99-1142 Danbeck v. American Family Insurance Co.

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“As this contract is written, UIM benefits are owed only when the tortfeasor’s liability insurance is insufficient to cover the UIM policyholder’s damages. According to the plain language of the policy, that insufficiency does not arise unless and until the full limits of the tortfeasor’s policy are paid out. In other words, the tortfeasor ‘motorist’ is not ‘underinsured’ as a definitional matter until his or her policy limits are fully-not partially-paid. Thus, although the public policy supporting partial settlements still figures prominently in our jurisprudence, it does not supplant the plain language of the insurance contract. To choose an interpretation that furthers the public policy of encouraging settlements but contradicts the clear language of the contract would be to substitute our policy preferences regarding UIM insurance for the agreement of the parties.”

DISSENTING OPINION: Bradley, J. “I would conclude that not only is the exhaustion clause ambiguous and subject to construction against the insurer but also that our precedent and public policy require a construction under which a settle and credit agreement is deemed to exhaust the at-fault driver’s liability limits. Accordingly, I respectfully dissent.”

Sykes, J.

Attorneys:

For Appellant: Ward I. Richter, John M. Christenson, Madison

For Respondent: Michael J. Luebke, Madison