June 27, 2008
PASQUALE CASUSCELLI, PLAINTIFF-RESPONDENT.
LIBERTY MUTUAL INSURANCE COMPANY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-55-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted June 17, 2008
Before Judges Stern and Coburn.
In this personal injury accident case, the Law Division judge refused to enforce a step-down provision contained in an automobile insurance policy issued by defendant Liberty Mutual Insurance Company ("Liberty Mutual"), and ordered Liberty Mutual to participate in an Underinsured Motorist ("UIM") arbitration hearing. Liberty Mutual appealed. Although the order was not final, Janicky v. Point Bay Fuel, Inc., 396 N.J. Super. 545, 549-50 (App. Div. 2007), we grant leave to appeal nunc pro tunc.
The relevant facts are simple and not in dispute. On June 24, 2004, plaintiff was injured when his motorcycle collided with an automobile operated by Marilyn Potts. Plaintiff insured his motorcycle with Foremost Insurance Company. He elected UIM coverage in the amount of $15,000 per person and $30,000 per accident. Potts's insurance policy, which provided $100,000 in coverage per person and $300,000 per accident, was inadequate to fully compensate plaintiff for his injuries.
When the accident happened, plaintiff was living with his parents, and they were insured under the Liberty Mutual policy which provided UIM coverage in the amount of $500,000. Plaintiff settled with Potts and then demanded UIM coverage under the Liberty Mutual policy, which was denied.
The Liberty Mutual policy listed plaintiff's parents as the "named insureds" and listed plaintiff as an "additional driver." The UIM provision defines an "insured" as the named insureds and any "family member." The step-down clause in the Liberty Mutual policy read as follows:
A. The limit of liability shown in the Declarations for this coverage is our maximum limit of liability for all damages resulting from any one accident.
However, subject to our maximum limit of liability for this coverage:
a. An "insured" is not the named insured under this policy;
b. That "insured" is a named insured under one or more other policies providing similar coverage; and
c. All such other policies have a limit of liability for similar coverage which is less than the limit of liability for this coverage;
then our maximum limit of liability for that "insured", for all damages resulting from any one accident, shall not exceed the highest applicable limit of liability under any insurance providing limit of liability under any insurance providing coverage to that "insured" as a named insured.
Application of the unambiguous language of the UIM provision to the undisputed facts clearly supports Liberty Mutual's position in this case. Although plaintiff was insured under his parents' policy, he was not a named insured. On the other hand, he was the named insured under the Foremost policy, and that policy had "a limit of liability for similar coverage which is less than the limit of liability for this [the Liberty Mutual] coverage." Therefore, he was subject to the step-down clause.
We have previously confirmed that step-down provisions of the sort involved here are valid and enforceable. Christafano v. N.J. Mfrs. Ins. Co., 361 N.J. Super. 228, 235 (App. Div. 2003). "An insurance policy that is clear and unambiguous should be enforced as written." Universal Underwriters Ins. Co. v. N.J. Mfrs. Ins. Co., 299 N.J. Super. 307, 312 (App. Div.), certif. denied, 151 N.J. 73 (1997) (citation omitted). Since this policy is clear and does not frustrate plaintiff's reasonable expectations, we are obliged to reverse.
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