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Universal Underwriters Insurance Co. v. Atlantic Employers Insurance Co.

Decided: May 15, 1992.

UNIVERSAL UNDERWRITERS INSURANCE COMPANY, PLAINTIFF,
v.
ATLANTIC EMPLOYERS INSURANCE COMPANY AND RANDOLPH NEUES, DEFENDANTS



Menza, J.s.c.

Menza

Each party moves for summary judgment.

This case involves the question of whether two underinsured motorist policy provisions are to be applied pro rata or as primary and excess.

The defendant, Randolph Neues, was injured in a motor vehicle accident while operating an automobile owned by Freehold Nissan. The plaintiff, Universal Underwriters Insurance Company (Universal), insured the vehicle. The Universal policy contained an underinsured motorist (UIM) coverage clause with a limit of $300,000.00. Neues owned an automobile which was insured by the defendant, Atlantic Employers Insurance Company (Atlantic). That policy also contained UIM coverage with a limit of $300,000.00.

Neues recovered the sum of $15,000.00 for his personal injuries, the amount of the tortfeasor's policy limit. Neues has now made claim against Universal for UIM benefits. Universal has brought suit against Atlantic seeking a pro rata contribution of Neues' claim.

The Universal policy provides:

The insurance afforded by the endorsement is primary, except it is excess for any auto not owned by the insured or any trailer attached to it.

The Atlantic policy provides:

Any insurance we provide with respect to a vehicle you do not own . . . shall be excess over any other collectible insurance. (emphasis supplied).

Universal contends that Atlantic's policy violates New Jersey's public policy reflected in its statute. Atlantic responds that its excess coverage provision does not violate the law nor public policy and must therefore be applied in accordance with the agreement made between the parties.

The statute mandates Uninsured motorist (UM) coverage. It does not mandate underinsured motorist coverage but provides that it is to be offered as an option. N.J.S.A. 17:28-1.1(b).

The statute also prohibits the stacking of UM and UIM coverages, and provides for the pro rata ...


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