Dircks v The Travelers Indemnity Company of America

The United States District court for Utah certified the question of whether an insurance policy which covers vehicles for liability purposes also cover those vehicles for underinsured motorist coverage purposes. The Court, 3-2, held the answer is yes. Justice Lee, joined by Durrant and Durham, held that under the plain language of Utah code 31A-22-305.3, liability and underinsured motorist protection applies to all designated cars in the policy; the policy owner here chose to insure all vehicles used for its corporate purposes, including Dircks’ private car her;, the policy is what is controlled by 305.3 not just the parts of the policy purchased to satisfy liability insurance law, there is no basis to exclude sophisticated customers from the protections of 305.3 and there is no ambiguity in 305.3; and the policy here refers to all autos in the liability section and thus Dircks private car is covered for both liability and underinsured motorist purposes and the same policy limits apply as to each coverage. Himonas, joined by Pearce, dissented arguing 305.3 is ambiguous as the operative terms is not policy but a policy purchase to satisfy the owner’s liability requirements, this phrase can cover either polices which were purchased in whole or in part for liability purposes or only a policy to the extent it is purchased for liability purposes, this ambiguity has been recognized by other states’ courts, and the majority view places dispositive weight on how an insurance company labels the document not the substance and goes against the purpose of the lability statutes to insure coverage for all vehicles on the road and will spawn analytical confusion when differing limits are set for lability and underinsured motorist coverage in cases like this one.