Lundy v. Aetna Cas. and Sur. Co.

• Decision Date: 07 March 1983
• Citation: Lundy v. Aetna Cas. and Sur. Co., 92 N.J. 550, 458 A.2d 106 (N.J. 1983)
• Parties: Doris LUNDY, Plaintiff-Appellant, v. AETNA CASUALTY AND SURETY COMPANY, Defendant-Respondent. Phyllis ISOM, Plaintiff-Appellant, v. ALLSTATE INSURANCE COMPANY, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 550

92 N.J. 550

458 A.2d 106

Doris LUNDY, Plaintiff-Appellant, v.AETNA CASUALTY AND SURETY COMPANY, Defendant-Respondent.

Phyllis ISOM, Plaintiff-Appellant, v.ALLSTATE INSURANCE COMPANY, Defendant-Respondent.

Supreme Court of New Jersey.

Argued Oct. 26, 1982.

Decided March 7, 1983.

Dennis M. Donnelly, Newark, for plaintiffs-appellants(Blume, Weiseman & Vazquez, Newark, attorneys).

Donald D. Davidson, New Brunswick, for defendant-respondent, Aetna Cas. and Sur. Co.(Hoagland, Longo, Oropollo & Moran, New Brunswick, attorneys).

John L. McDermott, Millburn, for defendant-respondent, Allstate Ins. Co.(McDermott, McGee & Ruprecht, Millburn, attorneys).

The opinion of the Court was delivered by

SCHREIBER, J.

These two cases, involving substantially similar factual patterns, raise the question of the extent of uninsured motorist coverages under a single automobile liability policy covering three automobiles.

The Isom Claim

Harvey Washington purchased an automobile liability policy from Allstate Insurance Company(Allstate) in September 1976.The policy insured three automobiles, a 1966 Chrysler, a 1964 Pontiac, and a 1966 Pontiac.PlaintiffPhyllis Isom, an additional insured under the Allstate policy, was a passenger in an automobile that collided with an uninsured car.Accordingly, she was entitled to the benefit of the uninsured motorist provision in the Allstate policy.The face sheet of the policy referred to the three insured vehicles and indicated that each was covered by the uninsured motorists provision in the amount of $15,000 per person.The plaintiff sought recovery of $45,000.Allstate asserted that its policy limited recovery to $15,000.

The disputed claim was submitted to arbitration in accordance with the policy's provisions.The arbitrator awarded the plaintiff $45,000.The trial court, granting defendant's motion for summary judgment and denying plaintiff's motion for summary judgment, limited the award to $15,000.The Appellate Division affirmed.We granted plaintiff's petition for certification.91 N.J. 207, 450 A.2d 538(1982).

There are two aspects to this claim.One involves the statutory requirements governing uninsured motorist coverage.These must be embodied in the insurance policy and cannot be contracted away.Even if the statutory requisites are not set forth, they are deemed to have been included in the policy.Nor may policy provisions conflict with those statutory requirements.The second aspect concerns provisions of the insurance policy.In this respect the focus of attention is the coverage that the policy affords, irrespective of the statutory minima.

Each automobile must be insured, N.J.S.A. 39:6A-3, and "[e]very motor vehicle registered or principally garaged in New Jersey must be insured with Uninsured Motorist Coverage on and after January 1, 1973."M. Iavicoli, No Fault & Comparative Negligence in New Jersey 100 (1973)(emphasis in original);N.J.S.A. 39:6A-14.Thus, not only must every automobile policy have uninsured motorist coverage, N.J.S.A. 17:28-1.1, but also every automobile covered under that policy must have the statutorily required uninsured motorist coverage.

Neither party questions that under N.J.S.A. 17:28-1.1 automobile liability policies must include a provision that the insured or his legal representative shall be entitled to recover damages sustained in an accident with an uninsured automobile if the owner or operator of the uninsured automobile is legally responsible.This liability exists irrespective of whether the insured vehicle was involved in the accident.This interpretation of the statute has been adopted by this Court in Motor Club of America Insurance Co. v. Phillips, 66 N.J. 277, 330 A.2d 360(1974), ¹ Beek v. Ohio Casualty Insurance Co., 73 N.J. 185, 373 A.2d 654(1977), andCiecka v. Transamerica Insurance Group, 81 N.J. 421, 409 A.2d 272(1979).N.J.S.A. 17:28-1.1 reads as follows:

