On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, L-654-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Winkelstein and Chambers.
In this appeal, we must decide whether a carrier providing underinsured motorist coverage (UIM) under a policy covering one vehicle must contribute UIM coverage for an accident that occurred when its insured was driving a different vehicle he owned that had UIM coverage with another carrier. Based on the policy language, we answer this question in the affirmative and reverse the contrary decision by the trial court.
Plaintiff Rider Insurance Company (Rider) provided automobile insurance to Frank W. DiMeo for a motorcycle that he owned. The policy included UIM coverage with limits of $100,000 per person and $300,000 per incident. DiMeo also owned a Porsche, which was insured by defendant Farm Family Mutual Insurance Company (Farm Family). That policy included UIM coverage of $300,000 per accident.
On August 20, 2003, DiMeo was involved in an accident while riding his motorcycle. His personal injury action against the tortfeasor went to arbitration through the court arbitration program under Rule 4:21A-1(a), and he received an arbitration award of $125,000. DiMeo subsequently settled with the tortfeasor for the latter's policy limit of $25,000. DiMeo then asserted a UIM claim against Rider, the insurer of the motorcycle involved in the accident.
Rider subsequently sought pro rata contribution from Farm Family, since the Farm Family policy on DiMeo's Porsche also provided UIM coverage. Farm Family declined coverage. Rider settled the UIM claim with DiMeo for $40,000, and, as assignee of DiMeo's claims against Farm Family, commenced this law suit seeking to compel Farm Family to contribute its pro rata share to the settlement.
On motions for summary judgment, the trial judge concluded that DiMeo was not entitled to UIM benefits under the Farm Family policy for injuries that he suffered while riding the motorcycle. As a result, he held that Farm Family provided no coverage for the accident. Rider appeals the order of April 18, 2008, granting summary judgment to Farm Family and denying summary judgment to Rider.
Rider contends that both its policy and that of Farm Family provide DiMeo with UIM coverage for the accident. It maintains that the Farm Family policy has no exclusions relieving it of this obligation and that, as a result, Farm Family is a co-primary insurer and should be required to contribute its proportionate share of the UIM benefits paid to DiMeo.
UIM insurance provides an insured with coverage for personal injuries sustained in an accident involving an underinsured vehicle. N.J.S.A. 17:28-1.1(e)(1) (defining UIM coverage as "insurance for damages because of bodily injury and property damage resulting from an accident arising out of the ownership, maintenance, operation or use of an underinsured motor vehicle"). Coverage for UIM benefits in an automobile insurance policy is not mandatory under New Jersey law.
N.J.S.A. 17:28-1.1(b); Downey v. City of Elizabeth, 273 N.J. Super. 335, 338-39 (App. Div. 1994). The statute contemplates that an insured involved in an accident may have UIM coverage from more than one policy. See N.J.S.A. 17:28-1.1(c) (prohibiting the stacking of coverage limits in such situations).
Farm Family contends that its policy provided no UIM coverage to this accident because its policy did not cover the motorcycle. However, the language of the policy does not support that interpretation.
When construing the terms of an insurance policy, the goal is to ascertain from the language in the policy the intent of the parties. 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). If the terms of the policy are clear and unambiguous, it will be enforced as written. Ibid. Since an insurance policy is a contract of adhesion, any ambiguity will be interpreted in favor of the insured. Christafano v. N.J. Mfrs. Ins. Co., 361 N.J. Super. 228, 234 (App. Div. 2003). Further, the policy will be "construed liberally in the insured's favor to the end that coverage is afforded to the fullest extent that any fair interpretation will allow." Ibid. However, when construing an exclusion, a stricter interpretation limiting protection is required. Butler v. Bonner & Barnewall, Inc., 56 N.J. 567, 576 (1970). When no ambiguity is present, courts are ...