The Wisconsin Supreme Court recently heard oral arguments in a case dealing with under-insured motorist coverage (UIM). The case arose from an automobile accident which killed Lynn Bethke.
Bethke collided with a driver who was operating a rental car owned by AVIS Rent-a-Car. The driver of the rental vehicle did not have insurance. Instead, AVIS had a Wisconsin safety responsibility self-insurance certificate as permitted by Wisconsin law (Wis. Stat. § 344.01(2)(am)1.). Under the statute, AVIS was liable for damages in the amount of $25,000 per claim and $50,000 per accident. AVIS tendered $50,000 to Bethke.
Bethke’s estate then filed a claim of $450,000 with her insurer, Auto-Owners Insurance Company, for UIM coverage. Auto-Owners denied the coverage, contending that the rental car was a self-insured automobile excluded from coverage under the policy provisions.
Bethke’s estate filed a lawsuit against Auto-Owners for a survivor’s action, wrongful death, and bad faith. Both the circuit court and court of appeals ruled in favor of Auto-Owners, holding that the insurance policy properly excluded UIM coverage for self-insured vehicles.
The court of appeals ruled that Auto-Owners’ self-insured vehicle exclusion was not prohibited by Wis. Stat. § 632.32, which governs motor vehicle insurance policy provisions. The lower court also rejected the plaintiff’s argument that the exclusion was contrary to public policy.
A decision by the Wisconsin Supreme Court is expected by the end of its term in the summer of 2013.