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Ruenger v. Soodsma3/31/2005
Jeanna Ruenger appeals the circuit court order determining that the reducing clause in the underinsured motorist (UIM) endorsement of her personal auto policy was valid and also determining that there was no UIM coverage under her business auto policy for the injuries she sustained while operating her skid loader. With respect to the personal auto policy, we agree with the circuit court that the reducing clause is valid because it complies with WIS. STAT.§ 632.32(5)(i) and is not ambiguous when read in the context of the entire policy. With respect to the business auto policy, we agree with Ruenger that it does provide UIM coverage for her injuries. Our primary ruling on this issue is that both the insurer's proposed construction of the introductory language in the UIM endorsement and the occupancy exclusion are prohibited by § 632.32(6)(b)2. as construed and applied in Mau v. North Dakota Ins. Reserve Fund, 2001 WI 134, 248 Wis. 2d 1031, 637 N.W.2d 45. Finally, we conclude the reducing clause in the UIM endorsement to the business auto policy is valid because it complies with § 632.32(5)(i) and is not ambiguous when read in the context of the entire policy.
We therefore affirm in part, reverse in part, and remand for further proceedings consistent with this decision and the specific instructions in paragraphs 56-57.
BACKGROUND
Ruenger was operating her skid loader to clear snow from around her mailbox when an automobile driven by Seymour Soodsma struck the skid loader and caused injury to Ruenger. Soodsma was insured under a policy issued by Wisconsin American Mutual Insurance. After Ruenger initiated this action, Wisconsin American Mutual paid its policy limits--$250,000--to Ruenger.
Rural Mutual Insurance Company had issued two policies to Ruenger--a private passenger auto policy (personal policy) and a business automobile policy. Both policies contained UIM coverage--with a limit of $300,000 under the personal policy and $500,000 under the business policy--and the UIM endorsements in both policies contained reducing clauses.
Rural moved for a declaratory ruling that the UIM reducing clause in the personal policy was valid and reduced its obligation to $50,000, which it had already paid Ruenger. Ruenger responded with a motion asking the court to declare the reducing clause unenforceable because it did not comply with WIS. STAT.§ 632.32(5)(i) and, alternatively, because it was ambiguous when considered in the context of the entire policy. The court disagreed with Ruenger and declared the reducing clause valid.
Rural subsequently moved for a declaratory ruling that Ruenger was not entitled to UIM benefits under the business policy because of the exclusion for bodily injuries sustained by the named insured when occupying an owned vehicle that is not a covered auto (occupancy exclusion). In the alternative, Rural asked the court to declare that the reducing clause was valid and therefore its obligation was $200,000--the $500,000 limit less the $250,000 Ruenger received under Soodsma's policy and the $50,000 she had received from Rural under the UIM coverage in her personal policy.
In response, Ruenger asked the court to declare that there was UIM coverage under the business policy and that the occupancy exclusion did not apply because it violated WIS. STAT.§ 632.32(6)(b)2.a. and (5)(j). Ruenger also asked the court to declare that the reducing clause was unenforceable because it did not comply with § 632.32(5)(i) and, alternatively, because it was ambiguous in the context of the entire policy. The circuit court concluded that the occupancy exclusion was valid and, because of its application, there was no UIM c
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