Fireman's Ins. Co. of Newark, New Jersey v. State Farm Mut. Auto. Ins. Co., 22880

Citation370 S.E.2d 85,295 S.C. 538
Decision Date21 January 1988
Docket NumberNo. 22880,22880
CourtUnited States State Supreme Court of South Carolina
PartiesFIREMAN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Glenn A. Mullins and Joan C. Locklear, of whom Glenn A. Mullins and Joan C. Locklear are Respondents. . Heard

Theron G. Cochran and William A. Coates, Love, Thornton, Arnold & Thomason, Greenville, for appellant.

Eugene C. Covington, Jr., of Foster, Covington & Patrick, Greenville, for respondents.

FINNEY, Justice:

Appellant, Fireman's Insurance Company of Newark, New Jersey (Fireman's), filed a declaratory judgment action to determine the amount of uninsured and/or underinsured motorist benefits and medical payments to which respondents Glenn A. Mullins (Mullins) and Joan C. Locklear (Locklear) were entitled under an insurance policy issued by Fireman's to Mullins. The case was submitted to the trial judge without a jury on stipulated facts. The trial court permitted stacking of underinsured, uninsured and medical benefits. We reverse and remand for proceedings consistent with this opinion.

In December 1984, Earl Lewis Gentry (Gentry), a Florida resident, was operating a vehicle on U.S. 25 Bypass in Greenwood, South Carolina. He was involved in a collision with an automobile driven by Mullins and owned by Locklear, a passenger in the car. Mullins and Locklear sustained injuries and damages and filed claims against Gentry.

Gentry was insured with Coronet Insurance Company under a Florida automobile liability policy which provided maximum liability limits of ten thousand ($10,000) dollars per person and twenty thousand ($20,000) dollars per accident for bodily injury. The policy complied with the liability limits mandated by Florida law. However, it did not meet the liability limits of fifteen thousand ($15,000) dollars per person and thirty thousand ($30,000) dollars per accident required under S.C.Code Ann. § 56-9-820 (1976).

Locklear had liability coverage on her vehicle through State Farm Mutual Insurance Company (State Farm). The policy provided uninsured motorist coverage with maximum limits of $15,000 per person and $30,000 per accident. State Farm paid its $30,000 limit and is no longer a party to this action.

Mullins had an automobile liability policy with Fireman's insuring his three vehicles. The policy is a $35,000 single limits liability insurance policy and provides "uninsured (and underinsured)" coverage in the amount of $35,000 per accident. The declaration sheet of the policy provided "medical payments" coverage in the amount of $3,000 for each person.

The trial court ruled that Fireman's pay uninsured motorist coverage to Mullins in the amount of $45,000 ($15,000 per vehicle) and underinsured coverage to Mullins in the amount of $35,000 (the amount of policy coverage). The court further ordered that Fireman's pay uninsured motorist coverage to Locklear in the amount of $45,000 dollars ($15,000 per vehicle) and underinsured motorist coverage to Locklear in the amount of $45,000 ($15,000 per vehicle). The trial court also ruled that Locklear and Mullins were entitled to $9,000 ($3,000 per vehicle) in medical payments coverage. In short, the trial court permitted Mullins to stack his uninsured policy at $15,000 per vehicle, but did not allow Mullins to stack underinsured, limiting underinsured coverage to the policy limit of $35,000. The trial court permitted Locklear to stack uninsured and underinsured at $15,000 per vehicle, and both Mullins and Locklear were allowed to stack medical coverage. 1 We disagree.

I.

Fireman's argues that uninsured and underinsured coverage are mutually exclusive and, therefore, the trial court erred in awarding Mullins and Locklear uninsured and underinsured payments.

Whether uninsured and underinsured coverage are mutually exclusive is of novel impression before this Court. It is the opinion of the Court that an individual may be either uninsured or underinsured, but not both. See I. Schermer, Automobile Liability Insurance, § 35.10 at 35-45 (1985). As Schermer explains in his treatise on motor vehicle insurance:

Uninsured motorist coverage refers to a motorist who either does not carry any liability coverage applicable to his motor vehicle or who carries liability coverage with limits less than those required by a state's financial responsibility law. Underinsured motorist coverage refers, on the other hand, to a motor vehicle covered by complying liability limits which are not adequate to compensate the ... insured for his damages.

Id. (footnote omitted). See also Gambrell v. Travelers Insurance Companies, 280 S.C. 69, 310 S.E.2d 814 (1983).

On the other hand, respondents contend Gambrell held that uninsured and underinsured are not mutually exclusive because of the following language utilized by the Court:

One buys uninsured motorist coverage to protect himself in case an at-fault driver has no liability coverage or has less liability coverage than required by statutes. Over and above uninsured coverage, he may procure underinsured motorist coverage to protect himself in case an at-fault driver has liability coverage but the amount is insufficient to cover the damages sustained. Uninsured motorist coverage is required by law. S.C.Code Ann. § 56-9-830 (1976). Accordingly, optional underinsured coverage would always be over and above either the at-fault driver's liability coverage or over and above the policyholder's own uninsured motorist coverage. This is the protection provided for the additional premium paid for the underinsured motorist coverage.

Gambrell, 280 S.C. at 72, 310 S.E.2d at 816.

We do not interpret this language to imply that the terms uninsured and underinsured are not mutually exclusive. The language employed in Gambrell is intended to comport with the classic definition of uninsured and underinsured coverage. In fact, the Court in Gambrell was not faced with the novel question of whether one could collect both uninsured and underinsured as a result of a collision with one tortfeasor and, thus, did not decide whether the terms are mutually exclusive.