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 issued in this State with respect to any motor vehicle registered or principally garaged in this State unless it includes coverage, in limits for bodily injury or death as follows:

a. an amount or limit of $15,000.00, exclusive of interest and costs, on account of injury to, or death of, one person, in any one accident, and

b. an amount or limit, subject to such limit for any one person so injured or killed, of $30,000.00, exclusive of interest and costs, on account of injury to or death of more than one person, in any one accident,

under provisions approved by the Commissioner of Insurance, 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 as defined in section 18 of chapter 174 of the laws of 1952(C. 39:6-78), because of bodily injury, sickness or disease, including death resulting therefrom, sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured or hit and run automobile anywhere within the United States or Canada.All such automobile liability policies shall also include coverage for the payment of all or part of the sums which persons insured thereunder shall be legally entitled to recover as damages from owners or operators of uninsured automobiles, other than hit and run automobiles, because of injury to or destruction to the personal property of such insured with a limit in the aggregate for all insureds involved in any one accident of $5,000.00, and subject, for each insured, to an exclusion of the first $100.00 of such damages.

Justice Handler pointed out in Fernandez v. Selected Risks Insurance Co., 82 N.J. 236, 241, 412 A.2d 755(1980) that:

[t]he statute contains no language requiring ... that the insured have any special relationship with the vehicle that he is operating or in which he is a passenger.All that N.J.S.A. 17:28-1.1 demands is that the insured demonstrate that he has sustained injuries which were caused by an uninsured automobile.

An automobile liability policy must provide not only coverage for liability related to the insured vehicle, but also coverage to the insured for injuries caused by an uninsured automobile.As one commentator has observed: "unlike liability insurance, uninsured motorists' coverage is not linked to accidents that occur while the insured is operating or occupying a specified vehicle."2 I. Schermer, Automobile Liability Insurance§ 31.02, at 31-8 (2d ed. 1981).

This statute has two purposes: to relieve the financial burden on the Unsatisfied Claim and Judgment Fund and to protect insured motorists from uninsured financially irresponsible drivers.This statutory protection may also be extended to persons other than the named insured when the insuring company has contractually extended the coverage in the policy.Fernandez v. Selected Risks Insurance Co., 82 N.J. at 240, 412 A.2d 755.Such extensions further the statutory purpose of protecting persons injured by uninsured cars.

No reduction in the amounts mandated by the statute is legally possible.Thus, there must be protection up to $15,000 on account of injury to or death of any one person and $30,000 on account of injury to or death of more than one person in any one accident.For example, if a person has two automobiles insured under separate policies, each policy must have the accident liability feature providing protection for injuries due to the negligence of an uninsured motorist.Thus, in Beek v. Ohio Casualty Insurance Co., supra, the Ohio Casualty Insurance Company, which had issued a policy on an automobile of the plaintiff, was compelled to pay him under its uninsured motorist coverage, even though the plaintiff had collected under another insurance policy with the same coverage covering his motorcycle that had been involved in an accident with an uninsured motorist.See alsoState Farm Mutual Automobile Liability Insurance Co. v. Kiser, 168 N.J.Super. 230, 237, 402 A.2d 952(App.Div.), certif. denied, 81 N.J. 348, 407 A.2d 1221(1979)(holding stacking proper where insurance company issued two policies to same insured);General Accident Group v. Shimp, 147 N.J.Super. 404, 412-14, 371 A.2d 358(Law Div.1977)(same); Comment, "Intra-Policy Stacking of Uninsured Motorist and Medical Payments Coverages: To Be or Not To Be,"22 S.D.L.Rev. 349, 350(1977)(noting a majority of states have held "other insurance" clauses invalid and required inter-policy stacking).Recovery, of course, is limited to damages suffered and there cannot be double recovery.Motor Club of America v. Phillips, 66 N.J. at 292, 330 A.2d 360.

The defendant Allstate does not quarrel with the principles expressed in Motor Club, Beek and Fernandez and concedes that if its insured, Washington, had received three policies from Allstate, one for each car, then the plaintiff would have been entitled to stack his coverage of $15,000 under each policy, for a total of $45,000.²In other words, if Allstate had delivered to Washington three copies of the identical eleven-page Allstate Family Automobile Policy with three separate declaration sheets, each referring to one of the three vehicles, Allstate's exposure for uninsured motorists coverage would be $45,000.

We have previously observed that each automobile must have an insurance policy and that each policy must include uninsured motorist coverage.Allstate has not advanced any persuasive reason why it should make any difference from a statutory standpoint if there is one set of papers for three cars in which separate uninsured motorist insurance coverage is provided for each vehicle or three identical sets of papers for...