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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Ayres v. United Services Automobile Association (05/25/2007) sp-6127
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| LESLIE AYRES, | ) |
| ) Supreme Court No. S- 12018 | |
| Petitioner, | ) |
| ) Superior Court No. | |
| v. | ) 4FA-04-2808 CI |
| ) | |
| UNITED SERVICES AUTOMOBILE | ) O P I N I O N |
| ASSOCIATION, | ) |
| ) | |
| Respondent. | ) No. 6127 May 25, 2007 |
| ) | |
Petition for Review from the Superior Court
of the State of Alaska, Fourth Judicial
District, Fairbanks, Niesje J. Steinkruger,
Judge.
Appearances: Joseph L. Paskvan, Paskvan &
Ringstad, P.C., Fairbanks, for Petitioner.
Daniel T. Quinn, Richmond & Quinn, Anchorage,
for Respondent.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, and Bryner, Justices. [Carpeneti,
Justice, not participating.]
MATTHEWS, Justice.
I. INTRODUCTION
This case presents the question of whether AS 21.89.020
requires an insurance company to obtain a written waiver from the
insured before issuing a policy with uninsured/underinsured
motorist (UIM) coverage that is less than the liability coverage
selected by the insured. We affirm the superior courts
conclusion that a written waiver is not required. Alaska Statute
21.89.020 only requires a written waiver when the insured
declines all UIM coverage.
II. FACTS AND PROCEEDINGS
The facts in this case are not disputed. Leslie Ayres
was the owner of a motor vehicle insurance policy issued by
United Services Automobile Association (USAA). The policy
provided liability coverage that would pay a maximum of $100,000
per person in the event of an accident and UIM coverage that
would pay a maximum of $50,000 per person.
In 2001 Ayres was injured in a car accident. She
recovered the policy limits of the liability insurance of the
driver who was at fault. Since her damages exceeded the limits
of the at-fault drivers liability coverage, Ayres made a claim
under her UIM coverage with USAA.1 USAA refused to pay Ayres
more than her $50,000 UIM limit.
Ayres filed a complaint in superior court requesting a
declaratory judgment that USAA must provide UIM coverage equal to
her liability coverage of $100,000. At the same time Ayres filed
a motion for a statement of law interpreting AS 21.89.020. Ayres
argued that AS 21.89.020 requires an insurance company to obtain
a written waiver from the insured if it issues a policy with UIM
coverage that is less than the policys liability coverage.2 USAA
filed an opposition to Ayress motion and filed a cross-motion to
establish that the policy was in compliance with Alaska law.
USAA argued that it was only required to obtain a written waiver
from the insured if the insured completely rejected UIM coverage.
Superior Court Judge Niesje J. Steinkruger denied
Ayress motion on the grounds that AS 21.89.020 did not require
the insurance company to obtain a written waiver from the insured
in cases in which the UIM coverage was less than the liability
coverage selected by the insured but equal to or higher than the
statutory minimum. The court partially denied USAAs request for
a declaration that its policy was in compliance with Alaska law,
finding unresolved issues of fact as to whether USAA made the
statutorily required offers of UIM coverage.3 Ayres filed a
motion for reconsideration, which the superior court denied.
Ayres petitioned this court for review, asking whether
under AS 21.89.020 an insurance company must obtain a written
waiver when it issues a policy where UIM coverage is less than
liability coverage. We granted the petition.
III. DISCUSSION
Issues of statutory construction are reviewed de novo.4
In construing the meaning of a statute, we look to the language,
legislative history, and purpose of the statute, interpreting
statutes under a sliding-scale approach where [t]he plainer the
statutory language is, the more convincing the evidence of
contrary legislative purpose or intent must be.5 We strive to
give effect to the legislatures intent and adopt the rule of law
that is most persuasive in light of precedent, reason, and
policy.6
Alaska Statute 21.89.020 is part of the Alaska
Insurance Act. It sets out required motor vehicle coverage in
Alaska.7 The question before us in this case is whether AS
21.89.020 requires an insurance company to obtain a written
waiver from the insured before issuing a policy in which the UIM
coverage is less than the liability coverage. The statute as it
existed at the time of Ayress accident in 20018 provided in
relevant part:
(c) An insurance company offering
automobile liability insurance in this state
for bodily injury or death shall, initially
and at each renewal, offer coverage
prescribed in AS 28.20.440[9] and
28.20.445[10] or AS 28.22[11] for the protection of the
persons insured under the policy who are
legally entitled to recover damages for
bodily injury or death from owners or
operators of uninsured or underinsured motor
vehicles. The limit written may not be less
than the limit in AS 28.20.440 or AS
28.22.101.[12] Coverage required to be
offered under this section must include the
following options:
(1) policy limits equal to the limits
voluntarily purchased to cover the liability
of the person insured for bodily injury or
death;
(2) except when the coverage consists of
motorcycle liability insurance, and except
for a named insured required to file proof of
financial responsibility under AS 28.20 or an
applicant required to file proof of financial
responsibility under AS 28.20, policy limits
in the following amounts when these limits
are greater than those offered under (1) of
this subsection:
(A) $100,000 because of bodily injury to
or death of one person in one accident, and,
subject to the same limit for one person,
$300,000 because of bodily injury to or death
of two or more persons in one accident;
[(B) - (E) mirror (A) but contain higher
dollar amounts, the highest of which is
$1,000,000/$2,000,000]
(3) other policy limits at the option of
the insurer.
