This is a declaratory judgment action for construction of provisions contained in the uninsured motorist (UM) endorsement to an automobile liability policy.
Defendant United Services Automobile Association issued a liability policy to Lee C. McGhee covering his son Darrell L. McGhee for bodily injury in the amount of $50,000. N.J.S.A. 17:28-1.1 requires that every automobile policy covering a New Jersey motor vehicle must include coverage of $15,000 for bodily injury "for payment of all or part of the sums which the insured or his legal representatives shall be legally entitled to recover as damages from the operator or owner of an uninsured automobile, or hit and run automobile * * *." The UM endorsement under scrutiny in this action was issued in accordance with the statute. This endorsement provided insurance coverage for the McGhees and any occupants of the insured vehicle.
Plaintiff Jurgen Mozee was a passenger in the insured vehicle operated by Darrell L. McGhee. Plaintiff contends that an unidentified car emerged from a parking lot causing Darrell McGhee to swerve and collide with a tree. Plaintiff was injured very seriously. Following the accident defendant insurance company paid plaintiff $15,000 under the UM endorsement and plaintiff executed an "uninsured motorist release." The release simply discharged the company from claims arising under the UM coverage. It expressly provided that "nothing in this release shall be construed as modifying or discharging parties from their obligations under the Trust Agreement set forth in the policy." Subsequently, plaintiff instituted suit naming both McGhees and the owner of the parking lot as defendants.
The Automobile Association is prepared to offer plaintiff the full amount of insurance coverage available in satisfaction of plaintiff's complaint. It contends that two distinct sections of the policy indicate that the amount due is $50,000 minus the $15,000 payment under the UM coverage. Plaintiff claims he is entitled to $50,000 plus the $15,000.
The Association relies, first, upon § III(d) of the uninsured motorist endorsement:
Any payment made under this insurance to or for any insured shall be applied in reduction of the amount of damages which he may be entitled to recover from any person insured under the bodily injury or property damage liability coverage of the policy.
Since the provision is an invention of the company, its validity must be considered in the light of the statutory language and intent. I reach the conclusion that the clause is not enforceable.
N.J.S.A. 17:28-1.1 states in part:
No automobile liability policy or renewal or 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 * * *
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 ...