S056655, Opinion — Vogelin v. American Family Mutual Ins. Co.

490
Argued and submitted June 11, decision of Court of Appeals and judgment of
circuit court affirmed July 16, 2009
Jessica VOGELIN,
Petitioner on Review,
v.
AMERICAN FAMILY MUTUAL
INSURANCE COMPANY,
Respondent on Review.
(CC0502-01571; CA A132051; SC S056655)
213 P3d 1216

Cite as 346 Or 490 	491
CJS, Insurance § 56.
En Banc
On review from the Court of Appeals.*
Kathryn H. Clarke, Portland, argued the cause for peti-
tioner on review. With her on the brief was Steven A Kahn.
Thomas 	M. 	Christ, 	Cosgrave 	Vergeer 	Kester 	LLP,
Portland, argued the cause for respondent on review. With
him on the brief was Brian J. Scott.
Meagan A 	Flynn, Portland, filed the brief on behalf of
amicus curiae Oregon Trial Lawyers Association.
Joel S. DeVore, Luvaas Cobb, Eugene, filed a brief on
behalf of amici curiae Allstate Ins. Co., State Farm Mutual
Auto Ins. Co., and The Property Casualty Insurers Association
of America.
WALTERS,J.
The decision of the Court of Appeals and the judgment of
the circuit court are affirmed.
* Appeal from Multnomah County Circuit Court, Dale R. Koch, Judge. 221 Or
App 558, 191 P3d 687 (2008).

492 	Vogelin v. American Family Mutual Ins. Co.
WALTERS,J.
In this insurance breach-of-contract case, we decide
how a liability payment that plaintiff recovered from a tort-
feasor affects her recovery of underinsured motorist (UIM)
benefits under her own insurance policy. We conclude that
the relevant Oregon statutes permitted defendant-plain-
tiffs insurer-to calculate plaintiffs UIM benefit by sub-
tracting the tortfeasor's liability payment from the uninsured
motorist (UM) liability limit of plaintiffs policy, instead of by
subtracting that payment from the amount of plaintiffs total
damages.
The facts are undisputed. Plaintiff, who had pur-
chased an automobile insurance policy from defendant, was
injured in an automobile collision in 2003 and sustained
damages exceeding $300,000. The driver who collided with
plaintiff and injured her had liability insurance with a liabil-
ity limit of $25,000; the driver's insurance carrier paid that
amount to plaintiff. Because the driver's liability payment
was not sufficient to pay the full amount of plaintiffs dam-
ages, plaintiff made a claim against defendant for UIM ben-
efits; the UM liability limit under her own policy was
$100,000. The parties discussed various settlement amounts
but did not come to an agreement.
Plaintiff filed this action against defendant in 2005
for breach of contract, arguing that ORS 742.504 establishes
the minimum policy terms for UM and UIM insurance cov-
erage. Plaintiff contended that, as interpreted by this court in
Bergmann v. Hutton, 337 Or 596, 101 P3d 353 (2004), ORS
742.504(7)(c) requires insurers to pay their insureds the total
amount of the damages that they incur, less any amount paid
by or on behalf of a tortfeasor, up to the insured's UM liability
limit. Plaintiff argued that ORS 742.502(2)(a), which man-
dates UIM coverage, must be read consistently with ORS
742.504(7)(c), and compels the same result. Thus, plaintiff
asserted, although the policy that she had purchased from
defendant purportedly provided that the tortfeasor's $25,000
liability payment would be deducted from her UM liability
limit ($100,000), Oregon law required that that payment
should be deducted from the total amount of her damages
(which exceeded $300,000). Because the resulting figure

