Hesser v. Harleysville-Garden State Ins. Co.

• Decision Date: 31 January 1996
• Docket Number: HARLEYSVILLE-GARDEN
• Citation: Hesser v. Harleysville-Garden State Ins. Co., 670 A.2d 123, 287 N.J.Super. 47 (N.J. Super. App. Div. 1996)
• Parties: Denise A. HESSER, Plaintiff-Respondent, v.STATE INSURANCE CO., Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 47

287 N.J.Super. 47

670 A.2d 123

Denise A. HESSER, Plaintiff-Respondent, v. HARLEYSVILLE-GARDEN STATE INSURANCE CO., Defendant-Appellant.

Superior Court of New Jersey Appellate Division.

Argued Sept. 27, 1995.

Decided Jan. 31, 1996.

J. Robert McGroarty, Deptford, for appellant (Mr. McGroarty, on the brief).

Warren W. Faulk, Westmont, for respondent; (Brown & Connery, attorneys; Mr. Faulk, on the brief).

Before Judges SKILLMAN, LEVY and EICHEN.

The opinion of the court was delivered by

PAUL G. LEVY, J.A.D.

In this matter we consider whether plaintiff's automobile insurance policy or N.J.S.A. 17:28-1.1, or both, provided $75,000 uninsured motorist coverage plus $75,000 underinsured motorist coverage for her injuries from an accident involving both uninsured and underinsured vehicles, under a liability policy declaring $75,000 to be its "maximum limit of liability for all damages resulting from any one accident." Plaintiff was granted a declaratory judgment, providing the total of both coverages available regardless of the limit. We disagree and therefore reverse.

Plaintiff was a passenger in a car owned and operated by Linda Freund which collided with an automobile owned and driven by Carmen Sylvester. Freund was insured by Keystone Insurance Companies with liability coverage limits of $15,000 per person and $30,000 per accident, while Sylvester was uninsured. Each passenger (three in the Freund vehicle and one in Sylvester's) was seriously injured, and Keystone agreed to tender its $30,000 policy limit, subject to the passengers' agreement to equitably distribute those proceeds.

Defendant Harleysville Garden State Insurance Co. (Harleysville) issued a personal auto policy to plaintiff. She was seriously hurt, with injuries to her brain, skull and face. Plaintiff notified defendant that she sought $75,000 for her claim against Sylvester under the policy's uninsured motorist (UM) coverage as well as $75,000 for her claim against Freund under the underinsured motorist (UIM) coverage. Harleysville agreed to pay $75,000 to settle plaintiff's UM claim but denied any availability of UIM coverage because its total liability under the policy was limited to $75,000 for any one accident.

The various coverages selected when the Harleysville policy was purchased are summarily stated on the declarations page simply as:

            Coverages               Limits of Liability
                            LIABILITY               $75,000 EA ACCDNT
                            UNINSURED MOTORIST      $75,000 EA ACCDNT
                

Part C of the policy is the endorsement for "Uninsured Motorists Coverage--New Jersey." While both the declaration of coverage and the endorsement use only the term "uninsured motorist," the policy also includes coverage for underinsured motorists in this endorsement. The "schedule" listing the vehicles to be insured with their attendant limits of liability and premiums is headed (in bold type) by the words: "UNINSURED MOTORISTS COVERAGE (Includes Underinsured Motorists Coverage). The "insuring agreement" begins by stating:

We will pay compensatory damages which an "insured" is legally entitled to recover from the owner or operator of an "uninsured motor vehicle" or "underinsured motor vehicle"....

Part C also contains the limits of the insurer's liability.

The limit of liability shown in the Schedule or in the Declarations for this coverage is our maximum limit of liability for all damages resulting from any one accident. This is the most we will pay regardless of the number of:

....

4. Vehicles involved in the accident.

....

(emphasis added)

Along with the policy, Harleysville supplied the mandated Buyer's Guide in compliance with N.J.A.C. 11:3-15.6, presumably read by plaintiff. The Buyer's Guide explains the difference between UM and UIM coverage and that benefits are paid up to the coverage limit selected by the policyholder, explicitly stating the statutory minimum and maximum limits. In pertinent part it states:

Despite New Jersey law, which requires auto insurance, many cars are not covered by insurance. Some motorists break the law. Many other motorists are residents of other states which do not require auto insurance by law.

Because these motorists can cause accidents, you are required to buy uninsured motorist coverage.

....

There are other motorists who have auto insurance coverage but with very low limits. When you buy uninsured motorist coverage, you are also provided coverage to protect you from those motorists who are underinsured. If you are in an accident caused by such a motorist, underinsured motorist coverage will pay damages up to the difference between your underinsured motorist coverage limit and the other driver's liability coverage limit.

You must by law purchase uninsured motorist coverage which will pay, for each accident, at least the following amounts:

$15,000 for any one person's injuries;

$30,000 when more than one person is injured;

$5,000 for property damage.

....

You can buy higher uninsured/underinsured motorist coverage limits, but only as high as the liability coverages you have purchased. Most companies sell up to $250,000/$500,000/$100,000 coverage or a combined single limit of $500,000.

N.J.S.A. 17:28-1.1(a) requires each auto liability policy to insure against uninsured motorists (or hit and run drivers) to at least the extent of $15,000/$30,000/$5,000. Underinsured coverage is not mandated, but N.J.S.A. 17:28-1.1(b) requires all auto insurers to provide UM and UIM coverage, "as an option," up to at least $250,000/$500,000/$100,000, "except that the limits for uninsured and underinsured motorist coverage shall not exceed the insured's motor vehicle liability policy limits for bodily injury and property damage, respectively." Rates for UM and UIM coverage for the same limits are to be uniform statewide. N.J.S.A. 17:28-1.1(d) provides that UM is subject to the policy terms including "nonduplication...