Summary
holding that a group self-insurance pool is not subject to statutory provisions regarding uninsured motorist coverage because it is neither an insurance company nor an insurer
Summary of this case from City of Arvada v. Inter. RiskOpinion
49236 Record No. 930260 Record No. 930266
February 25, 1994
Present: All the Justices
In a case involving the amount of uninsured motorist coverage available to a motor vehicle insured through the Virginia Municipal Liability Pool, given the absence of a resolution by the liability pool as required by Code Sec. 15.1-503.4:4, the trial court erred in holding that the uninsured motorist coverage offered by the liability pool was subject to the provisions of Code Sec. 38.2-2206 and the portion of the trial court order so holding is reversed.
Insurance — Automobile — Uninsured Motorist Coverage — Municipal Liability Pools — Statutory Construction (Code Sections 15.1-503.4:1 through -503.4:9) — Limits of Liability
The sheriff of a county was riding in a vehicle owned by the county when that vehicle was involved in an accident. He was awarded $250,000 damages against the driver of the other car, whose insurer paid $25,000, the policy limit. The injured sheriff then sought recovery of the unpaid balance of his damage award under the uninsured motorist provisions of his own automobile liability policy and that of the county. His policy had a $50,000 uninsured motorist coverage limit. The county's insurance contract, issued by the Virginia Municipal Liability Pool, set the uninsured motorist coverage limit at $25,000. The plaintiff filed a motion for judgment against the Virginia Municipal Liability Pool, seeking satisfaction of the unpaid amount of the damage award. The trial court found that the limit of the municipal pool coverage for uninsured motorist liability was $1,000,000 and entered an order requiring the pool to pay the portion of the damage award still unsatisfied. The defendant insurer appeals.
1. Code Sec. 38.2-2206 requires that automobile liability insurance policies contain uninsured motorist coverage in an amount equal to the liability coverage limits unless those limits are rejected, but in no case less than a prescribed minimum level. The uninsured motorist coverage here would be $1,000,000 if the Virginia Municipal Liability Pool is subject to Code Sec. 38.2-2206, and if the liability limits were not effectively rejected for uninsured motorist coverage.
2. The Virginia Municipal Liability Pool is a governmental self-insurance pool created by legislation which specifically provides that such pools are not insurance companies or insurers, but are deemed to be self-insurers for motor vehicle security under Code Sec. 46.2-368.
3. Although Sec. 46.2-368 requires self-insurers to provide uninsured motorist coverage in accordance with the provisions of Sec. 38.2-2206, the General Assembly specifically excluded the pools from that mandate and, accordingly, the provisions of Sec. 38.2-2206 are applicable to the uninsured motorist coverage provided by the pools only if the pools have complied with the requirement of Code Sec. 15.1-503.4:4.
4. The word "resolution" in Code Sec. 15.1-503.4:4 is a term of art and denotes a specific type of affirmative act by a governing body and no other act is an adequate substitute for such a resolution.
5. The record does not contain any resolution passed by the Virginia Municipal Liability Pool or any adequate substitute for the existence of such a resolution regarding uninsured motorist insurance and all documents issued by the pool regarding the terms of the uninsured motorist coverage limit the coverage to $25,000.
6. In the absence of a resolution adopted by the pool, as required by Code Sec. 15.1-503.4:4, the trial court erred in holding that the uninsured motorist coverage offered by the pool was subject to the provisions of Sec. 38.2-2206.
Appeal from a judgment of the Circuit Court of Louisa County. Hon. Jay T. Swett, judge presiding.
Record No. 930260 — Reversed and final judgment.
Record No. 930266 — Affirmed.
Howard W. Dobbins (Sarah Hopkins Finley; Williams, Mullen, Christian Dobbins, on briefs), for appellant. (Record No. 930260)
W.W. Whitlock (Susan L. Whitlock, on brief), for appellee. (Record No. 930260)
W.W. Whitlock (Susan L. Whitlock, on brief), for appellant. (Record No. 930266)
Howard W. Dobbins (Sarah Hopkins Finley; Williams, Mullen, Christian Dobbins, on briefs), for appellee. (Record No. 930266)
In this appeal we must determine the amount of uninsured motorist (UM) coverage applicable to a motor vehicle insured through the Virginia Municipal Liability Pool (VMLP).
Henry A. Kennon, Sheriff of Louisa County, was riding in a vehicle owned by Louisa County when that vehicle was involved in an accident with a vehicle driven by Thomas L. Armstrong, Jr. Kennon sued Armstrong to recover damages for injuries he sustained in the accident and was awarded $250,000. State Farm Insurance Company, Armstrong's liability carrier, paid Kennon $25,000, the policy limits.
Kennon sought recovery of the unpaid balance of his damage award under the UM provisions of his own automobile liability policy and under the UM coverage applicable to the Louisa County vehicle in which he was riding. Kennon's policy, issued by Nationwide Insurance Company, had a $50,000 UM coverage limit. Louisa County insured its vehicle through VMLP and that contract of insurance set the UM coverage limit at $25,000. Kennon received $33,500 from Nationwide and $16,500 from VMLP, leaving $175,000 of the damage award still unsatisfied.