Cite as 346 Or 490 (2009) 	493
exceeded her policy's $100,000 UM liability limit, plaintiff
reasoned that she was entitled to receive her full UIM
benefit from 	defendant. 	Defendant responded that ORS
742.502(2)(a), rather than ORS 742.504(7)(c), controlled, and
that, under defendant's interpretation of that former statute,
the tortfeasor's payment ($25,000) must be deducted from
the amount of the policy's UM limit in plaintiffs policy
($100,000), rather than from plaintiffs damages. It followed,
in defendant's view, that its obligation to plaintiff was lim-
ited to $75,000.
The trial court agreed with defendant and, after a
jury returned a damages finding of $304,035. 70, entered
judgment for plaintiff in the amount of$75,000, plus attorney
fees and costs. The Court of Appeals affirmed. Vogelin v.
American Family Mutual Ins. Co., 221 Or App 558, 191 P3d
687 (2008). We allowed plaintiffs petition for review to
answer this question of statutory interpretation-a question
left open in Mid-Century Ins. Co. v. Perkins, 344 Or 196, 179
P3d 633 (2008), modified on recons, 345 Or 373, 195 P3d 59
(2008).
We begin our analysis 	with ORS 	742.504(7)(c),
because it is central to an understanding of the parties' argu-
ments. The parties agree that ORS 742.504 sets out the min-
imum required UM and UIM benefit provisions for all auto-
mobile insurance policies issued in Oregon. ORS 742.504;
ORS 742.502(4). 1 ORS 742.504(7)(c) sets out the mandatory
provisions regarding calculation of UM and UIM benefits and
provides:
"Any amount payable under the terms of this coverage
because of bodily injury sustained in an accident by a per-
son who is an insured under this coverage shall be reduced
by:
"(A) 	All sums paid on account of the bodily injury by or
on behalf of the owner or operator of the uninsured vehicle
* * *, including all sums paid under the bodily injury liabil-
ity coverage of the policy; and
1 As discussed in Bergmann v. Hutton, 337 Or 596, 602, 101 P3d 353 (2004),
ORS 742.502(4) provides that UIM coverage is subject to the UM provisions set out
in ORS 742.504.

494 	Vogelin v. American Family Mutual Ins. Co.
"(B) 	The amount paid and the present value of all
amounts payable on account of the bodily injury under any
workers' compensation law, disability benefits law or any
similar law."
(Emphasis added.)
In Bergmann, 337 Or 596, this court considered the
question whether, under ORS 742.504(7)(c)(B), the amount of
UIM benefits that an insured was entitled to receive from an
insurer was (1) the amount of the insured's damages reduced
by workers' compensation benefits; or (2) the amount of the
insured's UM liability limit reduced by workers' compensa-
tion benefits. 2 To make that determination, the court con-
strued the meaning of the words in the introductory phrase
italicized above, "[a]ny amount payable under the terms of
this coverage." Id. at 602-07. The court distinguished the
term "coverage" from the term "policy"-a term that the leg-
islature did not use in the statutory text at issue-and
explained that the former was a broad term encompassing
"the universe of people, vehicles, and events that trigger the
insurer's obligation to pay under the policy," whereas the lat-
ter referred to "the specific contract between the insurer and
the insured[.]" Id. at 604. The court noted that an insurance
policy includes limits on the insurer's liability, but insurance
"coverage" does not. Id. The court therefore concluded that
the phrase "[a]ny amount payable under the terms of this
coverage" in ORS 742.504(7)(c) meant
"the amount that the insured legally would be entitled to
recover from the owner or operator of an uninsured or
underinsured vehicle on account of bodily injury sustained
by the insured in an accident caused by the ownership or
operation of the uninsured or underinsured vehicle."
Id. at 610. Because, in the usual case, "that amount would be
equal to the insured's total damages," id. at 605, the court
held that the plaintiff in Bergmann was entitled to recover
the amount of his total damages less the workers' compensa-
tion benefits that he had received. Id. at 610.
In Bergmann, the plaintiff apparently did not contend that the insurer was
prohibited by law from deducting the amount paid on behalf of the tortfeasor from
the limits of her UIM policy, Bergmann, 337 Or at 603 n 7, and that was not an
issue in the case.

