A recent decision by the Wisconsin Court of Appeals has determined that an insurance policy exclusion preventing a resident relative from receiving underinsured motorist (UIM) benefits is not enforceable under state law. The ruling impacts how insurance companies may define who qualifies for coverage when household members own uninsured vehicles.
The complaint was filed by David M. Fredrich, through his guardian ad litem Robert L. Jakulski, in Milwaukee County Circuit Court against Farmers Group Property & Casualty Insurance Company. The appeal, identified as case number 2024AP992, challenged a circuit court order that had granted summary judgment to Farmers and denied Fredrich’s motion for declaratory judgment.
According to the appellate opinion authored by Judge Geenen, Fredrich was injured while riding his bicycle after being struck by an underinsured driver. At the time of the accident, he lived with his mother and brother—both named insureds on a Farmers automobile policy—and owned an uninsured 2005 Toyota Corolla. The policy included a UIM Endorsement defining “insured” as “you or any relative,” with “relative” further defined as someone related by blood or marriage and residing in the household. However, an endorsement added by Farmers excluded any person who owns or insures an auto, motorcycle, or motor home other than a covered auto from being considered a “relative.”
Fredrich argued that this amended definition created ambiguity and functioned as an unlawful “drive other car” exclusion under Wisconsin Statute § 632.32(5)(j). He maintained that because this definitional exclusion did not conform to statutory requirements—which specify exclusions must be tied to losses resulting from use of another vehicle—it could not be enforced against him. In contrast, Farmers contended that its policy language unambiguously excluded Fredrich from coverage due to his ownership of an uncovered vehicle and asserted that the exclusion was permissible since it aimed to prevent residents from obtaining coverage for vehicles not listed on the policy.
The circuit court initially sided with Farmers, finding no ambiguity in the definition of “relative” and concluding that even if it were treated as an exclusion rather than a limitation on initial coverage grants, it would still be lawful under Wisconsin statutes.
On appeal, however, Judge Geenen outlined that although the policy’s definition of “relative” clearly excludes anyone owning an uncovered vehicle, such an exclusion constitutes a “drive other car” provision prohibited unless it meets specific statutory conditions set forth in § 632.32(5)(j). These conditions require that any valid exclusion must apply only when loss results from use—not mere ownership—of another vehicle meeting certain criteria.
Citing precedent including Blazekovic v. City of Milwaukee and Vieau v. American Family Mutual Insurance Co., the appellate panel concluded: “the Policy’s definition of ‘relative’ constitutes a ‘drive other car’ exclusion, and because it does not conform to the requirements of WIS. STAT. § 632.32(5)(j), the exclusion cannot be enforced.” The opinion also noted tension between different cases regarding whether such exclusions should be treated as limitations on initial coverage or outright exclusions but ultimately found controlling authority required treating them as exclusions subject to statutory limits.
As relief, Fredrich sought declaratory judgment confirming his entitlement to UIM benefits under his family’s policy despite owning an uninsured vehicle himself. The appellate court reversed the circuit court’s summary judgment order favoring Farmers and remanded with instructions for the lower court to grant Fredrich’s motion for declaratory judgment.
Attorneys involved include Robert L. Jakulski acting as guardian ad litem for David M. Fredrich; no additional attorney names are specified in this document excerpt. The case was decided without explicit mention of judge names beyond those signing the appellate opinion: White (Chief Judge), Colon (Presiding Judge), and Geenen (Judge). The case identification number is 2024AP992.
