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Downey v. City of Elizabeth

Decided: May 24, 1994.

JAMES DOWNEY AND LYNN DOWNEY, PLAINTIFFS-APPELLANTS,
v.
CITY OF ELIZABETH AND RASMUSSEN ADMINISTRATORS, DEFENDANTS-RESPONDENTS.



On appeal from Superior Court, Law Division, Union County.

Before Judges Pressler, Brochin and Kleiner.

Pressler

The opinion of the court was delivered by PRESSLER, P.J.A.D.

The issue raised by this appeal is whether a municipal self-insurer is required to afford underinsured motorist benefits (UIM) to drivers of vehicles owned by it. We agree with the trial Judge that it is not, and we therefore affirm the summary judgment dismissing the complaint.

Plaintiff James Downey, a police officer employed by defendant City of Elizabeth, was seriously injured when the motorcycle he was riding while on duty was struck by a vehicle owned and operated by Maria Rodrigues. The Rodrigues vehicle was insured by a liability policy with a $100,000 limit. Plaintiff and his wife, Lynn Downey, who had sued per quod, settled their action against Rodrigues for $90,000. Since plaintiff's damages exceeded the liability limit of the Rodrigues policy and since there was no other policy to which he could have recourse, he asserted this claim against Elizabeth, seeking UIM coverage from it as a self-insurer. This action followed the City's rejection of that claim.

In granting defendant's motion for summary judgment, the trial Judge reasoned that a self-insurer is required to afford only those coverages mandated by statute. Since UIM is not a compulsory coverage, he concluded that the City's self-insurance obligation did not encompass it. We concur.

Compulsory motor vehicle liability insurance is generally required by N.J.S.A. 39:6A-3, applicable to passenger automobiles, and N.J.S.A. 39:6B-1, applicable to all other vehicles. Both prescribe minimum coverage of $15,000 for one victim and $30,000 for more than one victim, and neither makes any reference to

either UIM or uninsured motorist coverage (UM). The municipal insurance obligation is not governed by Title 39 but rather by Title 40A. Thus, N.J.S.A. 40A:10-3, enacted subsequent to these Title 39 sections and presumptively superseding them, requires all local units to maintain insurance coverage for the operators of all its motor vehicles, equipment and apparatus in the minimum amount of $50,000 for one victim and $100,000 for more than one victim. N.J.S.A. 40A:10-3, like the Title 39 sections, is silent both as to UM and UIM.

The source of UM and UIM coverage is N.J.S.A. 17:28-1.1. Paragraph a. of that section requires every motor vehicle liability policy to provide UM coverage in the same minimum amounts as minimum liability coverage. The insured's counterpart obligation to maintain minimum UM, at least for automobiles, is prescribed by N.J.S.A. 39:6A-14. Paragraph b. of N.J.S.A. 17:28-1.1 requires the insurer to offer to the insured, as an option, additional UM coverage up to a maximum of $250,000/$500,000. It also requires the offering, as an option, of UIM coverage up to that maximum, subject to the stipulation that the UM and UIM coverage opted for not exceed the insured's liability limits.

It is now well-settled that ordinarily the statutory requirement of compulsory UM coverage applies to both private and public self-insurers of all types of motor vehicles. Christy v. City of Newark, 102 N.J. 598, 607, 510 A.2d 22 (1986); Transport of New Jersey v. Watler, 161 N.J. Super. 453, 463, 391 A.2d 1240 (App. Div. 1978), aff'd as modified, 79 N.J. 400 (1979). As we explained in Transport of New Jersey, which dealt with what was then a private entity, the primary purpose of compulsory UM coverage was "to prevent the drain on the [Unsatisfied Claim and Judgment] Fund caused by claims against uninsured motorists." 161 N.J. Super. at 459. Compulsory UM coverage was accomplished by the 1972 amendment of N.J.S.A. 17:28-1.1, which "changed the requirement of an offer of UM coverage to a compulsory requirement of UM coverage in liability policies." Id. at 461. Since a self-insurer must "be

expected to cover at least the same risks that other motorists are required by law to cover," id. at 463-464, we concluded that self-insurance must be deemed to include UM coverage. The Supreme Court in Christy endorsed that reasoning and extended it to municipal self-insurers as well. And in Ross v. Transport of New Jersey, 114 N.J. 132, 142, 553 A.2d 12 (1989), the Court reaffirmed the principle that the "status of ...


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