495
Responding to the insurer's concern in Bergmann
that the foregoing interpretation of ORS 742.504(7)(c) could
result in an insurer being liable for an amount greater than
the UM liability limit of the insured's policy, the court
explained that the UM policy limits set the maximum
amount of UIM benefit payments that the insured could
recover:
"First, no matter what types of offsets ORS 742.504 per-
mits, the maximum amount for which the insurer is liable
under its UM coverage is the limit of liability set out on the
declarations page of the policy. ORS 742.504(7)(a). Second,
ORS 742.502(2)(a) essentially defines the limit of the
insurer's liability in the UIM context. That section provides
that UIM benefits are 'equal to uninsured motorist cover-
age benefits less the amount recovered from other auto-
mobile 	liability 	insurance 	policies.' 	Nothing 	in 	ORS
742.504(7)(c), and certainly nothing in the interpretation of
that provision that we announce here, renders those provi-
sions of the statute inoperable. Thus, even if the insured's
damages continue to exceed the policy limits after appropri-
ate deductions from the total damages are taken, the max-
imum amount for which the insurer will be liable is the
limit of liability set out in the declarations. And if, after
reducing the amount that the insured legally would be enti-
tled to recover in the various ways permitted in ORS
742.504(7), the resulting amount is less than the insurer's
liability limit, then that resulting amount is the maximum
that the insurer will have to pay. The insurer may have to
pay, but the payment will never exceed the liability limits
that are stated on the declarations page. No unreasonable
result obtains."
Id. at 608.
This case involves a payment on behalf of a tort-
feasor, which is addressed under ORS 742.504(7)(c)(A), not
workers' compensation benefits, which are addressed under
ORS 742.504(7)(c)(B), but the analysis proceeds from the
same introductory phrase, "[a]ny amount payable under the
terms of this coverage." For purposes of ORS 742.504(7)(c),
that phrase defines the initial figure from which payments,
including those made by or on behalf of a tortfeasor, are to be
deducted. As noted in Bergmann, that figure is, in the usual
case, the insured's total damages. Thus, under Bergmann,

496 	Vogelin v. American Family Mutual Ins. Co.
ORS 742.504(7)(c)(A) means that payments made by or on
behalf of a tortfeasor must be deducted from the insured's
total damages, as plaintiff contends, not from the insured's
UM policy limit, as defendant contends.
However, although our analysis begins with ORS
742.504(7)(c), that is not where it ends. As noted, another
statute central to the parties' arguments, ORS 742.502, cre-
ates and addresses UM and UIM coverage. Specifically, ORS
742.502(1) requires that all motor vehicle liability policies in
Oregon provide UM coverage, and ORS 742.502(2)(a) defines
that coverage, as well as UIM coverage. Plaintiff argues that
we must interpret ORS 742.502(2)(a) in a manner that is con-
sistent with the interpretation of ORS 742.504(7)(c) that
Bergmann compels. Defendant responds that the wording of
ORS 742.502(2)(a) necessitates a different result and controls
over any contrary construction of ORS 742.504(7)(c). Stated
differently, defendant asserts that the provisions of ORS
742.504(7)(c) apply to UIM coverage only to the extent that
they are not inconsistent with ORS 742.502(2)(a).
Before examining the parties' arguments further, we
set out the applicable 2001 version of ORS 742.502(2)(a), sep-
arately numbering its four distinct sentences for ease of
reference:
(1) 	"A motor vehicle bodily injury liability policy shall
have the same limits for uninsured motorist coverage as for
bodily injury liability coverage unless a named insured in
writing elects lower limits."
(2) 	"The insured may not elect limits lower than the
amounts prescribed to meet the requirements of ORS
806.070 for bodily injury or death."
(3) 	"Uninsured 	motorist 	coverage 	larger 	than 	the
amounts required by ORS 806.070 shall include under-
insurance coverage for damages or death caused by acci-
dent and arising out of the ownership, maintenance or use
of a motor vehicle that is insured for an amount that is less
than the insured's uninsured motorist coverage."
(4) 	"Underinsurance benefits shall be equal to uninsured
motorist coverage benefits less the amount recovered from
other automobile liability insurance policies." 3
"ORS 742.502(2)(a) has been amended since 2001; for the most part, those
amendments are immaterial to our analysis here. We do note, however, that the

