On appeal from Superior Court of New Jersey, Law Division, Monmouth County.
J.h. Coleman and Skillman. The opinion of the court was delivered by Skillman, J.A.D.
This appeal presents an issue regarding the scope of underinsured motor vehicle insurance coverage (UIM) which we conclude is directly controlled by our recent decision in Gold v. Aetna Life & Cas. Ins. Co., 233 N.J. Super. 271, 558 A.2d 854 (App.Div.1989).
On March 29, 1984, defendant Kenneth Kress was a passenger in an automobile being operated by John D. Roggie which was struck from the rear by a vehicle operated by Donna M. Tuchol. According to Tuchol, the Roggie vehicle was stopped at a red light at an intersection but started to move forward when the light turned green. Roggie stopped his vehicle again when a fire truck entered the intersection and Tuchol then rear ended him. Kress suffered serious injuries in the resulting accident.
Kress filed a personal injury action naming both Tuchol and Roggie as defendants. Tuchol had $50,000 in automobile liability insurance coverage. Her insurance company paid Roggie $500 for the damage to his automobile and settled Kress's claim by paying him the remaining $49,500 of her coverage. Roggie had $100,000 in liability coverage. His insurance company settled Kress's claim by paying him $20,000. Thus, Kress
received a total of $69,500 in settlement of his personal injury action.
At the time of the accident, Kress had an automobile liability insurance policy with plaintiff Prudential Insurance Company (Prudential) which included a UIM endorsement of $100,000. Kress demanded that Prudential pay him UIM benefits, because Tuchol's policy limit of $50,000 was less than his $100,000 UIM coverage. However, Prudential took the position that because the aggregate of Tuchol's $50,000 of coverage and Roggie's $100,000 of coverage exceeded Kress's $100,000 of UIM coverage, he was not entitled to UIM benefits.
Kress pursued his efforts to collect UIM benefits from Prudential by filing a demand for arbitration. Prudential responded by filing this declaratory judgment action.*fn1 On cross motions for summary judgment, the trial court declared that Prudential was not liable for UIM benefits for Kress's injuries. We reverse.
The circumstances under which an insured with UIM coverage is entitled to recovery are set forth in N.J.S.A. 17:28-1.1(e), which 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 ...