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Kontowicz v. American Standard Insurance Co. of Wisconsin1/19/2005
otection of the policyholder is again paramount. Our supreme court rejected Kranzush's proposition that insurers should be liable "to a third-party claimant for the insurer's failure to settle the claim where the liability of the insured is reasonably clear." Id. at 62-63. The supreme court explained that settlement of third-party claims may give rise to the tort of bad faith only in the sense that the tort action is "a vehicle to enforce the insurer's duty to be mindful of the insured's interests when settling third-party claims." Id. at 63. The Kranzush court looked extensively at other court decisions and identified the following theme: "an insurer owes no duty to the third-party claimant to settle or to negotiate in good faith." Id. at 72.
. Kontowicz and Buyatt argue that reliance on Kranzush is misplaced because our supreme court has clearly stated that the interest penalty is unrelated to the issue of bad faith. See id. at 76. However, we discern in the case law of that period a focus on the fiduciary relationship between insurer and insured, and the goal of protecting the rights of the insured. This then is the historical context for development of the interest penalty under Wis. Stat. § 628.46. We conclude that § 628.46 arose from the legislature's intent to protect the insured from improper claims settlement practices.
. Kontowicz and Buyatt contend that the Wis. Stat. § 628.46(3) reference to Wis. Stat. § 646.31(2) supports them. At the time that Wis. Stat. § 636.10(3) (1975) was created, it read, "This section applies only to the classes of claims enumerated in s. 646.11(2)." The relevant portion of Wis. Stat. § 646.11(2) (1975) stated that the classes of claims to be paid included:
(c) Third party claimants. A claim under a liability o worker 's compensation insurance policy, if:
1. Either the insured or the 3rd party claimant was a resident of this state at the time of the insured event; or
2. The claim is for bodily injury or personal injuries suffered in this state or by a person who when he [or she] suffered the injuries was a resident of this state; or
3. The claim is for damage to property situated in this state at the time of damage.
Sec. 646.11(2)(c) (1975). However, we are persuaded that the legislature has made its intent clear by withdrawing all references to bodily injury or personal injury from the statute. The current language states that eligible claims include a "claim under a liability or workers' compensation insurance policy, if either the insured or the 3rd party claimant was a resident of this state at the time of the insured event." Sec. 646.31(2)(d). Kontowicz and Buyatt assert that the current language continues to include third-party bodily injury or personal injury claims by its reference to liability policies and third-party claimants. We disagree. By eliminating the bodily injury and personal injury language from the statute, the legislature has preserved eligibility for a more narrow group, specifically: (1) third parties whose claims arise under the policy in the same manner and under the same provisions as the named insured, and (2) third-party worker 's compensation claimants.
. Under Wis. Stat. § 632.32(3)(a), an automobile insurance policy must provide coverage "to any person using any motor vehicle described in the policy when the use is for purposes and in the manner described in the policy." Furthermore, a policy may not exclude coverage for " ersons related by blood, marriage or adoption to the insured" or a "passenger in or on the insured vehicle." Sec. 632.32(6)(b)1. and 2.a. Consequently, the insured has paid premiums with the expectation that these third pa
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