This opinion considers a claim for underinsured motorist's coverage ("UIM"). It recognizes the rule that a carrier issuing a UIM policy to an automobile accident victim is entitled to a credit when the tortfeasor who caused the accident is insured. It concludes, however, that the credit is limited to the amount available to the victim after payments by the tortfeasor's insurer to other victims of the accident.
Raymond and Eleanor Goughan were injured in an automobile accident caused by the negligence of Theresa Fernandez. Keith Dombrowsky, a passenger in Fernandez's vehicle, was also injured. The Goughans' were covered by a UIM policy issued by Rutgers Casualty with a limit of $100,000 per person and $300,000 per accident. Fernandez was covered by a liability policy issued by Cigna Property and Casualty Company with limits of $15,000 per person and $30,000 per accident. Dombrowsky settled with Cigna for $15,000, thus leaving $15,000 of the tortfeasor's coverage available to the Goughans.
They seek damages in excess of $15,000 and have demanded compensation from Rutgers under their UIM policy. Rutgers claims a $30,000 credit against any recovery of the Goughans; the Goughans claim that the credit is limited to $15,000. The issue has not been addressed in any reported decision. This
court concludes that the Goughans are correct, that Rutgers' credit is limited to $15,000.
N.J.S.A. 17:28-1.1e provides:
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. . . .
Our courts, in two cases, have decided that a motorist is not underinsured when a tortfeasor's policy limits are equal to or greater than the UIM limits in the victim's policy. Wolfe v. Sperling, 228 N.J. Super. 428, 549 A.2d 1275 (Law Div.1988); Tyler v. N.J. Auto Full Ins. 228 N.J. Super. 463, 550 A.2d 168 (App.Div.1988). While Rutgers cites these cases, they are not apropos. They simply reflect the clear language of the UIM statute which provides:
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 underinsurance motorist coverage afforded under the motor vehicle insurance policy held by the person seeking that recovery.
In the present case the tortfeasor was underinsured since her liability insurance limits were less than ...