverage provisions and confuses underinsured
motorist coverage with liability coverage.
The terms of the coverage provision are specified by statute.
At the time Gilbert's policies were issued and at the time of
Gilbert's accident, the statute read as follows:
"(a) No automobile liability insurance policy
covering liability arising out of the ownership,
maintenance, or use of any motor vehicle shall be
delivered or issued for delivery in this state . . .
unless the policy contains or has endorsed thereon, a
provision with coverage limits equal to the limits of
liability coverage for bodily injury or death in such
automobile liability policy sold to the named insured
for payment of part or all sums which the insured or
the insured's legal representative shall be legally
entitled to recover as damages from the uninsured
owner or operator of a motor vehicle because of
bodily injury, sickness or disease, including death,
resulting therefrom, sustained by the insured, caused
by accident and arising out of the ownership,
maintenance or use of such motor vehicle. . . .
"(b) Any uninsured motorist coverage shall include
an underinsured motorist provision which enables the
insured or the insured's legal representative to
recover from the insurer the amount of damages for
bodily injury or death to which the insured is
legally entitled from the owner or operator of
another motor vehicle with coverage limits equal to
the limits of liability provided by such uninsured
motorist coverage to the extent such coverage exceeds
the limits of the bodily injury coverage carried by
the owner or operator of the other motor vehicle."
The language of subsections (a) and (b) appears in the two
automobile policies, which provide:
"PART II UNINSURED MOTORIST
"Coverage C Uninsured Motorist Coverage (Including
Underinsured Motorists Protection)
"We will pay all sums which an insured person is
legally entitled to recover as damages from the
owner or operator of an uninsured motor vehicle
because of bodily injury sustained by the insured
person. The bodily injury must be caused by