THE STATE OF SOUTH CAROLINA
In The Supreme Court
Concrete Services, Inc.
and Ann C. Mickle, Plaintiffs,
United States Fidelity
and Guaranty Company, Defendant.
ON CERTIFICATION FROM THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT
OF SOUTH CAROLINA
David C. Norton, United States District Court
Opinion No. 24773
Heard February 2, 1998 - Filed March 23, 1998
CERTIFIED QUESTIONS ANSWERED
Robert J. Moran, of Murrells Inlet, for plaintiffs.
Andrew F. Lindemann, of Ellis, Lawhorne,
Davidson and Sims, of Columbia, for defendant.
WALLER., A.J.: The following questions have been certified to
this Court by the United States District Court for the District of South
1. Is the spouse of the sole shareholder of a corporation entitled
to stack UIM coverage where the corporation is the "named
insured" under the policy, and where the spouse was injured
while operating a vehicle owned by the corporation and insured
under the UIM policy?
2. Where the South Carolina Appellate Courts have required an
insured to "have" a vehicle involved in the accident in order to
stack UIM coverage, is it required that the insured own the
vehicle involved in the accident?
The plaintiff, Ann Mickle, was involved in an automobile accident while
driving a vehicle owned by her husband's company, Concrete Services, Inc
(Concrete).1 Mickle's damages exceeded the $15,000.00 policy limits of the at
fault driver. At the time of the accident, the vehicle operated by Mickle was
covered by an insurance policy issued by United States Fidelity and Guaranty
(USF&G) to its named insured, Concrete. The policy provided $50,000.00 of
underinsured motorist coverage (UIM) on several vehicles owned by Concrete.
After receiving $50,000.00 in UIM coverage from USF&G under the policy
insuring the vehicle which she was driving, Mickle and Concrete commenced
this declaratory judgment action seeking a ruling that Mickle was entitled to
stack UIM coverages on the other vehicles owned by Concrete. The District
Court certified the above questions to this Court.
I. CORPORATION AS "NAMED INSURED"
Whether the spouse of a sole shareholder of a corporation listed as the
"named insured" is entitled to stack UIM benefits is a novel issue in this
state; the issue turns upon whether Mickle qualifies as a Class I insured.
The critical question in determining whether an insured has the right
to stack is whether he is a Class I or Class II insured. American Sec. Ins.
Co. v. Howard, 315 S.C. 47, 431 S.E.2d 604 (Ct.App.1993). The two classes
of insureds are: (1) the named insured, his spouse and relatives residing in
his household; and (2) any person using, with the consent of the named
insured, the motor vehicle to which the policy applies and a guest in the
motor vehicle. Garris v. Cincinnati, 280 S.C. 149, 311 S.E.2d 723 (1984).
The right to stack is available only to a Class I insured. Fireman's Ins. Co.
v. State Farm Mut. Auto. Ins. Co., 295 S.C. 538, 370 S.E.2d 85 (1988); Ohio
Cas. Ins. Co. v. Hill, __S.C. __, 473 S.E.2d 843 (Ct. App. 1996).
As Mickle is not the "named insured" in the policy, the question is
whether she is a spouse or relative of the "named insured," i.e., the
corporation, Concrete Services.2 If not, then she does not qualify as a Class
I insured and may not stack benefits. Although the issue is novel in South
Carolina, it has been addressed by other courts.
The majority of courts addressing the issue hold that a corporation
insured by a business automobile insurance policy cannot have a "family" as
that term is used in the definition of "insured." See Grain Dealers Mutual
Ins. Co. v. McKee, 943 S.W.2d 455 (Tex. 1997) (noting majority of
jurisdictions analyzing similar policy provisions have found no ambiguity
notwithstanding corporation may not have a "family"); Buckner v. Motor
Vehicle Accident Indem. Corp., 486 N.E.2d 810 (N.Y. 1986) (business policy
covering corporation could not reasonably be read to provide coverage to
family member of officers and sole shareholders of corp); Kaysen v. Federal
Ins. Co., 268 N.W.2d 920 (Minn. 1978) (policy terms listing corporation as
named insured unambiguous, does not include corporate officers and their
spouses); Sproles v. Greene, 407 S.E.2d 497 (N.C.1991) (policy terms listing
corporation as named insured not ambiguous and does not include corporate
officers and spouses); Dixon v. Gunter, 636 S.W.2d 437 (1982) (individual
owners of corporation are not, as such, insureds under a policy issued to a
corporation); General Ins. Co. v, American Builders Inc., 604 P.2d 966
(Wash. App. 1979)(policy unambiguously lists corporation, and no others, as
named insured); Lundgren v. Vigilant Ins. Co., 391 N.W.2d 542 (Minn. App.
