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Perez v. American Bankers Insurance Co.

Decided: December 20, 1979.

EDUARDO PEREZ, PLAINTIFF-APPELLANT,
v.
AMERICAN BANKERS INSURANCE COMPANY OF FLORIDA, DEFENDANT-RESPONDENT



On certification to Superior Court, Appellate Division.

For reversal and reinstatement -- Chief Justice Wilentz and Justices Sullivan, Pashman, Clifford, Schreiber, Handler and Pollock. For affirmance -- None. The opinion of the court was delivered by Sullivan, J.

Sullivan

The basic issue presented by this appeal is the validity of a clause contained in the Uninsured Motorist (UM) Endorsement of automobile insurance policies which requires, as a condition of coverage of a noncontact hit-and-run accident, corroboration of the facts of such accident, a question specifically reserved in In re Matter of Arbitration Between Grover, 80 N.J. 221, 233 (1979). The framework in which the issue is presented is an arbitration proceeding under the policy.

The facts are easily recited. Plaintiff Eduardo Perez was the owner of a motorcycle. He had taken out a liability insurance policy with defendant American Bankers Insurance Company of Florida (American), which policy contained the standard motor vehicle uninsured motorist endorsement. The endorsement also covered accidents involving hit-and-run vehicles and provided in relevant part:

"hit-and-run vehicle" means (i) a highway vehicle which causes an accident resulting in bodily injury to an insured arising out of physical contact of such vehicle with the insured or with a vehicle which the insured is occupying at the time of the accident, or (ii) a highway vehicle which without physical contact with the insured or with a vehicle which the insured is occupying at the time of the accident causes bodily injury to an insured arising out of an accident in New Jersey, provided:

(d) with respect to subdivision (ii) the facts of such accident can be corroborated by competent evidence other than the testimony of any person having a claim under this or any other similar insurance as the result of such accident * * *.

Perez, while riding his motorcycle, was injured in an accident which happened on McCarter Highway in Newark. He filed a claim with American under the UM endorsement in his policy alleging an accident with a hit-and-run vehicle. American rejected the claim, apparently on the ground that the accident, if it involved another vehicle at all, was a noncontact accident, and that corroboration of the facts of such accident, as required by the policy, was lacking. Perez then demanded arbitration of the dispute pursuant to the arbitration clause contained in the UM endorsement.

At the time the claim was rejected, existing case law of the State upheld the validity of such policy requirement.*fn1 Jones v. Heymann, 127 N.J. Super. 542 (App.Div.1974). Because of this, the parties decided to submit only the question of coverage to arbitration. Two questions were presented to the arbitrator, namely, was the accident a contact or a noncontact accident and, if the latter, was there sufficient corroborative evidence to satisfy the policy requirement? According to counsel for Perez, this limited submission did not include the question of liability, i.e., whether in fact there had been an accident involving another vehicle and, if so, whether the accident was caused by the fault of the other driver.

The hearing before the arbitrator was not transcribed. However, counsel represents that Perez claimed that the accident with the hit-and-run vehicle was a contact accident. Proofs were also presented on the issue of corroboration. By letter dated May 23, 1977, the arbitrator notified counsel that he found that the accident was a noncontact accident. Perez was given

15 days to submit any additional proofs he might have regarding corroboration, as required by the policy.

At about the same time, on May 17, 1977, Pasterchick v. Insurance Co. of No. America, 150 N.J. Super. 90, was decided by the Appellate Division. That case differed with Jones and held that the policy provision requiring corroboration of the facts of a hit-and-run noncontact accident was void as contrary to the statutory provisions contained in N.J.S.A. 17:28-1.1 and N.J.S.A. 39:6-78. However, in holding that the uninsured motorist endorsement may not lawfully precondition policy coverage on corroboration, the court stated that a fact finder was nevertheless still free to find under all the circumstances, including ...


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