Our conclusion that underinsured and uninsured coverage are mutually exclusive under the facts of this case is further supported by a reading of S.C.Code Ann. § 56-9-831 (1978 & Supp.1986) (repealed by 1987 Act. No. 155 § 25, Jan. 1, 1988). The statute states in pertinent part:

Automobile insurance carriers shall offer, at the option of the insured, uninsured motorist coverage up to the limits of the insured's liability coverage in addition to the mandatory coverage prescribed by § 56-9-830. Such carriers shall also offer, at the option of the insured, underinsured motorist coverage up to the limits of the insured liability coverage to provide coverage in the event that damages are sustained in excess of the liability limits carried by an at fault insured or underinsured motorist.

Id.

We read the statute as allowing the purchase of extra insurance to cover two separate contingencies. Additional uninsured coverage applies when the at-fault motorist lacks liability insurance with minimum statutory limits. 2 A. Widiss, Uninsured and Underinsured Motorist Insurance, § 31.3 (1987). Underinsured coverage applies when the at-fault motorist has the required minimum liability coverage, but such coverage is insufficient to fully compensate the insured for damages sustained. 3 R. Long, The Law of Liability Insurance, § 24.22 (1987). Therefore, the two types of coverages are mutually exclusive.

The Minnesota Supreme Court addressed the question of whether uninsured and underinsured coverage are mutually exclusive under the Minnesota No-Fault Act. See Murphy v. Milbank Mutual Insurance Co., 368 N.W.2d 753 (Minn.Ct.App.1985); aff'd in part, rev'd in part and reman'd, 388 N.W.2d 732 (Minn.S.Ct.1986). In Murphy the Minnesota Supreme Court found that Minnesota's No-Fault Act, which combines uninsured and underinsured protection into one mandatory coverage, simultaneously permits both underinsured and uninsured coverage. The Court found the statutory language describing each coverage to be unambiguous and, thus, concluded that the legislature intended duplicative coverage. Id. However, the Court held "if the No-Fault Act allows duplicative coverages, it is clear that the act does not intend duplicate recoveries." Id. at 737.

While the Minnesota Court held that the statute's clear language permitting duplicative coverage precluded a finding of mutual exclusivity, we find persuasive the Court's conclusion that duplicative recoveries are prohibited. To the contrary, the law in South Carolina is clear that underinsured coverage and uninsured coverage are mutually exclusive. S.C.Code Ann. § 56-9-831 (1978 & [295 S.C. 544] Supp.1986) (repealed by 1987 Act. No. 155 § 25, Jan. 1, 1988). The tortfeasor's insurance coverage in this case was not legally sufficient under South Carolina law and, therefore, the uninsured motorist provision applied. S.C.Code Ann. § 56-9-810 (1977). Since the tortfeasor was uninsured in South Carolina, he could not simultaneously qualify as an underinsured possessing a policy which did not meet the required basic liability coverage. See S.C.Code Ann. § 56-9-831 (1978 & Supp.1986) (repealed by 1987 Act. No. 155 § 25, Jan. 1, 1988), and Schermer, supra. Accordingly, we conclude that Locklear and Mullins are not entitled to underinsured indemnification, but only uninsured reparation under Section 56-9-810.

II.

Fireman's contends the trial court erred in ruling that Mullins was entitled to stack uninsured coverage of $15,000 per vehicle for a total of $45,000.

In determining whether Mullins was entitled to stack his uninsured coverage, we must first examine the appropriate statutory provision. Section 56-9-831 provides in pertinent part:

If ... an insured ... is protected by uninsured or underinsured motorist coverage in excess of the basic...

To continue reading

Request your trial
19 cases
  • Concrete Services v. US Fidelity & Guar.
    • United States
    • South Carolina Supreme Court
    • March 23, 1998
    ...280 S.C. 149, 311 S.E.2d 723 (1984). The right to stack is available only to a Class I insured. Fireman's Ins. Co. v. State Farm Mut. Auto. Ins. Co., 295 S.C. 538, 370 S.E.2d 85 (1988); Ohio Cas. Ins. Co. v. Hill, 323 S.C. 208, 473 S.E.2d 843 As Mickle is not the "named insured" in the poli......
  • Lackey v. Green Tree Financial Corp.
    • United States
    • South Carolina Court of Appeals
    • March 16, 1998
    ...define an adhesion contract, although several cases refer to them in an insurance setting. See Fireman's Ins. Co. v. State Farm Mut. Auto. Ins. Co., 295 S.C. 538, 370 S.E.2d 85 (1988); Wolf v. Colonial Life & Accident Ins. Co., 309 S.C. 100, 420 S.E.2d 217 (Ct.App.1992). The federal distric......
  • State Farm Mut. Auto. Ins. Co. v. Beavers
    • United States
    • Arkansas Supreme Court
    • July 10, 1995
    ...N.W.2d 726 (Minn.App.1984); Monti v. United Services Auto Ass'n, 108 N.C.App. 342, 423 S.E.2d 530 (1992); Fireman's Ins. Co. v. State Farm Mut., 295 S.C. 538, 370 S.E.2d 85 (1988). See also Jenkins v. Lanigan, 196 Ga.App. 424, 396 S.E.2d 28 (1990). We have examined our cases for precedent a......
  • Motsinger v. Nationwide Mut. Ins. Co.
    • United States
    • U.S. District Court — District of South Carolina
    • November 25, 2013
    ...311 S.E.2d 723 (S.C. 1984)). "The right to stack is available only to a Class I insured." Id. (citing Fireman's Ins. Co. v. State Farm Mut. Auto. Ins. Co., 370 S.E.2d 85 (S.C. 1988); Ohio Cas. Ins. Co. v. Hill, 473 S.E.2d 843 (S.C. Ct. App. 1996)). In order to stack, it is only necessary th......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT