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Sikking v. Nelson

Decided: June 28, 1990.


On appeal from the Superior Court of New Jersey, Law Division, Camden County.

Shebell, Baime and Keefe. The opinion of the court was delivered by Keefe, J.A.D.


The question presented on this appeal is whether an insurer who failed to provide its insured with a written notice and buyer's guide by May 15, 1984 thereby failing to advise the insured, among other things, of the availability of underinsured motorist insurance up to the bodily injury limits of the insured's policy, can be liable to the insured who is injured in an automobile accident on June 9, 1984 due to the negligence of an underinsured motorist for damages sustained in excess of the underinsured's liability coverage up to the limits of the insured's liability coverage. The Law Division judge resolved the issue in favor of the insurer and granted summary judgment to Selected Risk Insurance Company (Selected).*fn1 Plaintiff Arnold Sikking and Sikking Brothers, Inc. (plaintiffs) and plaintiffs' insurance broker Egery Nelson, individually, and Egery Nelson, Inc. (Nelson) thereafter moved for leave to appeal which we granted. We now reverse the judgment in favor of Selected and remand the matter for further proceedings in compliance with this opinion.

The facts were stipulated to the Law Division judge only for the purpose of determining plaintiffs' claim against Selected.*fn2

Arnold Sikking, president of Sikking Brothers, Inc., was severely injured in an accident of June 9, 1984. Sikking Brothers, Inc. is a family owned business primarily engaged in growing and selling gladiolas. As a result of Arnold's injuries, Sikking Brothers, Inc. alleges to have suffered financial loss. The tortfeasor carried liability coverage of $25,000 and apparently has paid the policy limits to plaintiffs. However, plaintiffs claim that their damages are far in excess of that amount.

At the time of the accident plaintiffs were insured under an automobile policy issued by Selected. The policy contained bodily injury single limit coverage of $300,000 and an uninsured/underinsured motorist (UM/UIM) endorsement having single limits of $50,000. The policy covered several personal vehicles, one of which was being driven by Arnold Sikking on June 9, 1984. The policy was renewed on April 21, 1984 for a term of one year. Selected also renewed an excess liability policy with liability limits of $1,000,000 to Sikking Brothers, Inc. which is not involved in this litigation.

The Selected policy as written would permit $25,000 to be available under the UIM endorsement to satisfy plaintiffs' underinsurance claim.*fn3 Plaintiffs, unsatisfied with that prospect, brought suit against Nelson and Selected alleging that they failed to make appropriate offers of additional UIM coverage prior to June 9, 1984. Plaintiffs sought reformation of the insurance policy to increase the UIM coverage to the maximum limits permitted by law, i.e., $300,000. See N.J.S.A. 17:28-1.1.

Plaintiffs apparently had $50,000 UIM single limit coverage at least since the renewal of the policy in April, 1983. The Law Division judge was also advised that Arnold Sikking had met with Egery Nelson to discuss the renewal of the policy in April

1984. However, there was no stipulation concerning the content of that conversation.

Selected admitted that it did not mail a written notice and buyer's guide to plaintiffs by May 15, 1984 as required by section 17(b) of "The New Jersey Automobile Insurance Freedom of Choice and Cost Containment Act of 1984" (ACT) (L. 1983, c. 362).*fn4 Instead, the material was mailed by third class postage on June 8, 1984. It is agreed that plaintiffs did not receive the material before the accident of June 9, 1984. Selected further admits that it was voluntarily offering UIM coverage up to the bodily injury and property damage limits of its insureds' policies prior to the April 1984 renewal, and that it would have written UIM coverage up to the limits contained in plaintiffs' basic policy, ($300,000 single limit for bodily injury), in April 1984 had it been asked to do so by plaintiffs' agent, Nelson.

After considering the respective arguments of counsel, the Law Division judge, as indicated earlier, granted judgment in favor of Selected. The following passage from the bench opinion best expresses the judge's reasoning.

I find the principal purpose of these regulations is to give notice of the existence of that kind of insurance and that an insured may choose that kind ...

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