Fireman's Fund Ins. Co. v. Freda

• Decision Date: 04 December 1989
• Citation: 156 A.D.2d 364,548 N.Y.S.2d 319
• Parties: In the Matter of FIREMAN'S FUND INSURANCE COMPANY, Respondent, v. Philip FREDA, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 319

548 N.Y.S.2d 319

156 A.D.2d 364

In the Matter of FIREMAN'S FUND INSURANCE COMPANY, Respondent, v. Philip FREDA, Appellant.

Supreme Court, Appellate Division Second Department.

Dec. 4, 1989.

Minniti & Benedict, Mamaroneck (Anthony J. Benedict, of counsel), for appellant.

Kornfeld, Rew, Newman & Ellsworth, Suffern (Thomas J. Newman, of counsel), for respondent.

Before MOLLEN, P.J., and RUBIN, SULLIVAN and ROSENBLATT, JJ.

MEMORANDUM BY THE COURT.

In a proceeding pursuant to CPLR 7503 to stay arbitration of an underinsured motorist claim, Philip Freda appeals from a judgment of the Supreme Court, Westchester County (Donovan, J.), entered May 10, 1988, which granted the petition.

ORDERED that the judgment is reversed, on the law, with costs, and the matter is remitted to the Supreme Court, Westchester County, for an evidentiary hearing on the issue of whether Philip Freda resided in his father's household on the date of the accident in accordance herewith; pending that hearing arbitration is temporarily stayed.

On February 16, 1985, Philip Freda suffered serious personal injuries as a result of an automobile accident that occurred in Clinton County, Pennsylvania. Freda was a passenger in the automobile at the time of the accident. In December 1986, Freda settled his personal injury claim with the owner and operator of the car for the maximum liability coverage available under their respective insurance policies. Prior to entering into the settlement, however, Freda notified Fireman's Fund Insurance Company (hereinafter Fireman's Fund) by letter dated April 2, 1986, of his intention to file a claim for benefits pursuant to the underinsured motorist endorsement contained in an insurance policy issued by Fireman's Fund to Freda's father, which was in effect at the time of the accident. By letter dated August 13, 1987, Fireman's Fund disclaimed coverage on the sole ground that Freda was not a "covered person" as defined by the policy because Freda was not a resident of his father's household at the time of the accident. By letter dated October 10, 1987, Freda demanded arbitration of his underinsured motorist claim and Fireman's Fund subsequently commenced the instant proceeding for a permanent stay of arbitration.

The Supreme Court granted a permanent stay of arbitration, concluding that underinsured motorist coverage was not available because the bodily injury coverage provided in the insurance policies issued to the operator and owner of the motor vehicle involved in the accident, equaled or exceeded the State's minimum financial responsibility requirements. We disagree.

The court has erroneously equated uninsured motorist coverage (see, Insurance Law § 3420[f][1], with supplementary uninsured motorist insurance (see, Insurance Law § 3420[f][2], which is commonly referred to as underinsured motorist coverage. The uninsured motorist endorsement of the Fireman's Fund policy affords coverage if the tortfeasor's motor vehicle is uninsured. An uninsured motor vehicle is one which has no bodily injury liability bond or policy applicable at the time of the accident, or which has an applicable bond or policy with a limit for bodily injury liability that is less than the minimum limit for bodily injury liability specified by the financial responsibility law of this State (see, Vehicle & Traffic Law § 311[4]. In contrast, supplementary uninsured motorist insurance provides coverage "if the limits of liability under all bodily injury liability bonds and insurance policies of another motor vehicle liable for damages are in a lesser amount than the bodily injury liability insurance limits of coverage provided by such policy" (Insurance Law § 3420[f][2]. Unlike uninsured motorist coverage, the applicability of underinsured motorists coverage is not governed by this State's financial responsibility requirements. Since the total amount of bodily injury liability coverage applicable to the motor vehicle at issue was less than the limit of bodily injury liability coverage in the policy issued by Fireman's Fund to Philip Freda's father, the subject vehicle was underinsured as to a person covered by the Fireman's Fund policy (see, e.g., Passaro v. Metropolitan Prop. & Liab. Ins. Co., 128 Misc.2d 21, 487 N.Y.S.2d 1009, affd. 124 A.D.2d 647, 507 N.Y.S.2d 836; Garry v. World-Wide Underwriters Ins. Co., 120 Misc.2d 91, 465 N.Y.S.2d 483, affd. 101 A.D.2d 717, 475 N.Y.S.2d 307; Gull v. General Acc. Fire & Life Assur. Corp., 121 Misc.2d 721, 469...