Uninsured Motorist Insurance Coverage / Umbrella Policies

This could happen to someone in Grand Prairie, Arlington, Fort Worth, Mansfield, Hurst, Euless, Bedford, Colleyville, Keller, or anywhere else in Tarrant County or the State of Texas. It is a case dealing with umbrella insurance policies and uninsured motorist automobile policies.
The case was decided in January, 1996, by the Austin Court of Appeals and is styled, Joel Sidelnik et al v. American States Insurance Company. Here is some background.
Sidelnik brought a declaratory judgment action seeking a determination that, as a matter of law, his umbrella insurance policy issued by American provides uninsured motorist coverage for the car accident in which his wife was killed. The trial court and this appeals court ruled in favor of American.
Sidelnik’s wife was killed in a car wreck with an uninsured motorist (UM). Sidelnik received the full $100,000 available under his UM coverage. Sidelnik also had an umbrella policy which provided one million dollars in coverage, which Sidelnik attempted to get American to pay. American refused and this action ensued.
Sidelnik argued that the umbrella policy could be construed to provide coverage and since it could be construed that way then by operation of law, coverage was provided.
In its analysis, the court stated that insurance policies are controlled by rules of interpretation and construction applicable to contracts generally. The primary concern of a court in construing a written contract is to ascertain the true intent of the parties as expressed in the instrument. If a contract is so worded that it can be given a definite or certain legal meaning, then it is not ambiguous.
The court went on to say if the language of a policy or contract is subject to two or more reasonable interpretations, it is said to be ambiguous. Whether a contract is ambiguous is a question of law for the court to decide by looking at the contract as a whole in light of the circumstances present at the time the contract was executed. Only where a contract is first determined to be ambiguous may the court consider the parties interpretation.
The court then discussed ambiguity in a contract and how the ambiguity is viewed in light of the type of ambiguity there is that exists. The court ultimately decided that there was no ambiguity.
They next discussed the relationship between UM coverage and umbrella insurance policies. Sidelnick argued provisions of the Texas Insurance Code dealing with the requirement that UM coverage be provided in an auto policy and that umbrella coverage was coverage that provided protection above the limits of the auto policy.
The court pointed out that the statute regarding UM coverage applies only to “automobile liability insurance.” Noting other jurisdictions in this area of the law the court found other jurisdictions concur that UM statutes are inapplicable to umbrella policies. The court said “The umbrella policy issued by [the insurance company] is an inherently different type of insurance from an automobile or motor vehicle liability policy, and consequently does not come within the scope of the uninsured motorist statute.” In other discussion the court stated “there is no intention to supplant the basic carriers on the homeowners or automobile coverages …”
As part of its ruling the court stated:
“We are pursuaded that umbrella policies providing excess liability coverage serve a purpose distinct from that served by policies that exclusively cover liability from damages arising from the ownership, maintenance, or use of an automobile. While Sidelnik’s umbrella policy provides excess coverge for liability arising from an automobile accident, this fact does not convert it into an ‘automobile liability insurance’ policy …”
Going further, the court said that the statute that mandates UM coverage for auto liability policies does not also mandate that the umbrella policy provide additional UM coverage.