Collester, Lynch and Michels. The opinion of the court was delivered by Michels, J.s.c., Temporarily Assigned.
Plaintiff Hartford Insurance Company (Hartford) appeals from a grant of summary judgment in favor of defendant Joseph Yuhas (Yuhas). Yuhas was injured in an automobile accident while a passenger in a vehicle owned and operated by Cecelia Satoli which collided with an uninsured vehicle. The Satoli vehicle was insured by Allstate Insurance Company (Allstate) and Yuhas was insured by Hartford. Both the Hartford and Allstate policies contained uninsured motorist coverage endorsements issued pursuant to the provisions of N.J.S.A. 17:28-1.1, and each contained the minimum statutory limits of $10,000 per person and $20,000 per accident.
Yuhas instituted an arbitration proceeding against Hartford and Allstate under the arbitration provisions of the uninsured motorist coverage issued by each, to recover damages for the personal injuries he sustained as a result of the accident. The arbitrator, at the conclusion of the hearing, entered an award in favor of Yuhas and against Hartford and Allstate in the sum of $10,000 each, or a total of $20,000. Allstate paid the $10,000 awarded Yuhas. Hartford refused to pay, contending that recovery was barred by reason of the "other insurance" clause contained in its uninsured motorist coverage endorsement, and instituted this declaratory judgment action. The "other insurance" clause provides:
With respect to bodily injury to an insured while occupying a highway vehicle not owned by the named insured, this insurance shall apply only as excess insurance over any other similar insurance available to such insured and applicable to such vehicle as primary insurance, and this insurance shall then apply only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.
Except as provided in the foregoing paragraph, if the insured has other similar insurance available to him and applicable to the accident, the damages shall be deemed not to exceed the higher of the
applicable limits of liability of this insurance and such other insurance, and the company shall not be liable for a greater proportion of any loss to which this coverage applies than the limit of liability hereunder bears to the sum of the applicable limits liability of this insurance and such other insurance.
Hartford contends that under the express language of the aforesaid clause, the uninsured motorist coverage of the insured's (Yuhas) own policy operates as excess coverage and applies only if its coverage is more extensive than the primary coverage afforded by Allstate, and then only for the amount of such excess. Since the Allstate and Hartford policies contained the identical limits of liability, Hartford argues that its coverage does not apply, and Yuhas was not entitled to stack or pyramid the policies, but rather was limited in his recovery to $10,000 -- the amount of the Allstate coverage.
The trial court rejected this argument and granted Yuhas' motion for summary judgment, holding that Hartford was also liable to Yuhas under its uninsured motorist coverage. The trial court relied on the opinion of the Chancery Division in McFarland v. Motor Club of Amer. Ins. Co., 120 N.J. Super. 554 (Ch. Div. 1972). In McFarland the court held the same "other insurance" clause that is contained in the Hartford policy here involved to be violative of public policy and invalid, stating:
N.J.S.A. 17:28-1.1 sets a minimum recoverable amount but does not limit the total recovery. Defendant's "other insurance" clause should be read only so as to avoid dual recoveries; N.J.S.A. 17:28-1.1 itself states this limitation. Where an insured's loss exceeds the limits of one policy, he may proceed against other available policies. The insurance company is, of course, free to dispute the validity of the asserted claim. But this court will not permit an insurer to escape its statutorily imposed liability by including in its policy a limiting clause which prevents the insured from receiving coverage he has paid for. Insofar as the "other insurance" clause under consideration purports to do so, it is violative of public policy and is invalid. [at 563]
The court reached this result by concluding that the general purpose of the Motor Vehicle Security Responsibility
Law (N.J.S.A. 39:6-23 to 60), the Unsatisfied Claim and Judgment Fund Law (N.J.S.A. 39:6-61 to 91) and the Motor Vehicle Liability Security Fund Law (N.J.S.A. 39:6-92 to 104), is "to provide victims of automobile accidents with financially responsible people to look to for damages," and since the "other insurance" clause limits the amount that an insured may recover ...