A Missouri spouse can collect loss-of-consortium damages separate from her husband’s underinsured-motorist benefits, a federal appeals court ruled.
The 8th U.S. Circuit Court of Appeals concluded that an Auto-Owners Mutual Insurance Company auto policy was poorly drafted. Therefore, its ambiguity doesn’t subject two spouses to a single per-person limit as an insurance policy normally would.
Beverly Granger filed a UIM claim for loss-of-consortium damages after her husband, Randy, suffered severe injuries in a car accident where the other driver’s insurer paid out the policy limit of $25,000. The Grangers’ policy with Auto-Owners set a per-person limit of $250,000 and a total limit of $500,000 per “occurrence.”
Auto-Owners paid out its per-person limit of $250,000 to Randy but denied Beverly’s request, claiming that the per-person limit for UIM benefits had already been reached. Beverly’s loss-of-consortium claims were purely derivative of Randy’s bodily injuries, the insurer said.
Auto-Owners filed a lawsuit in district court seeking a declaration that it owed no more to the couple. The district court sided with the insurer, stating that Beverly’s loss-of-consortium claim inseparably followed the one covering Randy’s injuries.
On appeal, the Eighth Circuit found there were reasonable ways to interpret the policy that could favor either the insurer or the couple. The key interpretive question is the identity of “you” in the policy’s scope of coverage.
One interpretation, as argued by the district court, finds that Auto-Owners is required to pay UIM benefits to “you” who sustained bodily injuries. Since Beverly sustained no bodily injuries, she cannot receive compensatory damages for loss of consortium or otherwise, the district court reasoned.
A more favorable interpretation for the Grangers emerges with a close look at Missouri law and the definition of “you” in the scope-of-coverage provision, the appeals court argued.
In Missouri, the cause of action for loss of consortium seeks to compensate the uninjured spouse.
“The idea is that this background principle allows Beverly, who is the ‘uninjured spouse,’ … to recover these damages, so the insurance policy must reflect that understanding too, absent language to the contrary,” the appeals court panel wrote.
The one potential “stumbling block” for Beverly is that each reference to “you” in the policy’s scope-of-coverage provision ostensibly applies to the same person.
However, with a different reading, the “and” can be read disjunctively, the appeals court said, meaning that both Randy and Beverly independently qualified as “you” under the policy definitions.
The appeals court focused on a line that says “[y]ou . . . means any named insured shown in the Declarations and . . . [the] named insured’s spouse who resides in the same household.”
“Randy’s bodily injury, in other words, becomes the hook for the loss-of-consortium damages Beverly is trying to recover, consistent with how Missouri has defined the cause of action,” the appeals court wrote.
Such an interpretation allows each spouse to recover their own damages up to the $250,000 per-person limit.
The appeals court summarized that the Auto-Owners policy is “poorly drafted,” leaving open the question of what it does or does not cover. Since Missouri law construes any ambiguity against the insurer, the appeals court said it is required to adopt the interpretation that favors Beverly, allowing her to recover loss-of-consortium damages.
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