1986) (UIM coverage not a nullity when issued to a corporation since injured
party would be covered had he been injured while occupying an insured
vehicle); Meche v. Thibodeaux, 550 SO.2d 346 (La. App. 3 Cir. 1989) (where
corporation is the only named insured, UM coverage applies only to persons
while occupying a covered vehicle); Ott v. Firemen's Fund Ins. Co., 936
S.W.2d 165 (Mo. App. 1996) (president and sole shareholder of close corp. not
"named insured" of policy issued to corp.). See also American States Ins. Co.
v. C & G Contracting, Inc., 924 P.2d 111 (Ariz. App. 1996); Cutter v. Maine
Bonding and Cas., 579 A.2d 804 (N.H. 1990); Hogan v. Mayor & Alderman
as a "named insured." The District Court's order specifically states that the
endorsement adding Steve Mickle as a "named insured" applies only to
liability coverage. Although Mickle asserts an effective offer of UIM coverage
was not made with regard to the endorsement, we find such matters are
properly determined by the trial court. Accordingly, we do not address
Mickle's status under the endorsement.
of Savannah, 320 S.E.2d 555 (Ga. App. 1984); Busby v. Simmons, 406 S.E.2d
628 (N.C. 1990); Meyer v. Amer. Economy Ins. Co., 796 P.2d 1223 (Or. App.
1990); Sears v. Wilson, 704 P.2d 389 (Kan. App. 1985);Jacobs v. USF&G, 627
N.E.2d 463 (Mass. 1994). These courts are unpersuaded by claims that since
a corporation is incapable of suffering personal injuries or having family
members, a policy using "family member" terminology is ambiguous such that
coverage should be afforded; on the contrary, these courts find the policy
effectual since it provides coverage to Class II insureds, i.e., persons using a
vehicle which is covered under the terms of a policy. Sproles v. Greene,
supra (fact that corporation is the only class I insured doesn't render UIM
coverage a nullity since individuals are covered as class II insureds); Buckner
v. Motor Vehicle Accident Indem. Corp., supra (policy not meaningless since
it provides coverage to persons occupying autos owned by corporation or being
operated on behalf of corporation); Lundgren v. Vigilant Ins. Co., supra
(ambiguity in use of "family member" language did not render UIM coverage
a nullity where individuals were covered while occupying a covered vehicle).
A minority of jurisdictions, however, hold that, since a business
corporation cannot have relatives, a policy issued to a corporation which
defines the insured to include such persons creates an ambiguity, thereby
affording coverage. See e.g. Hager v. American W. Ins. Co., 732 F.Supp.
1072 (D. Mont. 1989)(finding ambiguity in use of term "family member" in
insurance policy issued to closely held corporation rendered it reasonable to
conclude that readily identifiable officers and shareholders of corporate entity
fall within purview of term,); Hawkeye Security Ins. Co. v. Lambrecht, 852
P.2d 1317 (Colo. Ct. App. 1993)(spouse of insured corp.'s sole shareholder
construed to be a "family member" for UM purposes); King v. Nationwide Ins.
Co., 519 N.E.2d 1380 (Ohio 1988). Under this view, when "family member"
language is used in a policy issued to a corporation, it creates an ambiguity
which is to be resolved against the insurer and in favor of the insured. Ceci
v. National Indem. Co., 622 A.2d 545 (Conn. 1993). See also Hansen v. Ohio
Casualty Ins. Co., 687 A.2d 1262 (Conn. 1996); Lunge v. Nat'l Casualty Co.,
977 F.Supp. 672 (D. Vt. 1997).
We decline to adopt the minority view. We agree with the majority
view that a corporation, as such, cannot have a spouse or family members.
Further, as noted in the District Court's certification order, the policy in
question defines "Insured" as "You," and "If you are an individual, any
'family member."' This language clearly demonstrates that it applies to family
members only of individuals and not to corporations such that there is no
ambiguity. Accord Kitts v. Utica Nat'l Ins. Group, 667 N.E.2d 30 (Ohio
1995)(no ambiguity where policy distinguished between corporation and an
"individual"). Moreover, it is clear that Steve Mickle was aware the policy
did not cover either himself, his spouse or his family, as he purchased
separate coverage under an endorsement adding "Broadened Coverage for
Named Individuals." See American States Ins. Co. v. C & G Contracting,
Inc., supra (insured corporation's president had no reasonable expectation he
was family member of corporation). Had the policy covered family members,
there would have been no need for this endorsement adding Steve Mickle as
a named insured.3 Accordingly, we follow the majority view and hold that
Mickle was not aspouse or family member of the named insured, Concrete
Services. It follows that if she is not the spouse of a named insured, then
she is not a Class I insured and may not stack coverage under the policy
issued to Concrete.
