An Endorsement is the Equivalent of a “Policy Issued or Renewed”

Yesterday, the Court of Appeals released its opinion in Botdorf v. Krebsbach, 12AP00204 (recommended for publication) and held that an automobile insurance policy endorsement added after the effective date of 2009 Wisconsin Act 28 to a policy renewed prior to the effective date of Act 28 created a new policy of insurance within the meaning of Wis. Stat. § 600.03(35). Based on this holding, the reducing clause within the original policy was invalid.

On June 29, 2009, the Wisconsin Legislature enacted 2009 Wisconsin Act 28, which, among other things, prohibited the inclusion of reducing clauses in “motor vehicle insurance policies issued or renewed” on or after November 1, 2009.

On October 9, 2009, the Botdorfs renewed an automobile insurance policy through Allstate.  Included in their policy was $100,000 in underinsured motorist coverage.  The policy contained a reducing clause that reduced the amount of underinsured motorist coverage, and this reducing clause was valid because it was issued prior to the effective date of Act 28.

However, on November 10, 2009, the Botdorfs contacted Allstate to request insurance for their newly acquired Ford Econoline.  Allstate processed a policy endorsement for the existing policy and informed the Botdorfs that the Ford Econoline would have coverage effective November 11, 2009. Rather than issuing an entirely new policy, which clearly would have been a “polic[y] issued” after November 1, 2009, see 2009 Wis. Act 28, § 9326(6), Allstate chose to add the new vehicle to the Botdorfs’ existing policy by endorsement.  In a document entitled “Amended Auto Policy Declarations” Allstate insured the new vehicle.

The Botdorfs were in an accident on November 28, 2009, and Allstate denied the Botdorfs’ claim for underinsured motorist coverage based on the reducing clause in the original policy.

The Court of Appeals held that Allstate owed coverage and reasoned that “Wis. Stat. § 600.03(35) defines “[p]olicy,” in relevant part, as “any document … used to prescribe in writing the terms of an insurance contract, including endorsements….” 12AP00204, ¶ 12, emphasis in the original. The court also added that its holding is “further supported by both statute and caselaw requiring us to broadly construe Wis. Stat. § 632.32 in favor of coverage.” ¶ 13.

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