Union Ins. Co. v. Houtz
In Union Ins. Co. v. Houtz, 883 P.2d 1057 (Colo 1994), two insureds, Houtz and Etheridge, were injured in a traffic accident.
Houtz recovered $ 127,500 from the tortfeasor's liability carrier and Etheridge received $ 112,500, for a total of $ 240,000. They filed a claim under Houtz' Union policy for UIM benefits.
Houtz' policy limits were $ 100,000 per person, $ 300,000 per accident. The insureds sought $ 172,500 for Houtz ($ 300,000 minus $ 127,500), and $ 187,500 for Etheridge ($ 300,000 minus $ 112,5000). Union claimed Houtz and Etheridge were only entitled to $ 60,000 ($ 300,000 minus $ 240,000).
Houtz' policy contained the following provision: "except with respect to the Limit of Insurance, the coverage afforded applies separately to each insured who is seeking coverage or against whom a claim or 'suit' is brought." Id. at 1061-62.
The Limit of Insurance provided:
Regardless of the number of covered "autos," "insureds," premiums paid, claims made or vehicles involved in the "accident," the most we will pay for all damages resulting from any one "accident" is the least of the following:
a. The LIMIT OF INSURANCE for UNINSURED MOTORISTS COVERAGE shown in the Declarations $ 100,000/$ 300,000.
b. The difference between the limit of this insurance and all amounts paid to an "insured" by of for anyone legally liable for damages resulting from "bodily injury" . . . .(Id. at 1060.)
As noted by the court, coverage under the policy applied separately "except with respect to the Limit of Insurance. The corollary to this language is that the limit of liability does not apply separately to each injured insured, but applies to the accident." Id. at 1062.
Because the UIM policy limits applied to the accident and not the individual insured, Union was allowed to offset all monies received by the insureds involved in the accident ($ 240,000) and the insureds were only entitled to $ 60,000 in UIM benefits. Id. at 1063.