2 OWNERSHIP OF VEHICLE
In light of our holding that Mickle is not a Class I insured, she may
not stack UIM coverage in this case, and the answer to the second certified
question is purely academic. However, since we accepted certification on this
issue, we address the matter to clarify apparent confusion concerning
whether, in order to stack UIM coverage, an insured must own the vehicle
involved in the accident? We hold that, so long as an individual otherwise
qualifies as a Class I insured, he or she need not "own" the vehicle in order
The statute controlling the right to stack UIM benefits is S.C. Code
Ann. § 38-77-160 (Supp. 1997) which provides, in pertinent part:
If, however, an insured or named insured is protected by
uninsured or underinsured motorist coverage in excess of the
basic limits, the policy shall provide that the insured or named
insured is protected only to the extent of the coverage he has
on the vehicle involved in the accident. If none of the insured's
or named insured's vehicles is involved in the accident, coverage
is available only to the extent of coverage on any one of the
vehicles with the excess or underinsured coverage.
(Emphasis supplied). Cases of this Court and the Court of Appeals have
interpreted this statute to mean that a Class I insured is an insured or
named insured who "has" a vehicle involved in the accident. South Carolina
only to liability coverage, and that issue is not before this Court.
Farm Bureau Mut. Ins. Co. v. Moonevham, 304 S.C. 442, 405 S.E.2d 396
(1991); Ohio Casualty Insurance Co. v. Hill, _ S.C. _, 473 S.E.2d 843 (Ct.
App. 1996); American Security Ins. Co. v. Howard, 315 S.C. 47, 431 S.E.2d
604 (Ct. App. 1993). An insured is a Class II insured if none of his vehicles
are involved in the accident. Fireman's Ins. Co. v. State Farm Mut. Auto.
Ins. Co., 295 S.C. 538, 370 S.E.2d 85 (1988).
The question is whether, in order to "have" a vehicle involved in the
accident, it must be owned by the insured. We find that it need not. We
hold that, in order to "have" a vehicle involved in the accident, it is necessary
only that the insured qualify as a Class I insured. We have repeatedly
defined a Class I insured as "the named insured, his spouse and relatives
residing in his household." Davidson v. Eastern Fire and Cas. Ins. Co., 245
S.C. 472, 141 S.E.2d 135 (1965); Garris v. Cincinnati. supra; Fireman's Ins.
Co. v. State Farm, supra. Under that definition, it is patent that one may
be the spouse or relative of a named insured and reside in the same
household without owning the vehicle. We have never required ownership
as a prerequisite to stacking;4 on the contrary, we have consistently held the
determinative factor is Class I status. South Carolina Farm Bureau Mut.
Ins. Co. v. Mooneyham, 304 S.C. 442, 405 S.E.2d 396 (1991); Nationwide Mut.
Ins. Co. v. Howard, 288 S.C. 5, 339 S.E.2d 501 (1985); Fireman's Ins. Co. v.
State Farm Mut. Auto. Ins. Co.,supra.. Accordingly, we hold that prior cases
requiring a person to "have" a vehicle involved in the accident as a
prerequisite to stacking mean only that a person must be a Class I insured
with respect to a vehicle involved in the accident, i.e., they must be either
the named insured, or the spouse or relative living in the same household
with the named insured.5
1. Mickle is neither the named insured, nor the spouse or relative of
the corporation, Concrete Services, and therefore does not qualify as a Class
Co. v. Pena, 308 S.C. 521, 419 S.E.2d 375, (Ct. App. 1992) and American
Security Ins. Corp. v. Howard, supra, suggest that ownership is required,
they are overruled.
5 Further, this Court recently held that an insured may contract for
coverage which permits stacking, even though his vehicle is not involved in
an accident. Putnam v. S.C. Farm Bureau, 323 S.C. 494, 476 S.E.2d 902
I insured with respect to the first certified question. Accordingly, she may
not stack UIM coverage under the policy issued to Concrete Services. The
answer to the first certified question is "No."
2. Ownership of a vehicle is not required as a prerequisite to stacking
of UIM benefits, so long as the individual qualifies as a Class I insured, i.e.,
is the spouse or relative of the "named insured." Since Mickle is neither the
spouse nor relative of the named insured (i.e., Concrete) in this case, she is
not entitled to stack.6 The answer to the second certified question is "No."
FINNEY, C.J., TOAL, MOORE and BURNETT, JJ., concur.
Mickle's husband. In that case, Mickle would be a Class I insured by virtue
of her status as the spouse of the "named insured." Accord American Fire
and Casualty Co. v. Sinz, 487 So.2d 340 (Fla. App. 4 Dist. 1986)(where policy
designated executive officers of corporation as named insureds, appellant was
"insured" not by virtue of being a "relative of a named insured corporation,"
but by being a relative resident of the same household as a named insured,
i.e., the executive officer).