Yanoff, J.s.c. (retired and temporarily assigned on recall).
At issue is the meaning of an "underinsured motor vehicle," in N.J.S.A. 17:28-1.1 e.
The context is not in dispute. On January 13, 1985, plaintiff's daughter, Debra Wolfe, was killed in an automobile accident. She was a passenger in a car driven by Gregory Reyes, whose negligence caused the accident. Of the two other passengers in the car, one was killed and one was severely injured.
Reyes carried a bodily injury/property damage liability of $25,000 per person and $50,000 per accident. Each of the three passengers in the automobile received approximately $16,600 of the $50,000.
When the accident occurred, the decedent, Debra Wolfe, was covered by her father's underinsured motorist policy, with limits of $25,000 per person and $50,000 per accident, identical to Reyes's liability coverage. Plaintiff seeks to recover the difference between the amount collected under Reyes's policy, $16,600, and his underinsured motorist coverage of $25,000. The defendant Hanover Insurance Company denies coverage. Both parties move for summary judgment.
The statute involved is part of a comprehensive act to revise and reform the law of automobile insurance. N.J.S.A. 17:28-1.1 e reads:
For the purpose of this section, (1) 'underinsured motorist coverage' means insurance for damages because of bodily injury and property damage resulting from an accident arising out of the ownership, maintenance or use of an underinsured motor vehicle. Underinsured motorist coverage shall not apply to an uninsured motor vehicle. A motor vehicle is underinsured when the sum of the limits of liability under all bodily injury and property damage liability bonds and insurance policies available to a person against whom recovery is sought for bodily injury or property damage is, at the time of the accident, less than the applicable limits for underinsured motorist coverage afforded under the motor vehicle insurance policy held by the person seeking that recovery. A motor vehicle shall not be considered an underinsured motor vehicle under this section unless the limits of all bodily injury liability insurance or bonds applicable at the time of the accident have been exhausted by payment of settlements or judgments. The limits of underinsured motorist coverage available to an injured person shall be reduced by the amount he has recovered under all bodily injury liability insurance or bonds;
(2) 'uninsured motor vehicle' means: (a) a motor vehicle with respect to the ownership, operation, maintenance, or use of which there is no bodily injury liability insurance or bond applicable at the time of the accident;
(b) a motor vehicle with respect to the ownership, operation, maintenance, or use of which there is bodily injury liability insurance in existence but the liability insurer denies coverage or is unable to make payment with respect to the legal liability of its insured because the insurer has become insolvent or bankrupt, or the Commissioner of Insurance has undertaken control of the insurer for the purpose of liquidation; or
(c) a hit and run motor vehicle as described in section 18 of P.L. 1952, c. 174 (C.39:6-78).
'Uninsured motor vehicle' shall not include an underinsured motor vehicle; a motor vehicle owned by or furnished for the regular use of the named insured or any resident of the same household; a self-insurer within the meaning of any financial responsibility or similar law of the state in which the motor vehicle is registered or principally garaged; a motor vehicle which is owned by the United States or Canada, or a state, political subdivision or agency of those governments or any of the foregoing; a land motor vehicle or trailer operated on rails or crawler treads; a motor vehicle used as a residence or ...