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WELCHANS v. UNITED SVCS. AUTO. ASSN.3/13/2002
Defendant-appellants, United Services Automobile Association (USAA) and Allied Mutual Insurance Company, n/k/a Nationwide Mutual Insurance Company (Allied), appeal from the district court's ruling in this declaratory judgment action, which determined their insured, plaintiff-appellee Robert Welchans, had underinsured motorist coverage (UIM) under the provisions of a business auto insurance policy written by Allied and a personal auto policy written by USAA. USAA and Allied both claim the "owned-but-not-insured" exclusions in their policies excluded the farm tractor Welchans was driving when it was struck by the underinsured motorist and consequently they were not bound to perform under the UIM coverage of either policy. We reverse and dismiss.
In November 1997, Welchans was driving his 1972 John Deere tractor on a county road. The tractor was struck from behind by an automobile resulting in Welchans suffering serious personal injury . At the time of the accident, Welchans had a business auto policy with Allied on his farm truck and an automobile policy on four cars from USAA. Welchans also had a general farm liability policy that included insurance on the tractor with IMT Insurance which is not a party to this suit. After advising Allied and USAA of his intent to settle, Welchans settled with the driver of the automobile who hit him for the policy limits of the driver's liability coverage. Welchans then made a claim against his UIM coverage under the policies with Allied and USAA. Both Allied and USAA denied coverage claiming Welchans was operating a vehicle that fell under their respective owned-but-not-insured exclusions. Welchans filed this declaratory judgment action.
The district court found the exclusion language in Allied's policy did not exclude Welchans' injuries from UIM coverage. In contrast, the court found the exclusion language in USAAs policy did exclude Welchans' injuries from UIM coverage. After examining the requirements concerning UIM coverage found in Iowa Code section 516A.1, the court found the UIM coverage in both policies was available to Welchans because the insurers did not obtain a written rejection from Welchans of UIM coverage for the tractor. This finding was made though neither insuror wrote coverage for the tractor. Allied and USAA appeal.
Review of actions for declaratory relief is governed by the manner in which the action was tried. United Fire and Cas. Co. v. Iowa Dist. Ct., 612 N.W.2d 101, 103 (Iowa 2000). This case was tried at law. Our review is for correction of errors of law. Iowa R. App. P. 6.4 ; Van Oort Constr. Co. v. Nuckoll's Concrete Serv., Inc., 599 N.W.2d 684, 689 (Iowa 1999). We are not bound by the district court's legal conclusions, but we are bound by its findings of fact if they are supported by substantial evidence in the record. Walsh v. Nelson, 622 N.W.2d 499, 502 (Iowa 2001). Evidence is substantial when a reasonable mind would accept it as adequate to reach a conclusion. Flanagan v. Consolidated Nutrition, L.C., 627 N.W.2d 573, 577 (Iowa Ct. App. 2001).
The UIM endorsement in Allied's policy states, in pertinent part:
This insurance does not apply to any of the following:
4. `Bodily injury ' sustained by you . . . while `occupying' or struck by any vehicle owned by you . . . which is not a covered `auto.'
Finding Welchans had UIM coverage for the accident under the Allied policy, the district court stated:
odily injury sustained while occupying a non-covered auto is excluded from coverage. However, farm machinery is expressly excluded from the definition of auto, thereby removing farm machinery from the exclusion. The owned but not insured provisions o
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