Cite as 346 Or 490 	497
The first two sentences of ORS 742.502(2)(a) (2001)
address the required minimum limits of UM coverage and do
so by referring to the insured's liability insurance limits. The
first sentence requires that an insured's UM limits be equiv-
alent to the insured's bodily injury liability limits, unless the
insured agrees to lower limits in writing. The second sen-
tence, by incorporating a reference to ORS 806.070, prohibits
motorists from electing limits lower than $25,000 (colloqui-
ally known as the "financial responsibility limits").
The third sentence of ORS 742.502(2)(a) (2001)
addresses the circumstances in which an insurer must pro-
vide its insureds with UIM coverage and defines that cover-
age. UIM coverage is triggered when an insured obtains UM
coverage that exceeds the financial responsibility minimum
of $25,000. UIM coverage is coverage for "damages or death
caused by accident and arising out of the ownership, mainte-
nance or use of a motor vehicle that is insured for an amount
that is less than the insured's uninsured motorist coverage."
ORS 742.502(2)(a) (2001).
This court recently discussed the meaning of the
third sentence of ORS 742.502(2)(a) (2001), including the
above-quoted phrase, in Mid-Century Ins. Co., 344 Or 196. In
those consolidated cases, the insureds contended that a
"motorist is underinsured if the limit of his or her liability
policy is less than the sum of the damages sustained by the
insured." Id. at 206 (emphasis added). The insurers, on the
other hand, contended that the determination whether a
vehicle is underinsured is made by comparing the limits of
the tortfeasor's liability policy to the limits of the insured's
UM policy; by the insurer's reasoning, if the limits were
equal, as they were in Mid-Century Ins. Co., then the tortfea-
sor would not be an underinsured motorist, and, thus, the
fourth sentence of ORS 742.502(2)(a) now provides (new text in italics; deleted text
in brackets):
"Underinsurance coverage [benefits] shall be equal to uninsured motorist cov-
erage [benefits] less the amount recovered from other motor vehicle [automo-
bile] liability insurance policies."
See Or Laws 2007, ch 287, § 2 (adding "coverage" and twice removing "benefits"};
Or Laws 2005, ch 235, § 1 (adding "motor vehicle" and removing "automobile"). As
noted in Mid-Century Ins. Co. v. Perkins, 344 Or 196, 200 n 2, 179 P3d 633 (2008),
modified on recons, 345 Or 373, 195 P3d 59 (2008), the third sentence of ORS
742.502(2)(a) also has been amended since 2001.

498 	Vogelin v. American Family Mutual Ins. Co.
insured would not be entitled to recover UIM benefits. Id. at
207.
Resolution of that dispute turned on the meaning of
the word "coverage," as used in the third sentence of ORS
742.502(2)(a) (2001). This court concluded that, although in
Bergmann the word "coverage" in ORS 742.504(7)(c) had
been construed to refer to an insured's total damages, the leg-
islature had not necessarily used that word in the same sense
in the third sentence of ORS 742.502(2)(a) (2001). Id. at 209-
11. The court reasoned in part that, because the legislature
had included a companion reference to "limits" of coverage in
the latter provision, see 346 Or at 496 (setting out statute), it
had intended the word "coverage" in that provision to mean
the amount of the UM liability limits in the insured's policy.
Mid-Century Ins. Co., 344 Or at 213-14. The court in Mid-
Century Ins. Co. therefore determined that the threshold
question whether a tortfeasor's vehicle is underinsured is
determined by comparing the liability limits of the vehicle's
insurance against the limits of the insured's UM policy cov-
erage, rather than against the insured's damages. Id. at 216.
This case concerns the meaning of the fourth sen-
tence of ORS 742.502(2)(a) (2001), which, again, provided:
"Underinsurance benefits shall be equal to uninsured
motorist coverage benefits less the amount recovered from
other automobile liability insurance policies."
The fourth sentence addresses, as does ORS 742.504(7)(c),
the issue of how liability insurance payments recovered from,
or on behalf of, a tortfeasor affect an insured's UIM policy
benefits. According to that fourth sentence, the initial figure
for purposes of subtracting "the amount recovered from other
automobile liability insurance policies"-here, the tortfea-
sor's liability payment-is the insured's "uninsured motorist
coverage benefits."
In defendant's view, that phrase from the fourth sen-
tence of ORS 742.502(2)(a) (2001), "uninsured motorist cov-
erage benefits," means the amount that the insured would be
entitled to recover from the insurer ifthe tortfeasor had been
uninsured. Because, defendant argues, that amount cannot
exceed the UM liability limits in the insured's policy, the

