APPEAL FROM THE CIRCUIT COURT OF THE FOURTH JUDICIAL CIRCUIT LAWRENCE COUNTY, SOUTH DAKOTA THE HONORABLE RANDALL L. MACY Judge
The opinion of the court was delivered by: Konenkamp, Justice
CONSIDERED ON BRIEFS ON JANUARY 8, 2013
[¶1.] An Arizona couple was injured on their motorcycle by another biker.
Because the other motorcyclist left the scene, the couple sought uninsured motorist benefits from their insurer. The insurer tendered the policy's full uninsured motorist benefits of $15,000 per person. But the couple sought $25,000 per person, which is what they would have recovered in South Dakota had they been able to obtain the other biker's liability insurance. On cross motions for summary judgment, the circuit court declared that the terms of the Arizona insurance policy, rather than South Dakota law, governed the applicable coverage. The couple appeals.
[¶2.] Steve and Dianne Milinkovich are residents of Arizona. While riding their motorcycle on Highway 85 near Deadwood, South Dakota, on August 3, 2008, an unidentified motorcyclist forced them off the road. Both Steve and Dianne were injured. The driver of the other motorcycle did not stop, and the Milinkoviches were unable to get a license plate number.
[¶3.] The Milinkoviches insured their motorcycle through Progressive Insurance Company. Their insurance contract was executed in Arizona and contained uninsured motorist coverage limits of $15,000 per person and $30,000 per accident, as required by Arizona law. After the Milinkoviches made a claim, Progressive tendered $15,000 to Steve and $15,000 to Dianne under the policy. They accepted payment of the benefits, but refused to release Progressive from any and all claims.
[¶4.] In July 2010, the Milinkoviches brought suit in South Dakota against Progressive seeking, among other relief, a declaration that the company must pay uninsured motorist benefits in compliance with South Dakota's statutory minimum limits -- $25,000 per person and $50,000 per accident. They alleged that Progressive acted in bad faith when it refused to tender $50,000. As support, the Milinkoviches relied on public policy and South Dakota's financial responsibility law, which mandates liability coverage of $25,000 per person and $50,000 per accident for persons operating vehicles within South Dakota.
[¶5.] Progressive moved for summary judgment and the Milinkoviches moved for partial summary judgment on the issue of uninsured motorist benefits.
After a hearing, the circuit court issued a memorandum decision granting summary judgment for Progressive. It reasoned that while South Dakota's financial responsibility law, SDCL 32-35-70, dictates that all vehicles operating in this state must provide liability coverage for bodily injury of $25,000/$50,000, the statute does not specifically include a requirement that drivers must maintain uninsured motorist coverage at the same levels. The court also relied on the language in SDCL 58-11-9 addressing uninsured motorist coverage for insurance policies issued in South Dakota for "any motor vehicle registered or principally garaged in this state[.]" Because the Milinkoviches' policy was issued in Arizona and their motorcycle was registered and principally garaged in Arizona, the court held that the parties' insurance contract and Arizona law governed the dispute. Their policy provides, and Arizona law requires, $15,000 per person and $30,000 per accident in uninsured motorist coverage, which Progressive tendered.
[¶6.] On appeal, the Milinkoviches ask this Court to hold that drivers operating motor vehicles within our borders must be protected by South Dakota's minimum uninsured motorist coverage limits, regardless of the level of uninsured motorist coverage contracted for between non-resident drivers and their insurance companies. In urging their position, the Milinkoviches emphasize that in both South Dakota and Arizona uninsured motorist coverage is "inextricably linked as equal sums." Indeed, both states have held that the purpose of uninsured motorist coverage is to protect victims to the same extent as if they had been injured by an insured driver. See Transp. Ins. Co. v. Martinez, 899 P.2d 194, 196 (Ariz. Ct. App. 1995); Cornelius v. Nat'l Cas. Co., 2012 S.D. 29, ¶ 12, 813 N.W.2d 167, 171 (citations omitted).
[¶7.] Yet the fact that uninsured coverage and bodily injury liability coverage have the same purpose does not mean the two types of insurance protection are equal, one in the same, or interchangeable. Compare SDCL 58-11-9 with SDCL 32-35-70. An insurer provides bodily injury liability coverage to pay damages to another for bodily injury when an insured becomes legally responsible because of an accident arising out of the ownership, maintenance, or use of the insured motor vehicle. See SDCL 32-35-70. On the other hand, an insurer pays an insured uninsured motorist benefits when the insured would legally be ...