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Dunn v. Meridian Mutual Insurance Co.10/27/2005
We hold that uninsured motorist coverage of an automobile policy covers the liability of an uninsured motorist to the insured. If the insured's vehicle is damaged by an uninsured motorist and the insurer chooses to repair the vehicle, the insurer must pay any diminished value of the insured's vehicle, in addition to any costs of repair up to the policy limits.
Factual and Procedural Background
In March 2001, James Dunn, a Tennessee resident, was involved in an accident in Tennessee. The record does not include any other information about the accident, but the parties agree that Dunn's uninsured motorist (UIM) coverage applied. Dunn had $10,000 in UIM coverage with a $200 deductible. Meridian Mutual Insurance Company, Dunn's insurer, inspected his car and paid for $3,108.30 in repairs and waived the deductible. As explained in greater detail, under Allgood v. Meridian Sec. Ins. Co., ___ N.E.2d ___ (Ind. 2005), Meridian's collision coverage is limited to repair or replacement of a damaged vehicle and does not require it to compensate its insureds for any diminution of the value of the car resulting from having been in an accident. Meridian contends that its policy gives its insureds the same result in the case of an accident in which an uninsured motorist is liable to its insured.
Dunn filed a breach of contract claim against Meridian alleging that under his UIM coverage Meridian was required to pay not only for the cost of repairs to his car, but also for the diminished value of the car after the repairs attributable to it having been in an accident. Dunn's claim under UIM is only for the damage to his car including its diminished value, and appears to be in an amount under the UIM limit of $10,000. Dunn also sought certification as a class action. Meridian moved to dismiss for failure to state a claim upon which relief can be granted. Without deciding the class issue, the trial court granted Meridian's motion, finding that the policy was unambiguous and did not provide coverage for diminished value. The Court of Appeals decided this case before we handed down our opinion in Allgood. Relying on its decision in that case, Allgood v. Meridian Sec. Ins. Co., 807 N.E.2d 131, 138 (Ind. Ct. App. 2004), aff'd by 812 N.E.2d 1065 (Ind. Ct. App. 2004), the Court of Appeals reversed and remanded. Dunn v. Meridian Mut. Ins. Co., 810 N.E.2d 739, 740 (Ind. Ct. App. 2004). We grant transfer.
Applicable Law
An insurance policy is governed by the law of the principal location of the insured risk during the term of the policy. Hartford Accident & Indem. Co. v. Dana Corp., 690 N.E.2d 285, 291 (Ind. Ct. App. 1997), trans. denied; see also Restatement (Second) of Conflict of Laws ยง 193 (1971). Because Dunn was a Tennessee resident at the time he took out the policy, his claim is grounded in the law of Tennessee. Specifically, by issuing a policy to a Tennessee resident, Meridian, which was domiciled in Indiana, became subject to the Tennessee UIM statute. See United Farm Bureau Mut. Ins., Co. v. Hanley, 172 Ind. App. 329, 360 N.E.2d 247 (1977), trans. denied (Farm Bureau, domiciled in Iowa, was subject to Indiana's UIM statute); Dunn v. Hackett, 833 S.W.2d 78 (Tenn. Ct. App. 1992) (State Farm, domiciled in Illinois , was subject to Tennessee's UIM statute).
Tennessee and Indiana doctrines of insurance policy interpretation appear to be the same. An insurance policy is a contract, and as such is subject to the same rules of construction as other contracts. Allstate Ins. Co. v. Dana Corp., 759 N.E.2d 1049, 1054 (Ind. 2001); McKimm v. Bell, 790 S.W.2d 526, 527 (Tenn. 1990). Interpretation of a contract is a pure question of law and is reviewed de novo. Harriso
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