Cite as 346 Or 490 (2009) 	499
phrase "uninsured motorist coverage benefits" must refer to
those limits. Furthermore, defendant contends, this court
in Mid-Century 	interpreted the 	third sentence in 	ORS
742.502(2)(a) (2001) to refer to an insured's UM liability lim-
its, and there is no reason to conclude that the legislature
intended a different meaning when it used similar wording in
the fourth sentence.
Plaintiff counters that we must interpret the phrase
"uninsured motorist coverage benefits" in the fourth sentence
of ORS 742.502(2)(a) (2001) consistently with the Bergmann
interpretation of the introductory phrase "[a]ny amount pay-
able under the terms of this coverage" in ORS 742.504(7)(c).
In other words, both phrases must mean "the amount that
the insured legally would be entitled to recover from the [tort-
feasor]," Bergmann, 337 Or at 610, not from the insurer.
Plaintiff urges that the initial figure for purposes of calculat-
ing UIM benefits under ORS 742.502(2)(a) (2001) should be
the same as the initial figure mandated by ORS 742.504(7)(c)
as determined in Bergmann-the insured's total damages.
Under plaintiff's interpretation, ORS 742.502(2)(a) (2001)
requires the insurer to subtract the tortfeasor's liability pay-
ment from the plaintiff's total damages and obliges the
insurer to pay its insured the remainder, up to the UM liabil-
ity limit of the insured's policy. Thus, plaintiff contends that
she is entitled to recover from defendant her damages of
$304,035. 70, minus the payment from the tortfeasor's liabil-
ity insurance carrier of $25,000, up to her UM liability limit
of$100,000-that is, the amount of$100,000.
To support her position, plaintiff emphasizes that, if
we were to construe ORS 742.502(2)(a) (2001) to use her UM
liability limit as the initial figure in calculating her ultimate
recovery, she would receive less than the policy limits for
which she bargained. Plaintiff further argues that such an
outcome would cause ORS 742.502(2)(a) (2001) to conflict
directly with ORS 742.504(7)(c), which, under Bergmann,
uses damages-not the UM liability limit-as the initial fig-
ure from which to calculate payment. Further, plaintiff
insists, if a conflict exists between the two statutes, the cal-
culation required by ORS 7 42.504(7)(c) controls, because
ORS 742.502(4) provides that "[u]nderinsurance coverage is
subject to ORS 742.504."

500 	Vogelin v. American Family Mutual Ins. Co.
For its part, defendant acknowledges that its pro-
posed 	interpretation 	of 	the 	fourth 	sentence 	of 	ORS
742.502(2)(a) (2001) appears to conflict, on its face, with the
interpretation of ORS 742.504(7)(c) that Bergmann suggests.
However, defendant contends, the two statutes can be read
harmoniously by understanding that the reference that ORS
742.502(4) makes to ORS 742.504-that is, that UIM cover-
age is "subject to ORS 742.504"-is a shorthand method of
requiring that Oregon insurance policies include equivalent
minimum UM and UIM benefits provisions. As defendant
explains it, the legislature understood that circumstances
exist in which the provisions of ORS 742.504 cannot, for var-
ious reasons, apply to UIM coverage. 4 Defendant concludes
that the legislature did not intend the provisions of ORS
742.504 to be controlling when they are inconsistent with the
very definition ofUIM coverage set out in ORS 742.502(2)(a)
(2001).
The wording of the two statutes is difficult to deci-
pher and reconcile, and both parties have strong arguments.
Had 	the 	legislature 	used the 	terms 	"damages," "policy
limits," or "liability limits" in the fourth sentence of ORS
742.502(2)(a) (2001), or had it eliminated that sentence in
deference to ORS 742.504(7)(c), we could have discerned its
intent more easily. Without that guidance, we are left to
parse the meaning of less precise terms and to harmonize
provisions that are not easily harmonized. Recognizing the
difficulty that we face in reconciling the statutes, defendant
directs our attention to the legislative history of the UM and
UIM provisions, which, as explained below, we find to be illu-
minating and determinative. See State v. Gaines, 346 Or 160,
171-72, 206 P3d 1042 (2009) (in interpreting statutes, court
will consider proffered legislative history); 5 see also generally
4 Provisions of ORS 742.504 that cannot apply to UIM coverage include provi-
sions for "hit-and-run" and "phantom" vehicles, see ORS 742.504(2)(b), (g), because
UIM coverage, by its very nature, requires an identifiable and insured tortfeasor.
Similarly, other provisions of ORS 742.504 cannot apply to UM coverage, which
requires a tortfeasor without insurance. See, e.g., ORS 742.504(4)(d) (concerning
only "underinsured motorist benefits").
Citing PGE v. Bureau of Labor and Industries, 317 Or 606, 611-12, 859 P2d
1143 (1993), plaintiff argued in her brief that a resort to legislative history is not
justified, because no statutory ambiguity exists. This court issued its decision
in State v. Gai.nes, 346 Or 160, 171-72, 206 P3d 1042 (2009), which refined the

Cite as 346 Or 490
State ex rel Turner v. Frankel, 322 Or 363, 374, 908 P2d 293
(1995) (examining legislative history to determine intended
relationship between two related statutes).
In 1967, the legislature first required that every
automobile insurance policy in Oregon provide UM coverage,
defined as insurance against the risk of injury or death in an
accident arising out of the ownership, maintenance, or use of
an "uninsured motor vehicle." Or Laws 1967, ch 482, §§ 1, 2
(originally former ORS 743.786(1) (1967) and former ORS
743.789 (1967); now ORS 742.500(1) and ORS 742.502). In
that same enactment, the legislature set out the terms of UM
coverage in the form of a "model" policy and required that
insurers provide UM coverage no less favorable to the
insured than those set forth in its statutory "model." Vega v.
Farmers Ins. Co., 323 Or 291, 301-02, 918 P2d 95 (1996); see
also Or Laws 1967, ch 482, § 3 (originally former ORS
743.792 	(1967); 	now 	ORS 	742.504). 6 	The 	UM 	statutes
originally required that UM coverage have limits equal
to or greater than the amounts required by the Financial
Responsibility Law, ORS chapter 806. Or Laws 1967, ch 482,
§§ 1, 3 (originally former ORS 743. 786(1) (1967) and former
ORS 743.792(2)(d)(A) (1967); now ORS 742.500(1) and ORS
742.504(2)(k)(A)). In 1975, the legislature required insurers
to offer higher UM limits whenever a policy provided liability
coverage with higher limits. Or Laws 1975, ch 390 (originally
former ORS 743.789(2) (1975); now ORS 742.502(2)(a) (sen-
tences one and two)). 7 In general, the purpose of UM coverage
was to place the injured policyholder in the same position as
if the tortfeasor had had liability insurance. Peterson v. State
Farm Ins. Co., 238Or106, 111-12, 393 P2d 651 (1964).
Because UM insurance paid benefits to an insured
only when the vehicle that had caused the injury had no
statutory construction analysis set out inPGE, after plaintiff filed her brief. In any
event, here, the competing statutes that give rise to the parties' dispute certainly
are capable of more than one meaning, and we find the history to be helpful in
ascertaining the legislature's intent in that regard.
e Former ORS 743.792(7)(c) (1967) is virtually identical to current ORS
742.504(7)(c).
7 The legislature later required that an insurer provide as much DM coverage
as liability coverage, unless the insured elected otherwise, as now set out in the
first two sentences of ORS 742.502(2)(a).

502 	Vogelin v. American Family Mutual Ins. Co.
insurance whatsoever, circumstances existed in which an
insured could recover more insurance benefits when injured
by an uninsured driver than when injured by a driver who
was insured, but at a level insufficient to pay the injured
driver's damages in full. So, for example, if an insured with a
$100,000 UM liability limit were injured by an uninsured
driver, suffering damages of $75,000, the insured would not
be able to recover any insurance benefits from the tortfeasor,
but could recover the amount of $75,000 under his or her own
UM policy. However, if the insured were injured by an
insured tortfeasor with a liability limit of $25,000, the
insured could recover only that amount from the tortfeasor
and could not recover any additional benefit from its own
insurer. In that example, the insured would recover $50,000
less in insurance benefits when injured by an insured driver
than the insured would recover when injured by an unin-
sured driver.
The legislature confronted that incongruity in 1981
by enacting legislation that required insurers to provide their
insureds with coverage for injuries inflicted by underinsured,
as well as by uninsured, vehicles. Or Laws 1981, ch 586. 8
That legislation was drafted and considered by the 1980
Interim Joint Committee on the Judiciary before the com-
mencement of the 1981 legislative session; the legislation
later moved through the 1981 session as Senate Bill (SB) 31
(1981). AB we shall explain, we have reviewed the records
from the proceedings of the various committees that consid-
ered the legislation, and it is evident from that review that
the legislature's purpose in enacting the legislation was to
8 As originally enacted, the underinsurance provisions currently set out in the
third and fourth sentences of ORS 742.502(2)(a), and also currently set out in ORS
742.502(4), provided:
"* * * Offers of uninsured motorist coverage larger than the amounts
required by ORS chapter 486 shall include underinsurance coverage for dam-
ages or death caused by accident and arising out of the ownership, mainte-
nance or use of a motor vehicle that is insured for an amount that is less than
the insured's uninsured motorist coverage. Underinsurance benefits shall be
equal to uninsured motorist coverage benefits less the amount recovered from
other automobile liability insurance policies.
"* * * Underinsurance coverage shall be subject to [former] ORS 743.792
[(1981) (now ORS 742.504)]."
Or Laws 1981, ch 586, § 1.

