OGC Op. No. 04-10-10
The Office of General Counsel issued the following opinion on October 13, 2004, representing the position of the New York State Insurance Department.
RE: Personal Lines Automobile Insurance UM/SUM Coverage
1. An individual has a personal auto insurance policy with Uninsured Motorist ("UM") coverage of $25,000 and has not purchased Supplementary Uninsured Motorist ("SUM") Coverage. The individual is riding a bicycle and suffers injuries in an accident with a motor vehicle that leaves the scene ("hit-and-run"). The individual suffers injuries in excess of $25,000. The individuals insurer pays the $25,000 UM policy limit. The individuals brother, who lives in the same household, has a separate personal auto insurance policy with SUM coverage of $100,000. May the individual file a claim under his brothers insurance policy?
2. If the individual is entitled to recover under his brothers policy, may the brothers insurer, at the time of renewal, increase the premium based upon the fact that the individuals claim was filed (and paid) on the brothers policy?
1. The individual may file a SUM claim under his brothers policy for up to $75,000 in SUM coverage.
2. The brothers insurer may not increase the policy premium as a result of the individuals claim.
An individual has a personal auto insurance policy with UM coverage of $25,000 and no SUM Coverage. The individual is riding a bicycle and suffers injuries in an accident with a motor vehicle that leaves the scene ("hit-and-run"). The individual suffers injuries in excess of $25,000. The individuals insurer pays the $25,000 UM policy limit. The individuals brother, who lives in the same household, has a separate personal auto insurance policy with SUM coverage of $100,000 available for an individual suffering bodily injury.
N.Y. Ins. Law § 3420(f)(1) (McKinney 2000 & Supp. 2004), which requires all motor vehicle liability policies in New York to maintain UM coverage, reads, in relevant part, as follows:
(f) (1) No policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any natural person arising out of the ownership, maintenance and use of a motor vehicle by the insured shall be issued or delivered by any authorized insurer upon any motor vehicle then principally garaged or principally used in this state unless it contains a provision whereby the insurer agrees that it will pay to the insured...,all sums, not exceeding a maximum amount or limit of twenty-five thousand dollars exclusive of interest and costs, on account of injury..., which the insured or his legal representative shall be entitled to recover as damages from an owner or operator of an uninsured motor vehicle, unidentified motor vehicle which leaves the scene of an accident[.]
N.Y. Ins. Law § 3420(f)(2)(A) (McKinney 2000 & Supp. 2004), which requires New York insurers to offer optional SUM coverage to all purchasers of motor vehicle liability policies, reads, in relevant part, as follows:
(2) (A) Any such policy shall, at the option of the insured, also provide supplementary uninsured/underinsured motorists insurance for bodily injury, in an amount up to the bodily injury liability insurance limits of coverage provided under such policy, subject to a maximum of two hundred fifty thousand dollars because of bodily injury to or death of one person in any one accident....
Insurance Department Regulation No. 35-D establishes the endorsement that must be used by insurers when they provide SUM coverage. N.Y. Comp. Codes R. & Regs. tit. 11, § 60-2.3(a)(2) (2004) requires that the declarations page of every new or renewal motor vehicle liability insurance policy issued, if SUM coverage is purchased by the policyholder, shall state as follows:
(2) the maximum amount payable under SUM coverage shall be the policy's SUM limits reduced and thus offset by motor vehicle bodily injury liability insurance policy or bond payments received from, or on behalf of, any negligent party involved in the accident, as specified in the SUM endorsement.
N.Y. Comp. Codes R. & Regs. tit. 11, § 60-2.3(f) (2004) prescribes the language to be used in the SUM endorsement. It reads, in relevant part, as follows:
(f) Prescribed SUM endorsement:
MOTORISTS ENDORSEMENT -- NEW YORK
We, the company, agree with you, as the named insured, in return for payment of the premium for this coverage, to provide Supplementary Uninsured/Underinsured Motorists (SUM) coverage, subject to the following terms and conditions:
I. Definitions: For purposes of this SUM endorsement, the following terms have the following meanings.
(a) Insured. The unqualified term "insured" means: (1) you, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse;
* * *
(c) Uninsured Motor Vehicle. The term "uninsured motor vehicle" means a motor vehicle that, through its ownership, maintenance or use, results in bodily injury to an insured, and for which:
* * *
(2) neither owner or driver can be identified (including a hit-and-run vehicle), and which causes bodily injury to an insured by physical contact with the insured (d) Occupying. The term "occupying" means in, upon, entering into, or exiting from a motor vehicle.
"Conditions" 7 and 8 of the required endorsement read as follows:
7. Non-Stacking: Regardless of the number of vehicles involved, persons covered, claims made, vehicles or premiums shown in this policy, or premium paid, the limits, whether for uninsured/underinsured motorists coverage or supplementary uninsured/underinsured motorists coverage, shall never be added together or combined for two or more vehicles to determine the extent of insurance coverage available to an insured injured in the same accident.
8. Priority of Coverage: If an insured is entitled to uninsured motorists coverage or supplementary uninsured/underinsured motorists coverage under more than one policy, the maximum amount such insured may recover shall not exceed the highest limit of such coverage for any one vehicle under any one policy, and the following order of priority shall apply:
(a) a policy covering a motor vehicle occupied by the injured person at the time of the accident;
(b) a policy covering a motor vehicle not involved in the accident under which the injured person is a named insured; and
(c) a policy covering a motor vehicle not involved in the accident under which the injured person is an insured other than a named insured.
Coverage available under a lower priority policy applies only to the extent that it exceeds the coverage of a higher priority policy.
The named insured under the policy has $25,000 UM coverage. He was injured while riding a bicycle when hit by a hit-and-run vehicle. He is an "insured" under his own policy ("named insured") and under his brothers policy (as a relative residing in the same household). In either case, coverage is provided for a hit-and-run accident.
With regard to priority of coverage, the individual would first look to his personal auto policy coverage for "a motor vehicle not involved in the accident but under which the injured person is a named insured." He could recover up to the $25,000 limit of UM coverage provided by that policy.
The individual could then look to his brothers policy, which covers "a motor vehicle not involved in the accident under which the injured person is an insured other than a named insured." The insured may only recover the highest limit of such coverage for any one vehicle under any one policy. The highest limit is the $100,000 SUM coverage under his brothers policy. The individuals total recovery may not exceed $100,000. Since he has received $25,000 from his own insurer the maximum amount he may recover from his brothers insurer is $75,000 ($100,000 minus $25,000).
The second question is whether the brothers insurer may, on the policy anniversary date, increase the premium based upon the fact that the individuals claim was filed (and paid) on the brothers policy.
N.Y. Comp. Codes R. & Regs. tit. 11, § 169 (2004) (Regulation 100) establishes the required procedures for the "Noncommercial Insurance Merit Rating Plans". The regulation states that "A surcharge may be imposed for an occurrence involving bodily injury (including a no-fault injury subject to article 51 of the Insurance Law), provided the motor vehicle was in operation and the insured was at fault." N.Y. Comp. Codes R. & Regs. tit. 11, § 169.1(c) (2004). The brothers motor vehicle was not in operation when the accident occurred and thus no surcharge would be permissible.
N.Y. Ins. Law § 2349 (McKinney 2000) provides that an insurer may make available a multi-tier program, with more than one rate level in the same company, for private passenger motor vehicle insurance in the voluntary market. Such a multi-tiered program must be filed with and approved by the superintendent. At present, no insurer has filed or received approval for a multi-tiered program that would allow movement of the brothers coverage to a higher-rated tier under the circumstances presented.
For further information you may contact Associate Attorney Sam Wachtel at the New York City Office.