Goodman v. Allstate Ins. Co.

• Decision Date: 18 December 1987
• Citation: 137 Misc.2d 963,523 N.Y.S.2d 391
• Parties: Marsha GOODMAN, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant. /IAS Term, Nassau County, Part 7
• Court: New York Supreme Court

Page 391

523 N.Y.S.2d 391

137 Misc.2d 963

Marsha GOODMAN, Plaintiff, v. ALLSTATE INSURANCE COMPANY, Defendant.

Supreme Court, Trial/IAS Term,

Nassau County, Part 7.

Dec. 18, 1987.

Moinester & Hafner, Lynbrook, for plaintiff.

Roy I. Mandelbaum, Mineola, for defendant.

Gary R. Masi, Dix Hills, for Britt-Morgillo.

BEATRICE S. BURSTEIN, Justice.

This declaratory judgment action raises an issue of apparent first impression in this State. Can an insured combine or "stack" the liability coverage provided in two separate policies issued to the same insured by the same insurer, when the insurer insisted upon two policies rather than one? Based upon the following analysis, the Court concludes the insurer must provide the coverage available under each policy.

Plaintiff was allegedly injured while a passenger in a vehicle owned by defendant Britt-Morgillo (the insured). That vehicle was insured by defendant Allstate Insurance Company (the insurer). Plaintiff has commenced a personal injury action against the insured. Defendant insurer admits that the insured is covered by one of its policies of insurance and has offered the full policy in settlement of the personal injury action. Plaintiff contends the insured also is covered by another of the insurer's policies. She has commenced this declaratory action to establish the extent of the insured's coverage.

By prior order dated August 7, 1987 this Court directed that the insured be joined as a party to this action. This having been done, and the insured having been provided with an opportunity to consider the issues raised, the Court now turns its attention to plaintiff's motion for an order dismissing the insurer's affirmative defense and granting her summary judgment, and the insurer's cross-motion for judgment dismissing this action.

The following facts are not controverted. Some time prior to the accident at issue the insured purchased a 1961 Buick upon which the insurer issued a policy (hereinafter referred to as the 1961 policy). Thereafter, the insured purchased a 1957 Buick. He requested coverage for the 1957 Buick from the insurer. The insurer advised him that it required that the 1957 Buick be insured under a separate policy. ¹ The insured paid a separate premium for that policy (hereinafter referred to as the 1957 policy). Because the insurer required the insured to obtain two separate policies he was deemed not eligible for the two-car discount on either policy. The declarations page of each policy does not name the other automobile. Plaintiff was in an accident while a passenger in the 1957 Buick, which was being operated by the insured at the time.

As relevant, each policy provides for personal injury liability coverage limited to $50,000 per person. Plaintiff contends the insured is obligated to make available the $50,000 coverage from each of these policies, for a total of $100,000. As an affirmative defense the insurer asserts that the terms of each policy confine the available insurance to the $50,000 coverage provided by the 1957 policy.

Pursuant to Article 6 of the Vehicle and Traffic Law (commonly known as the Motor Vehicle Financial Security Act) the insured was required to carry insurance on each of his automobiles. As a result of an individual's complying with the Motor Vehicle Financial Security Act, sometimes double, excess or additional insurance may arise. That result has not been held to be objectionable. See, e.g., Empire Mut. Ins. Co. v. Liberty Ins. Co., 21 Misc.2d 1050, 194 N.Y.S.2d 64 (Sup.Ct.App. Term 1st Dept. 1959); Whaley v. Jamestown Mut. Ins. Co., 53 Misc.2d 590, 279 N.Y.S.2d 267 (Sup.Ct. Madison Co. 1967); Downing v Allstate Ins. Co., 43 Misc.2d 215, 250 N.Y.S.2d 711 (Sup.Ct. Onondaga Co. 1964). In contrast to past rules, an insured may now be covered for the same loss by more than one liability policy. 8A Appleman, Insurance Law and Practice, § 4907.35. In fact the Court in Whaley (supra, 53 Misc.2d at p. 594, 279 N.Y.S.2d 267) noted that nothing more or less occurs whenever one insured owner drives the vehicle of another insured owner with permission.

Accordingly, the first question to be resolved is whether the 1957 policy, which the insurer admits applies, prohibits the insured from having any other applicable coverage. Quite the contrary. In providing for a pro-rating of losses the 1957 policy reflects that the insurer contemplated that coverage might be afforded by another policy. The 1957 policy states, at page 9:

If There is Other Insurance

If an insured person is using a substitute private passenger auto or non-owned auto, our liability insurance will be excess over other collectible insurance. If more than one policy applies to an accident involving your insured auto, we will bear our proportionate share with other collectible liability insurance. (emphasis as in original).

