Beek v. Ohio Cas. Ins. Co.

• Decision Date: 08 January 1974
• Citation: 316 A.2d 726,127 N.J.Super. 187
• Parties: Ronald BEEK, Plaintiff, v. OHIO CASUALTY INSURANCE COMPANY, Defendant.
• Court: New Jersey Superior Court

Page 187

127 N.J.Super. 187

316 A.2d 726

Ronald BEEK, Plaintiff, v. OHIO CASUALTY INSURANCE COMPANY, Defendant.

Superior Court of New Jersey Chancery Division.

Jan. 8, 1974.

Richard H. Wildstein, Paterson, for plaintiff (Gelman & Gelman, Paterson, attorneys).

Thomas M. Guiney, Paterson, for defendant (DeYoe, DeYoe & Guiney, Paterson, attorneys).

GELMAN, J.S.C., Temporarily Assigned.

Plaintiff Ronald Beek moves for summary judgment directing defendant Ohio Casualty Insurance Company (Ohio) to proceed with arbitration of plaintiff's claim under an uninsured motorist (UM) endorsement.

Book was the owner of a 1970 Ford automobile on which Ohio issued a liability policy containing UM coverage effective for a one-year term from October 22, 1969. On June 13, 1970 Beek was seriously injured while operating a motorcycle which was involved in an accident with an uninsured motorist. Beek had purchased liability insurance coverage for the motorcycle from Reserve Insurance Company. The Reserve policy also contained a UM endorsement and Reserve paid Beek the full amount of its coverage ($10,000) under its policy.

For the purposes of this motion it is conceded that Beek would be entitled to recover from the uninsured motorist an amount in excess of that which he was paid under the Reserve policy. He claims that Ohio is obligated to pay to him such excess liability of the uninsured motorist up to the limits of the UM coverage afforded by the Ohio policy, for which Ohio charged him and he paid a separate premium.

Ohio contends that its policy does not furnish coverage for Beek's claim because of the following language contained in the exclusions clause of the UM endorsement:

Exclusions

This insurance does not apply:

(b) to bodily injury to an insured while occupying a highway vehicle (other than an insured highway vehicle) owned by the named insured, any designated insured, or through being struck by such a vehicle, but this exclusion does not apply to the named insured or his relatives while occupying or if struck by a highway vehicle owned by a designated insured or his relatives.

The above-quoted language excludes coverage if Beek was injured while occupying another vehicle owned by him, but the exclusion is in turn subject to two exceptions: (1) if the second vehicle occupied by the named insured is 'an insured highway vehicle,' or (2) if the second vehicle occupied by the named insured is owned by a 'designated insured or his relatives.'

As to the first exception defendant urges that Beek's motorcycle is not an insured highway vehicle by reason of section V, captioned 'Additional Definitions' and which provides in part:

* * * 'insured highway vehicle' means a highway vehicle: * * * (c) while being operated by the named or designated insured or by the spouse of either if a resident of the same household; but the term 'insured highway vehicle' shall not include: * * * under subparagraphs (b) and (c) above, a vehicle owned by the named insured, any designated insured or any resident of the same household as the named or designated insured * * *.

Since the motorcycle was owned by Beek, it is not 'an insured highway vehicle' as that term is defined in the policy, and the first exception therefore does not apply.

As to the second exception, it applies to the named insured but only if injured while occupying a vehicle owned by a designated insured, which is not the case here, since the motorcycle was owned by Book who is the Named, not a Designated, insured under the Ohio policy. While the structure of the policy and the language employed to accomplish the claimed exclusion is subject to criticism, the basic intent of the insurer is clear and unambiguous: to deny coverage to the named insured under all circumstances if he is injured in a nonscheduled vehicle owned by him.

Plaintiff contends that the blanket exclusion from UM coverage for injuries sustained while occupying a second owned vehicle violates the intent and purpose of the Legislature in enacting N.J.S.A. 17:28--1.1. The statute requires that

No automobile liability policy or renewal of such policy, of insurance insuring against loss resulting from liability imposed by law for bodily injury or death, sustained by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this State * * * unless coverage is offered in connection therewith, in limits for bodily injury or death set forth in (N.J.S.A. 36:6--69) * * * for payment of all or part of the sums which the insured or his legal representative shall be legally entitled to recover as damages from the operator or owner of an uninsured automobile, or hit and run automobile * * * because of bodily injury * * * sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured or hit and run automobile * * *.

The argument is that a policy which denies coverage in contravention of a declared legislative edict that such coverage be afforded, must be deemed amended so as to conform to the legislative requirements. Selected Risks Ins. Co. v. Zullo, 48 N.J. 362, 225 A.2d 570 (1966); Kish v. Motor Club of Amer. Ins. Co., 108 N.J.Super. 405, 261 A.2d 662 (App.Div.1970), certif. den. 55 N.J. 595, 264 A.2d 68 (1970); Willis v. Security Ins. Group, 104 N.J.Super. 410, 250 A.2d 158 (Ch.Div.1968), aff'd 53 N.J. 260, 250 A.2d 129 (1969); McFarland v. Motor Club of Amer. Ins. Co., 120 N.J.Super. 554, 295 A.2d 375 (Ch.Div.1972).

In McFarland the court was also concerned with the interpretation of a UM endorsement which denied coverage under the insured's policy where he had been paid the statutory UM minimum by the insurer of the vehicle in which he was a passenger. The policy in McFarland provided 'excess' coverage only to the extent that the insured's own UM coverage limits exceeded the UM coverage provided by the primary insurance. Since both policies were issued with statutory minimum limits, the McFarland insurer rejected the claim that its policy furnished any excess coverage. The court held that the policy was in conflict with N.J.S.A. 17:28--1.1, in that the Legislature mandated UM coverage not limited to the statutory minimum afforded by N.J.S.A. 39:6 --69, but for 'all' sums which the insured might be entitled to recover to the limits of available insurance. The court concluded that

Where an insured's loss exceeds the limits of one policy, he may proceed against other available policies. * * * (T)his court will not permit an insurer to escape its statutorily imposed liability by including in its policy a limiting clause which prevents the insured from receiving coverage he has paid for. (At 563, 295 A.2d at 380)

As applied to the facts here, McFarland's reasoning would require amendment of the Ohio policy to furnish coverage to the named insured regardless of his ownership of the vehicle involved in the accident.

The basic question posed in McFarland and here is whether the legislative policy reflected in N.J.S.A. 17:28--1.1 requires insurers to offer UM coverage which permits 'stacking' of coverages under multiple policies so as to permit insureds to recover the full monetary value of their claims against uninsured motorists. Ohio contends that the legislative purpose underlying N.J.S.A. 17:28--1.1 does not have so broad a reach. It is urged that the statute was intended only to ensure that policy holders would be offered UM protection in limits corresponding to the...