On appeal from the Superior Court of New Jersey, Law Division, Ocean County, L-994-01.
Before Judges Havey, A. A. Rodríguez and
The opinion of the court was delivered by: Rodriguez, A. A., J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: November 4, 2002
This appeal requires us to consider the enforceability of a"step-down" clause included in an uninsured/underinsured endorsement (UM endorsement) for a policy issued to a corporation as a"named insured." The specific issue is whether the step-down clause limits the UM coverage afforded to an employee who is the"named insured" in another policy with lower UM limits. The trial court found that the step-down clause was not applicable in that instance, because the employee was deemed a"named insured" under the employer's policy. We conclude that the employee is not a"named insured." Thus, the step-down limitation applies. We reverse, being mindful that our holding differs from two decisions by other panels of this court: Macchi v. Connecticut Gen. Ins. Co., 354 N.J. Super. 64, certif. denied, 175 N.J. 79 (2002) and Araya v. Farm Family Cas. Ins. Co., 353 N.J. Super. 203, certif. denied, 175 N.J. 77 (2002).
The facts are undisputed. On March 27, 2000, plaintiff Robert Botti was driving a Jeep owned by his employer, J.W. Goodliffe & Son, Inc. (JWG). An unidentified vehicle made a sudden wide left turn forcing Botti to swerve to the right and off the road. The Jeep struck a utility pole. The unidentified vehicle drove away. Botti sustained three fractured bones in his right ankle and lower right leg. As a result, Botti underwent three surgeries and was out of work for seventeen weeks.
Botti was authorized by JWG to take the Jeep home on a regular basis for personal and business use. Botti paid $15 weekly to JWG, through a payroll deduction, to help cover the cost of insurance. JWG and two related corporations were the"named insureds" in a policy issued by CNA Insurance Company (CNA) for several vehicles.*fn1 In addition to the"named insured," other persons were deemed"insureds" for UM coverage, including anyone occupying a covered auto or a temporary substitute for such auto. Thus, Botti is an"insured" under the CNA policy by virtue of being an occupant of the Jeep at the time of the accident. The Jeep was designated as vehicle number thirty eight on JWG's business auto insurance policy. The UM coverage limit for the Jeep was $1 million.
The CNA policy contained a limitation or step-down clause with respect to the UM coverage. The limitation is found in section D of the UM endorsement, which provides that:
Regardless of the number of covered'autos','insureds', premiums paid, claims made or vehicles involved in the'accident', the Limit of Insurance shown in the Schedule or Declarations for Uninsured Motorists Coverage and Underinsured Motorists Coverage is the most we will pay for all damages resulting from any one'accident' with an'uninsured motor vehicle' or an'underinsured motor vehicle'.
a. However, subject to our maximum Limit Of Insurance for this coverage, if:
(1) An'insured' is not the individual named insured under this policy;
(2) That'insured' is an individual named insured under one or more other policies providing similar coverage; and
(3) All such other policies have a limit of insurance for similar coverage which is less than the Limit of Insurance for this coverage; then the most we will pay for all damages resulting from any one'accident' with an'uninsured motor vehicle' or an'underinsured motor vehicle' shall not exceed the highest applicable limit of insurance under any coverage form or policy providing coverage to that'insured' as an individual named insured.
Botti and his wife are"named insureds" under a policy of insurance issued by State Farm Insurance (State Farm), which covers Botti's family vehicle. The State Farm policy provides for $100,000 in UM coverage limits. Thus, pursuant to the step down clause, Botti would be entitled to UM coverage under the CNA ...