Cite as 346 Or 490
ensure that, whether a tortfeasor had some insurance or no
insurance, the insured would be able to recover the· same
amount in insurance payments. When the tortfeasor had no
insurance, the UM policy provisions would be the only source
of payment. When the tortfeasor had some insurance, the
tortfeasor's liability payment would be a secondary source of
payment.
Much of the discussion before the Interim Joint
Committee on the Judiciary that preceded the 1981 legisla-
tive session bears on our analysis here. For example, Frank
Howatt, an assistant insurance commissioner, explained to
the committee how a tortfeasor's liability payments would be
applied under the new UIM legislation:
"[T]he amount of insurance you would recover [from the
tortfeasor] would be an offset, of course, against the [UM]
limit that you carry."
Tape 	Recording, 	Joint 	Committee 	on 	the 	Judiciary,
Subcommittee on Insurance, Sept 12, 1980, Tape 9, Side A.
Howatt stated that he wanted the wording to make it "obvi-
ous that the intent was to cover this gap that arises when the
other party is not uninsured but [he] is insured and your own
policy [limit] is a higher limit and the offset should be applied
against that higher limit rather than simply eliminating the
coverage." Id. 	(emphasis added). Howatt later explained,
"You don't collect the full benefit under the uninsured [motor-
ist policy]; you collect the difference between that and * * *
the 	other 	party's 	insurance." 	Tape 	Recording, 	Joint
Committee on the Judiciary, Oct 5, 1980, Tape 1, Side A.
Others who spoke before the Interim Joint Committee
on the Judiciary about the draft legislation echoed that
understanding. Noam Stampfer, counsel to the committee
and the drafter of the proposed legislation, stated,
"What this legislation would do is to track underinsurance
and uninsurance [benefits]. Rather than stack [UIM and
UM benefits] one on top of the other, it would just track
them[,] so that the underinsurance would fill the gap
between the amounts received from the other party's poli-
cies and the amount that the person is insured to under
that person's uninsured motorist coverage."

504 	Vogelin v. American Family Mutual Ins. Co.
Id. Senator Vern Cook provided an example of how the UIM
coverage would work:
Id.
"[l]f he [i.e., the tortfeasor] has the minimum policy
[limit] and you [i.e., the insured] have a 50/100 liability pol-
icy which gives you 50/100 [in] uninsured [motorist] cover-
age if he is uninsured, this would mean that, if he has only
$15(,000], you'll also get an extra $35[,000] on your own pol-
icy for uninsured [motorist] coverage. So you would collect
up to $15[,000] from the third party and then up to
$35(,000] from your own [policy]."
Plaintiff does not dispute that, in general, the statu-
tory UIM requirements were designed to fill a "gap" in cov-
erage. In plaintiff's view, however, statements by other pro-
ponents of the legislation demonstrate that the legislature
intended that UIM benefits fill the gap between the tortfea-
sor's liability limits and the insured's damages, rather than a
gap between the tortfeasor's liability limits and the insured's
UM liability limits. Plaintiff points to statements by Senator
Ed 	Fadeley 	and 	Tom 	Bessonette 	of 	Oregon 	Mutual
Insurance. 	Speaking during a 	hearing before the 	Joint
Committee on the Judiciary, Senator Fadeley remarked:
"Suppose that I sued the other guy, and I only got
$10,000 as a judgment, but I've got a $50,000 uninsured
motorist policy under this statute, with underinsured man-
dated as part of it. So I'm supposed to get $50,000. I wonder,
if that last sentence and the word 'recovered' would allow
me to get $40,000 in that instance, when what I recovered
was $10[,000] and what I had in my policy was $50[,000]."
Tape Recording, Joint Committee on the Judiciary, Oct 5,
1980, Tape 1, Side A. Howatt then asked Senator Fadeley if
his question was whether,
"'if the man only got a judgment for $10,000, that he would
recover some larger amount by virtue of this underinsur-
ance ?'No, it says here, as I understand it, * * * [the legis-
lation] say[s] underinsurance benefits shall be equal to
uninsured motorist coverage benefit. Not [that] the unin-
sured motorist coverage benefit would be $10,000 wouldn't
it-you don't recover more under your uninsurance motor-
ist coverage than the amount of the judgment against the
other driver. If you start with a $10,000 judgment, that

