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General Acc. Ins. Co. v. CNA Ins. Co.

July 15, 1997


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

Approved for Publication July 15, 1997.

Before Judges P.g. Levy and Braithwaite. The opinion of the court was delivered by P.g. Levy, J.A.D.

The opinion of the court was delivered by: Levy

The opinion of the court was delivered by


On November 1, 1992, Sheldon Rogers was employed by Garden Irrigation, a closely held corporation, all of whose stock was owned by Rogers and his wife. He was injured in a motor vehicle accident while driving a 1991 Lexus automobile owned by Garden Irrigation. At the time of the accident, he was using the Lexus for personal, as opposed to employment related, purposes. The tortfeasor, a New York taxicab corporation, settled with Rogers by paying the limits of its liability insurance policy, $15,000. Rogers alleges his injuries are severe and extensive, requiring surgery for a total knee replacement, followed by rehabilitation and convalescence. He seeks full compensation for past, present and future pain, suffering and disability. Since the tortfeasor's settlement did not provide that full compensation, Rogers looked for other insurance coverage.

Rogers and his wife were "named insureds" of a personal automobile policy issued by Continental Casualty Company (incorrectly impleaded as CNA Insurance Company). The only motor vehicle scheduled as a covered auto under the Continental policy was a 1989 BMW automobile. This policy included underinsured motorist benefits (UIM) with a limit of $500,000.

Garden Irrigation was the "named insured" of a business automobile policy issued by General Accident Insurance Company. Among the vehicles listed on the "schedule of covered autos you own" was the 1991 Lexus. The General Accident policy provided UIM coverage up to $1,000,000.

Rogers demanded UIM benefits from both insurance companies, but each declined, pointing to the other as the responsible insurer. General Accident admits that the UIM endorsement in its policy "can be read as making insureds of those occupying the General Accident insured vehicle at the time of the accident." Both policies contain "other insurance" clauses providing primary coverage for an accident involving the insured vehicle and excess coverage for accidents where the insured person was not involved with the insured vehicle. General Accident acknowledged it is the primary insurer for UIM benefits according to the plain meaning of the "other insurance" clauses.

However, General Accident considered that its policy provisions, providing UIM coverage for occupants of vehicles not designated as "named insureds" for UIM purposes, were invalidated by Aubrey v. Harleysville Insurance Companies, 140 N.J. 397, 658 A.2d 1246 (1995). Claiming that "the right to recover UIM benefits is measured against the claimant's personal policy" pursuant to Aubrey, it declined to arbitrate Rogers' UIM claim. Instead, it filed the within action for declaratory judgment against Continental and Rogers. When the two insurance companies made cross-motions for summary judgment, the motion Judge held for General Accident and ordered Continental to provide UIM coverage to Rogers. Continental appeals and we reverse and remand for arbitration between Rogers and General Accident.

Rogers, while not filing a cross-appeal, joins in Continental's appeal and asks us to hold the General Accident policy "primary for UIM coverage" and the Continental policy secondary and excess thereto. We agree with that contention because we conclude that Aubrey does not limit UIM recovery to Rogers' personal auto policy. Without its disclaimer based on Aubrey, General Accident acknowledges it is the primary insurer for any UIM benefits to which Rogers is entitled.

In French v. New Jersey School Bd. Assn. Ins. Group, 146 N.J. 500, 683 A.2d 202 (1997), slip opinion at 10, our Supreme Court clarified Aubrey, stating that it did not intend the UIM coverage under a personal insurance policy "would be the sole criterion or litmus test for determining UIM coverage issues." The Court stated that it is "simply too broad a reading" of Aubrey to take the position that the injured party's personal insurance policy was to be used to ascertain the threshold eligibility for UIM status and that the personal policy would be "the only UIM policy that the injured person has resort to once that threshold test is met." Ibid.

Here, the motion Judge read Aubrey strictly, and considered it to limit UIM coverage to the application of the injured party's personal auto policy. The Judge found that Rogers was at most an "additional insured" under the General Accident policy but not a "named insured," and therefore Rogers could only reasonably expect UIM coverage under the personal policy he had purchased from Continental. However, in Taylor v. Nat'l Union Fire Ins. Co., 289 N.J. Super. 593, 674 A.2d 634 (App. Div.), certif. denied, 145 N.J. 376 (1996), we held UIM benefits were available under the employer's business auto policy to a person injured while driving a car provided by his employer as part of his compensation package, even though the employee had a personal auto policy covering his family vehicles.

In a later case, we considered the plight of an employee injured during the course of employment while driving his employer's van. Cook-Sauvageau v. PMA Group, 295 N.J. Super. 620, 685 A.2d 978 (App. Div. 1996). Under those circumstances, we said it was as clear there as in Taylor that "the essential risk for which [the] business automobile policy was intended to provide coverage ...

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