Kennon filed a motion for judgment against VMLP seeking satisfaction of the unpaid amount of the damage award. Kennon alleged that, as a matter of law, the limit of the UM coverage provided by VMLP was $1,000,000, not $25,000 as VMLP claimed. The trial court agreed and entered a final order requiring VMLP to pay Kennon $175,000, less a credit for previously made payments. We awarded VMLP an appeal. We also awarded Kennon an appeal on his assignments of cross-error to the trial court's denial of additional interest and its holding regarding the authority of the administrator of Louisa County.
Kennon also sued Nationwide. The trial court entered judgment against Nationwide, holding that Kennon was entitled to the full $50,000 UM coverage limit. This judgment was not appealed.
In a separate appeal, Kennon raised these same assignments of error. We consolidated the two appeals.
VMLP assigned error to a number of the trial court's rulings. VMLP first contends that the trial court erred in finding that the provisions of Code Sec. 38.2-2206 applied to the UM coverage offered by VMLP. Code Sec. 38.2-2206 requires that automobile liability insurance policies contain UM coverage in an amount equal to the liability coverage limits unless those limits are rejected, but in no case less than a prescribed minimum level. Under the circumstances of this case, the available UM coverage would be $1,000,000, if VMLP is subject to Sec. 38.2-2206, and if the liability limits were not effectively rejected for UM coverage.
[2-3] VMLP is neither a commercial insurer nor a self-insurer, but a governmental self-insurance pool created pursuant to legislation enacted by the General Assembly in 1986. This legislation was adopted because local governments were burdened by the high cost of liability coverage and the frequent inability to provide insurance through standard carriers. Such pools allow local governments to spread the risk of liability insurance. Code Sec. 15.1-503.4:1. The General Assembly put a statutory scheme in place that prescribed the categories of insurance which the pools could offer, the authority, operation, and the regulation of the pools. See Code Sections 15.1-503.4:1 through -503.4:9. The legislation specifically provided that the pools were not insurance companies or insurers, Code Sec. 15.1-503.4:9, but "deemed" the pools to be self-insurers for motor vehicle security under Sec. 46.2-368 (formerly Code Sec. 46.1-395). Code Sections 15.1-503.4:9, -503.4:4. Although Sec. 46.2-368 requires self-insurers to provide UM coverage in accordance with the provisions of Sec. 38.2-2206, the General Assembly specifically excluded the pools from that mandate. Code Sec. 15.1-503.4:4 provides in pertinent part:
Additionally, a group self-insurance pool shall not be subject to the provisions of Sec. 38.2-2206 relating to uninsured motorist coverage unless it elects by resolution of its governing authority to provide such coverage to its pool members.
Accordingly, the provisions of Sec. 38.2-2206 are applicable to the UM coverage provided by VMLP only if VMLP has complied with the requirements of Code Sec. 15.1-503.4:4.
VMLP argues that Sec. 15.1-503.4:4 establishes the adoption of a resolution as a prerequisite to application of the provisions of Sec. 38.2-2206. VMLP has not adopted such a resolution and, therefore, VMLP contends that it is not subject to Sec. 38.2-2206. The trial court rejected this contention, concluding that "[h]aving decided to provide uninsured motorist coverage to its members, VMLP elected to be 'subject to' the provisions of Sec. 38.2-2206 relating to uninsured motorist coverage."
This conclusion, however, disregards the plain language of the statute. The word "resolution" is a term of art and denotes a specific type of affirmative act by a governing body. In light of the reasons for authorizing the creation of these pools, it is entirely reasonable and consistent for the General Assembly to require a specific, affirmative act as a prerequisite to subjecting a pool to additional statutory responsibilities and liabilities.
In reaching its decision, the trial court relied on VMLP's admission that its governing body made the decision to provide UM coverage and on a renewal letter sent by VMLP's administrator to its members in which the administrator stated that, by offering UM coverage, VMLP was required to comply with Sec. 38.2-2206. Neither the admission nor the administrator's letter constitutes an admission that the governing body of VMLP passed a resolution qualifying under Sec. 15.1-503.4:4. Neither is an adequate substitute for the existence of such a resolution. The record does not contain any resolution passed by VMLP regarding UM coverage. Furthermore, all documents issued by VMLP regarding the terms of the UM coverage in the record, primarily the contract of coverage itself and renewal correspondence, limit UM coverage to $25,000.
In the absence of a resolution adopted by VMLP, as required by Code Sec. 15.1-503.4:4, the trial court erred in holding that the UM coverage offered by VMLP was subject to the provisions of Sec. 38.2-2206. Accordingly, we will reverse that portion of the trial court order and enter judgment in favor of VMLP.
In light of this holding, we need not consider the remaining assignments of error and cross-error.
Record No. 930260 — Reversed and final judgment.
Record No. 930266 — Affirmed.