(d) An insurance company offering
automobile liability insurance in this state
for injury to or destruction of property
shall offer coverage prescribed in AS
28.20.440 and 28.20.445, or AS 28.22, with
limits not less than those prescribed in AS
28.20.440 or AS 28.22.101, to cover the
insured persons liability for injury to or
destruction of property, for the protection
of the persons insured under the policy who
are legally entitled to recover damages for
injury to or destruction of the covered motor
vehicle from owners or operators of uninsured
or underinsured motor vehicles.
(e) The coverage required under (c) and
(d) of this section may be waived in writing
by the insured in whole or in part. After
selection of the limits by the insured or the
exercise of the option to waive the coverage
in whole or in part, the insurer is not
required to notify any policy holder in any
renewal, supplemental, or replacement policy,
as to the availability of the coverage or
optional limits, and the waived coverage may
not be included in any renewal, supplemental,
or replacement policy. The insured may, at
any time, make a written request for
additional coverage or coverage more
extensive than that provided on a prior
policy.
Ayres notes that subsection .020(e) requires the
insured to waive in writing the coverage required under
subsection .020(c). She argues that this refers to coverage
required to be offered under the mirror image provision of
subsection .020(c)(1). She contends that in this case subsection
.020(c)(1) required the offer of UIM coverage of $100,000 per
person (equal to the limits of the liability coverage Ayres
selected), and that USAA could not write UIM coverage for the
amount she selected, $50,000 per person, without first obtaining
from her a written waiver of UIM coverage of $100,000 per person.
We disagree that a written waiver of $100,000 per
person UIM limits was required. Alaska Statute 21.89.020
indicates that an insurance company must offer the different
levels of UIM coverage specified in subsections .020(c)(1)-(2)
but may not write a policy for less than the minimum amount
specified in AS 28.20.440 and AS 28.22.101. Subsection
.020(c)(1) reflects one of several options for the coverage
required to be offered. Subsection (e) requires written waiver
of the coverage required under (c) but not of each option of the
[c]overage required to be offered.13 UIM coverage in the amount
of liability coverage actually written for an insured is required
to be offered, but it is not required to be written. Subsection
.020(e) concerning required coverage does not refer to
.020(c)(1), since the latter refers to one level of coverage that
must be offered, not the minimum level of coverage that must be
written.
The written waiver requirement in subsection .020(e)
applies to subsection .020(c)s mandatory floor: The limit
written may not be less than the limit in AS 28.20.440 or AS
28.22.101. Under AS 28.20.440(b)(3) the minimum UIM coverage
required is equal to the minimum liability insurance required by
AS 28.20.440(b)(2): $50,000 per person and $100,000 per accident.14
Alaska Statute 21.89.020(e) therefore requires that insurance
companies obtain a written waiver from insureds who wish to
decline all coverage, including this minimum level. Subsection
(e) applies, in other words, to insureds who want no UIM coverage
at any permissible level.
Provisions of the MVSRA and the AMAIA relating to the
written rejection of UIM coverage support this interpretation.
As already noted, AS 28.20.445(e)(3) and AS 28.22.201(a)(3) each
provide that UIM coverage may be rejected by the insured in
writing. The AMAIA is more specific than the MVSRA as to what
coverage is being referred to since it adds after the word
coverage the phrase required under this chapter.15 But the same
meaning is implicit in the word coverage as used in section
28.20.445(e)(3) of the MVSRA. In both acts the coverage required
is $50,000 per person and $100,000 per accident. If insureds
wish to reject this coverage, they must do so in writing.
In our two most recent cases concerning the meaning of
AS 21.89.020(c) and (e) we also expressed the view that (e) calls
for a written waiver of UIM coverage only when UIM coverage is
completely waived.
