Howard Justice v. American Family Mutual Insurance Company

Summary

The Indiana Supreme Court interpreted an underinsured-motorist insurance policy provision reducing coverage limits by payments received from a tortfeasor and under workers’ compensation. The court held that the provision unambiguously operated against the policy limit but was unenforceable to the extent it reduced coverage below Indiana’s statutory minimum. Because the plaintiff received $25,000 from the tortfeasor and the required minimum coverage was $50,000, the court held he was entitled to recover the remaining $25,000 from the insurer and reversed the grant of summary judgment.

Holdings

1. The policy's workers' compensation exclusion did not invalidate or prevent application of the separate workers' compensation setoff provision.
2. The phrase "limits of liability of this coverage" unambiguously referred to the $50,000 policy limit, not to Justice's total damages.
3. Although the policy unambiguously applied the setoff against the policy limit, the setoff provision was unlawful and unenforceable because it reduced coverage below Indiana's statutory minimum.

Questions Presented

1. Whether the workers' compensation exclusion in the underinsured motorist endorsement prevented American Family from applying the policy's workers' compensation setoff provision.
2. Whether the phrase "limits of liability of this coverage" required reductions to be applied against the policy limit or against the insured's total damages.
3. Whether applying the setoff provisions to reduce the $50,000 underinsured motorist limit to zero violated Indiana Code section 27-7-5-2(a).

Disposition

reversed_and_remanded