Vehicle covered by Canadian no-fault is not uninsured, but is underinsured.

Byline: David Ziemer

A non-Wisconsin vehicle that is covered solely by the other jurisdictions no-fault insurance law is not an uninsured vehicle under Wisconsin law but if the other jurisdiction does not permit recovery of noneconomic damages, Wisconsin considers the vehicle to be underinsured, the Wisconsin Court of Appeals held on May 24.

The case involves a Wisconsin driver injured in Canada by a Canadian driver.

Facts:

In 1995, V. Thomas Ostlund, a Wisconsin resident, was driving his mothers pickup truck in Manitoba, Canada.

Franklin Gillette was a passenger. While legally stopped, they were struck from behind by another truck driven by Norman Unrau, a Manitoba resident. There was no dispute that Unrau was at fault.

Unraus vehicle was registered in Manitoba, and pursuant to Manitobas no-fault automobile liability legislation, was insured by the Manitoba Public Insurance Corporation (MPIC).

Ostlunds mother was insured by State Farm, and her policy contained uninsured motorist (UM) provisions, but no underinsured motorist coverage (UIM).

However, Ostlund also had two State Farm auto policies that contained both UM and UIM coverage.

MPIC paid Ostlunds subrogated health insurer $20,000, and almost $7,000 directly to Ostlund. Gillette has thus far received nothing, although he has filed a claim. State Farm has also paid for some of Ostlund and Gillettes medical expenses.

Procedural history:

State Farm sought declaratory judgment that it had no further obligations to Ostlund and Gillette under its policies.

La Crosse County Circuit Court Judge Dennis G. Montabon agreed, and entered judgment in State Farms favor.

Ostlund and Gillette appealed, and, in a decision by Circuit Court Judge William F. Hue, sitting by special assignment, the District IV (Madison) court of appeals held that, although the vehicle was not uninsured, it was underinsured, because Manitoba law does not permit the recovery of noneconomic damages.

The courts reasoning:

The appeals court concluded that, under the State Farm policy, Unraus vehicle was insured.

The policy defines an uninsured motor vehicle as one with policy limits less than required by the financial responsibility act of the state where your car is mainly garaged.

At the time of the accident, Wisconsins financial responsibility act required limits of $25,000 per person and $50,000 per accident.

At the time of accident, MPIC allowed recovery for lost income of up to $37,800 per year, permanent impairment up to...