Cite as 346 Or 490 (2009) 	505
Id.
would be payable under uninsurance, but then the exis-
tence of the other party's insurance would normally cancel
that benefit under your policy."
Contrary to plaintiffs position, that exchange indi-
cates that Senator Fadeley was concerned that the injured
party not recover more than the amount of the damages that
he or she was entitled to recover, not that the injured party be
able to recover more than his or her UM liability limits. In
fact, later in the proceedings, Senator Fadeley stated:
"If I was looking at it from an insurance salesman's
point of view, the intention is to allow me to buy an increase
in my uninsured motor[ist] vehicle coverage and to have the
increase in my motor vehicle insurance coverage cover the
gap between low insurance and the benefits I bought."
Id., Tape 2, Side A.
The testimony of Bessonette also is contrary to
plaintiffs position. Testifying before the Senate Committee
on Insurance, Banking, and Retirement, which considered
SB 31 during the 1981 legislative session, Bessonette stated:
"Many people have been involved in automobile crashes
and they were unable to collect a sufficient amount of dam-
ages for their injuries because there just wasn't enough
insurance on the other party. * * * This bill provides what
we now call underinsurance. If you hit and collide with
someone who has a $15,000 policy [limit] and you have a
$100,000 injury, [then] you would collect $15,000 from the
wrongdoer and $85,000 from your own insurance company
and you would be made well."
Tape Recording, Senate Committee on Insurance, Banking,
and Retirement, SB 31, Jan 23, 1981, Tape 5, Side A.
Plaintiff correctly points out that no one who spoke
about the 1981 UIM legislation specifically addressed the
gap between a tortfeasor's liability limits and an injured
party's damages, but plaintiff does not gain by that argu-
ment. It is evident to us that the legislature did not do so
because it focused on the gap between a tortfeasor's liability
limits and the injured party's UM liability limits.

506 	Vogelin v. American Family Mutual Ins. Co.
Our review of the legislative history surrounding the
enactment of the UIM legislation convinces us that defen-
dant's 	interpretation 	of 	the 	fourth 	sentence 	of 	ORS
742.502(2)(a) 	(2001) 	is 	correct 	and 	that 	that 	provision
controls the outcome here. The legislature intended that
insurers be permitted to offset tortfeasor liability payments
against the UM liability limits set out in their insureds' poli-
cies. Thus, the phrase "uninsured motorist coverage benefits"
in the fourth sentence of ORS 742.502(2)(a) (2001) means the
UM liability limits in the insured's policy, as defendant
argues, and not damages, as plaintiff argues. And, the provi-
sion in ORS 742.502(4) that "[u]nderinsurance coverage is
subject to ORS 742.504" does not mean that the latter statute
controls in the event of a conflict, as plaintiff contends.
Rather, it means that the model policy terms set out in the
many subsections of ORS 742.504, which before 1981 applied
to only UM coverage (see 346 Or at 501-02, 502 n 8 (so
explaining)), apply equally to the mandated UIM coverage, to
the extent that such an application is consistent with the
UIM mandate set out in ORS 742.502(2)(a) (2001). Stated dif-
ferently, the legislature intended the third and fourth sen-
tences of ORS 742.502(2)(a) (2001) to establish the parame-
ters of the mandated minimum UIM coverage.
In sum, we conclude that the applicable statutes
that governed the terms of the insurance policy that plaintiff
purchased from defendant permitted defendant to calculate
plaintiff's UIM benefit by subtracting the tortfeasor's liability
payment from plaintiff's UM liability limit. Defendant could
have offered, and plaintiff could have purchased, additional
UIM benefits that would have provided plaintiff greater pro-
tection against injury by an underinsured motorist, but that
greater protection was not required by Oregon law. The trial
court therefore properly entered judgment for plaintiff in the
amount of$75,000.
The decision of the Court of Appeals and the judg-
ment of the circuit court are affirmed.