As the insurer correctly argues, the first sentence of this clause does not apply in this case because the insured was not driving either a substitute or a non-owned automobile.

The second sentence, however, clearly does demonstrate the insurer intended that another policy could apply, and if so, the insurer's liability would be pro-rated. The insurer erroneously argues that the second sentence is limited "to a situation where any person not a named insured or an additional insured used the insured vehicle" or "where an insured vehicle is operated with the permission and consent of the insured". The flaw in this argument is that the clause simply does not state this. As the clause is clear and unambiguous, it must be given its plain and ordinary meaning. U.S.F. & G. v. Annunziata, 67 N.Y.2d 229, 501 N.Y.S.2d 790, 492 N.E.2d 1206 (1986). That does not include the construction advanced by the insurer. Furthermore, as the insurer seeks to interpret this clause as exclusionary, the Court also has considered whether other possible policy provisions support the insurer's aforesaid interpretation. Jewtraw v. Hartford Accident & Ind. Co., 280 App.Div. 150, 152, 112 N.Y.S.2d 727 (3d Dept.1952). Here there are none. Consequently, the insurer has not met its burden, namely, showing that its construction of the second sentence is the only one that fairly could be placed upon the policy. Sincoff v. Liberty Mut. Fire Ins. Co., 11 N.Y.2d 386, 390, 230 N.Y.S.2d 13, 183 N.E.2d 899 (1962). Therefore the Court finds the insurer intended other applicable insurance to apply.

Consequently, the Court turns its attention now to the question of whether the 1961 policy does provide coverage. Among the policy definitions of "Insured Autos" is a clause which provides for automatic coverage on newly-acquired automobiles, provided certain conditions are met. An insured automobile includes

An additional four wheel private passenger auto ... you become the owner of during the premium period. This auto will be covered if we insure all other private passenger autos you own. You must, however, tell us within 60 days of acquiring the auto. You must pay any additional premiums. (emphasis as in original)

In this case the insured had met all the conditions required of him. The 1957 Buick is a four wheel private passenger automobile which the insured acquired during the period when the 1961 policy was in full force and effect. All of the insured's private passenger automobiles were insured by the insurer, and the insured gave the insurer timely notice he had acquired the 1957 Buick. The insured paid all premiums requested of him, including a premium on the 1957 policy.

This automatic coverage for a newly-acquired vehicle may have entitled the insurer to a premium adjustment on the 1961 policy. It certainly provided the insurer with an opportunity to modify its 1961 policy. However, despite notice, the insurer did not request any additional premium, or modify its policy. Instead, it directed the insured to purchase a separate policy to cover the newly-acquired vehicle. This deprived the insured of an otherwise available two-car discount. Therefore, in effect, the insurer received a greater premium than it otherwise would have. Furthermore, the premium on the 1961 policy may have been computed to reflect the possible subsequently-acquired automobile.

In any event, requiring the insured to purchase an additional policy did not alter the terms of the 1961 policy already in existence, which provided coverage for a newly-acquired vehicle. This Court will not attempt to find a hidden meaning or an unexpressed intention in the cited clause in order to relieve the insurer of a liability it unambiguously assumed. Rather, the clause must be given its plain and ordinary meaning. U.S.F. & G. v. Annunziata, supra. If the insurer intended to cover newly-acquired automobiles only so long as no specific insurance was purchased to cover them, it could and should have stated this expressly. For example, the policy at issue in Bramlett v. State Farm Mutual Automobile Ins. Co., 205 Kan. 128, 130, 468 P.2d 157, 159 (1970) provided "If more than one policy issued by the [insurer] could be applied to [a newly-acquired] automobile the named insured shall elect which policy shall apply." Absent a specific provision such as the aforesaid, providing for an election of coverage or terminating automatic coverage, the insurer is bound by its agreement, even though there is another policy specifically covering the newly-acquired automobile. While there are no determinations on point in this State, decisions in other jurisdictions support this conclusion and distinction. Compare Carey v. State Farm Mutual Ins. Co., 367 F.2d 938 (4th Cir.1966) and Gorling v. Allstate Ins. Co., 125 Ga.App. 497, 188 S.E.2d 128 (1972) (each case holding that newly-acquired vehicle is covered by automatic insurance clause in policy naming another vehicle, as well as by policy specifically purchased to cover newly-acquired vehicle) and St. Paul's Mercury Ins. Co. v. Pennsylvania Lumbermen's Mut. Ins. Co., 378 F.2d 312 ...