In Peter v. Schumacher Enterprises, Inc. the insured
had purchased liability and UIM coverages with identical
$50,000/$100,000 limits.16 She contended that she was not advised
that higher UIM limits were available and that she would have
purchased higher limits if she had known she could.17 She also
argued that any offers of higher limits had to be in writing.18
We rejected Peters contention that offers had to be in writing,
but found that there were genuine issues of material fact as to
whether she was advised that she could purchase higher limits.19
We described the operation of the statute in an introductory
statement as follows:
Alaska Statute 21.89.020(c) requires
insurance companies to offer in automobile
liability policies UM/UIM coverage with
minimum limits of $50,000 per person and
$100,000 per accident. In addition,
subsection (c)(2) requires that optional
higher limits be offered up to
$1,000,000/$2,000,000. Subsection (d)
requires insurance companies to offer minimum
limits of $25,000 for UM/UIM property damage
coverage. Subsection (e) provides that [t]he
coverage required under (c) and (d) . . . may
be waived in writing by the insured in whole
or in part.[20]
Later in the opinion we stated that the coverage
required language of subsection (e) referred to minimum limits
prescribed in subsection (c) not to optional limits:
The text of subsection (e) makes a
distinction between coverage required and
optional limits. Coverage required must be
waived in writing, but optional limits in the
second sentence of (e) is a subject separate
from required coverage. The coverage
required by subsections (c) and (d) is UM/UIM
for bodily injury and UM/UIM for property
damage. This coverage must be purchased
unless the buyer waives it in writing. If
the coverage is not waived in writing, it
must be for the minimum limits prescribed in
subsection .020(c) and (d). The higher
limits that must be offered under subsection
.020(c)(2)(A)-(E) need not be accepted. They
are thus optional rather than required.[21]
It bears repeating that the minimum limits prescribed in
subsection (c) referred to in this statement are the minimum
limits described in the earlier introductory statement, $50,000
per person and $100,000 per accident.
In GEICO v. Graham-Gonzalez we also indicated that a
written waiver as called for by subsection (e) is only required
when no UIM coverage is selected.22 We stated with reference to
the second sentence of subsection (e) that it exempts insurers
from the offer requirement of (c) on policy renewals once the
insured has either waived UIM coverage altogether or selected a
level of coverage.23 We also explained that the purpose of
.020(c) is to give insureds various options with respect to UIM
coverage: to select coverage with limits mirroring their
liability limits, or with different limits, or to waive coverage
altogether.24
Ayres argues that other cases establish that a written
waiver is necessary before a policy can be written with UIM
limits less than liability limits. She relies on several cases
in which this court has found an insurance companys offer to be
deficient under AS 21.89.020(c). In Burton v. State Farm Fire &
Casualty Co. we invalidated under the mirror-image-offer clause a
provision in the insurance policy that specifically excluded a
vehicle insured under the liability policy from the definition of
an underinsured motor vehicle.25 In State Farm Mutual Automobile
Insurance Co. v. Harrington we required State Farm to cover pre
judgment interest and attorneys fees under its UIM policy because
its liability policy covered such items and they are considered
elements of policy limits under Alaska law.26 In State Farm
Mutual Automobile Insurance Co. v. Lawrence we found that since
the insured persons liability insurance covered punitive damages
its UIM insurance must do the same because of the mirror-image-
offer requirement of AS 21.89.020(c)(1) as interpreted in
Harrington.27
In these cases, once we found the offers to be
noncompliant because they invalidly excluded elements of policy
limits liability coverage28 and provided less [UIM] coverage than
. . . required29 by statute, we had to decide on a remedy. The
remedy we selected was to reform the policies in question so that
the coverage they contained complied with applicable statutory
requirements and the mirror-image-offer rule of AS
21.89.020(c)(1).
These cases are distinguishable from the present case.
Each of them involved noncompliance with the offer requirement of
AS 21.89.020(c)(1) or its predecessor. In this case, by
contrast, no contention is made that USAAs offer did not comply
with the statute.
Ayres also notes that in Lawrence, quoting Harrington,
we stated
that the evident purpose of section
.020(c)(1) is to provide for the insured, as
an injured claimant, the same benefit level
as that provided by the insured to those
asserting claims against the insured.
