Trotter v. Harleysville Ins. Co., 2016 WL 2731529 (7th Cir. May 10, 2016)

In this case, the court rejected an ambiguity challenge to a $500,000 “per accident” limit of liability for UIM coverage and held that the “per accident” rather than “per person” UIM limit applied. Therefore, Harleysville’s UIM coverage was limited to $500,000 in total.

In Trotter, Donna Powers drove through a stop sign and caused a four-vehicle accident.  One of the vehicles was driven by Trotter, and carried passengers Jackson and Petrie.  Trotter, Jackson and Petrie settled with Powers’ personal auto insurer, whose policy carried liability limits of $250,000 per person and $500,000 per accident.  Under the settlement, Trotter received the per-person limit of $250,000, and Jackson and Petrie split the remaining $250,000, with Jackson receiving $238,000 and Petrie receiving $12,000.

The three settling parties then filed claims with Harleysville, which issued Trotter’s personal auto policy, claiming they were entitled to underinsured motorist (UIM) coverage because the Harleysville policy did not unambiguously state that UIM coverage was limited to $500,000 per accident.  Instead, they argued, the policy could reasonably be construed to mean that the $500,000 limit applied on a per-person rather than a per-accident basis, thus entitling them to recover from Harleysville the difference between $500,000 and the amount he or she received from Powers’ insurer.  Thus, under their interpretation, Harleysville would owe Trotter up to $250,000 under its UIM coverage — the difference between Harleysville’s alleged $500,000 per person limit of liability and the $250,000 he received from Powers’ insurer.  Similarly, under plaintiffs’ interpretation, Harleysville would owe Jackson up to $262,000, and would owe Petrie up to $488,000.  Harleysville denied coverage and plaintiffs filed suit against Harleysville.

The district court concluded the Harleysville policy was not ambiguous and that its coverage was limited to $500,000 per accident, thus entering summary judgment in favor of Harleysville.  The plaintiffs appealed, and the Seventh Circuit affirmed.

The Seventh Circuit reviewed the Illinois endorsement to the policy, which referred to both per-person and per-accident UIM limits, as well as the “single limit” endorsement to the policy, which the court found “removed” the per-person limit.  Although the plaintiffs contended the two endorsements created an ambiguity as to whether the per-person or per-accident limit was applicable, the court disagreed.  The court read the two endorsements together with the declarations page of the policy and found they were “clear” that UIM coverage was limited to $500,000.  However, the court stated, even if there was any uncertainty over whether the per-person or per-accident limit was applicable as plaintiffs contended, it could not resolve that ambiguity in the way plaintiffs advocated.  The court found it could not do so because both endorsements expressly stated that coverage was subject to a $500,000 per accident limit.   The court of appeals thus affirmed the district court’s judgment in favor of Harleysville.