Therefore, automobile insurance companies
must offer insureds UM/UIM coverage that
mirrors the insureds liability coverage.[30]
We do not retreat from that statement, given that it is clear
that what must be provided to insureds is an opportunity to
obtain UIM coverage that is the equal of liability coverage. A
more complete explanation of the purposes of .020(c) as a whole
is set out in GEICO v. Graham-Gonzalez.31 There we noted that
[t]he purpose of .020(c) is to give insureds various options with
respect to UIM coverage: to select coverage with limits
mirroring their liability limits, or with different limits, or to
waive coverage altogether.32 Permitting an insurance company to
issue a policy like Ayress without a written waiver is consistent
with these purposes.
Our interpretation of the statute is supported by
policy as well. Ayres argues that it makes no sense for an
insured to purchase liability coverage for more than the
statutory minimum to protect others, and . . . not protect
himself or herself in an amount at least equal to the amount of
the liability coverage voluntarily purchased. However, the
reasons for selecting a given amount of liability insurance
differ from the reasons for selecting a given amount of UIM
insurance. Individuals purchase auto liability insurance above
the mandatory minimum to protect their assets in the event that
they are to blame for an expensive accident. Individuals
purchase UIM insurance to protect themselves if they are the
victims of an expensive accident. While auto liability insurance
generally does not overlap with other forms of insurance, UIM
coverage might overlap with medical, disability, life, or other
forms of first-party insurance available to the purchaser. When
this is the case, an insured might reasonably wish to purchase a
lower level of UIM coverage than liability coverage.
IV. CONCLUSION
For these reasons we AFFIRM the superior courts ruling
that AS 21.89.020 does not require a written waiver when an
insured person selects UIM coverage with limits below the
liability coverage voluntarily selected, so long as the UIM
limits meet the statutory minimums set out in AS 28.20.440 and AS
28.22.101.
_______________________________
1 A claimant may not pursue damages under her own UIM
coverage until the limits of liability of all bodily injury and
property damage . . . policies that apply have been used up. AS
28.20.445(e)(1). USAA consented to Ayress policy limits
settlement with the tortfeasor.
2 USAA did not obtain a written waiver from Ayres.
3 Ayres has agreed that she will not pursue the issue of
whether USAA met the statutory offer requirements.
4 Cook Inlet Keeper v. State, Office of Mgmt. & Budget,
Div. of Governmental Coordination, 46 P.3d 957, 961 (Alaska
2002).
5 Muller v. BP Exploration (Alaska) Inc., 923 P.2d 783,
787-88 (Alaska 1996).
6 Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
7 AS 21.89.020 prescribes requirements partly by
referring to provisions of two other statutes, the Alaska Motor
Vehicle Safety Responsibility Act and the Alaska Mandatory
Automobile Insurance Act. For a description of these acts see
notes 9-12 infra and accompanying text.
8 AS 21.89.020 was last amended in 2004. Ch. 172, 2, 3,
SLA 2004. The 2004 amendments added the following to subsection
.020(c)(1): coverage for punitive damages that might otherwise
be recoverable from an uninsured or underinsured person is not
required under this paragraph. Id. 2.
9 AS 28.20 is the Motor Vehicle Safety Responsibility Act
(MVSRA). AS 28.20.440 requires both UIM and liability coverage
of at least $50,000 per person and $100,000 per accident for
death or bodily injury and $25,000 per accident for property
damage.
10 AS 28.20.445 sets out a number of requirements
concerning UIM coverage under the MVSRA. Pertinent to this case
is subsection (e)(3), which provides in relevant part: [UIM]
coverage . . . (3) may be rejected by the insured in writing.
11 AS 28.22 is the Alaska Mandatory Automobile Insurance
Act (AMAIA). We explained the function and interrelationship of
the MVSRA and the AMAIA in Progressive Ins. Co. v. Simmons, 953
P.2d 510, 520-22 (Alaska 1998). Briefly, the MVSRA enacted
first in 1959 does not require insurance until a driver is in an
accident, but the acts policy content requirements apply to all
policies written in the state. The AMAIA enacted in 1989
mandates insurance for all drivers of vehicles driven on the land-
connected state highway system. AS 28.22.011. The two acts
policy content requirements are generally parallel, but where one
requires more extensive coverage than the other it governs.
Simmons, 953 P.2d at 522. AS 28.22.201(a)(3), the subsection of
the AMAIA parallel to AS 28.20.445(e)(3), governing requirements
concerning UIM coverage, provides that UIM coverage required
under this chapter may be rejected by the insured in writing.
12 AS 28.22.101 sets out general coverage requirements and
prescribes minimum UIM and liability policy limits of $50,000 per
person and $100,000 per accident for death or bodily injury and
$25,000 per accident for property damage.
13 AS 21.89.020(c)(1) (emphasis added).
14 AS 28.22.101 sets out the same requirements minimum
liability insurance of $50,000/$100,000, with minimum UIM
coverage at the same level.
15 AS 28.22.201(a).
16 22 P.3d 481, 491 (Alaska 2001).
17 Id. at 487.
18 Id. at 491.
19 Id.
20 Id. at 484 (emphasis added).
21 Id. at 492 (emphasis added). Although we referred to
the higher optional limits that must be offered with reference to
.020(c)(2) rather than (c)(1) and (2), this was both
understandable and correct in the context of Peter. The
liability coverage purchased in Peter was at the minimum
permissible level, and thus the UIM limits required to be offered
under (c)(1) were identical to the minimums required to be
written under (c). Id. at 491.
22 107 P.3d 279, 285 (Alaska 2005).
23 Id. (emphasis added).
24 Id. at 287 (emphasis added).
25 796 P.2d 1361, 1363-64 (Alaska 1990). Burton involved
the version of AS 21.89.020 that existed prior to the 1990
amendments. Id. at 1363 n.2. In that version subsection (c)
read in full as follows:
(c) An insurance company offering
automobile liability insurance in this state
for bodily injury or death shall offer
coverage prescribed in AS 28.20.440 and
28.20.445 or AS 28.22.010 - AS 28.22.130,
with limits equal to at least the limit
purchased voluntarily to cover the insured
persons liability for bodily injury or death,
for the protection of the persons insured
under the policy who are legally entitled to
recover damages for bodily injury or death
from owners or operators of uninsured or
underinsured motor vehicles. The limit
written may not be less than the limit in AS
28.20.440 or AS 28.22.010.
(Emphasis added.) The pre-1990 version of subsection (e) was
identical to the current one. The 1990 amendment removed the
highlighted text from the body of the paragraph, inserted it as
(c)(1), and added the current (c)(2) and (c)(3). It also deleted
the words at least from the highlighted text and prefaced (c)(1)-
(3) with the following sentence: Coverage required to be offered
under this section must include the following options. Ch. 78,
4, SLA 1990. The statute numbers referred to in the text were
also updated in the 1990 version, but they refer to the same
statutes.
The pre-1990 version of the statute was similar to the
current one, in that the insurance companies were required to
write UIM coverage equal to the statutory minimum of liability
coverage and to offer coverage equal to the liability coverage
voluntarily selected by the insured. The effect of the 1990
amendment was to increase the number and content of the UIM
offers an insurance company had to make. Since the new
subsection (c)(2) required insurance companies to make additional
offers above the level of liability insurance voluntarily chosen
and the new subsection (c)(3) indicated that they could make
other offers as well, it was no longer necessary to include at
least in the language of new subsection (c)(1).
26 918 P.2d 1022, 1025-26 (Alaska 1996). Holderness v.
State Farm Fire & Casualty Co., 24 P.3d 1235, 1237 (Alaska 2001),
extended this holding to UIM coverage contained in an umbrella
policy. In Holderness State Farm maintained that the umbrella
policy was not an automobile liability policy as defined by AS
21.89.020. Id. at 1239. The liability portion of the umbrella
policy covered attorneys fees and prejudgment interest, but State
Farm refused to pay them in connection with its UIM payments to
Holderness. Id. Because we found that the umbrella policy was
an automobile policy within the meaning of AS 21.89.020, the UIM
coverage in the policy was reformed under Harrington to provide
equal liability and underinsured motorist coverage as prescribed
by AS 21.89.020(c), and State Farm was required to pay attorneys
fees and prejudgment interest. Id. at 1241. In 2004 the
legislature amended the statute to add AS 21.890.020(i), which
states that umbrella coverage is not considered automobile
insurance for purposes of that section. Ch. 172, 3, SLA 2004.
27 26 P.3d 1074, 1079-80 (Alaska 2001). In 2004 the
legislature amended AS 21.89.020(c)(1) to clarify that it did not
require coverage for punitive damages that might otherwise be
recoverable from an uninsured or underinsured person. Ch. 172,
2, SLA 2004.
28 In Burton, Harrington, and Holderness the insureds
purchased UIM coverage with the same limit as their liability
coverage. Holderness, 24 P.3d at 1237-38; Harrington, 918 P.2d
at 1023; Burton, 796 P.2d at 1362. Lawrence does not indicate at
any point that the liability limits were higher than the UIM
limits.
29 Burton, 796 P.2d at 1362-63.
30 Lawrence, 26 P.3d at 1079-80 (quoting Harrington, 918
P.2d at 1026).
31 107 P.3d 279 (Alaska 2005).
32 Id. at 287.
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