On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3317-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 25, 2011 - Decided Before Judges Wefing and Payne.
Following a collision between plaintiff's motorcycle and the tortfeasor's van and payment of the $25,000 policy limits maintained by the tortfeasor, plaintiff, who was substantially injured in the crash, filed an underinsured motorist (UIM) claim with his father's carrier, New Jersey Manufacturers Insurance Company (NJM), which had issued $500,000 in UIM coverage. Plaintiff was insured under NJM's policy as a family member residing with his father. At the time, plaintiff was also the named insured under a motorcycle insurance policy issued by Rider Insurance Company, with a UIM limit of $15,000.
NJM's policy defined underinsured motor vehicle as a land motor vehicle or trailer of any type to which a liability bond or policy applies at the time of the accident but its limit for liability is less than the highest applicable limit of liability under any insurance providing coverage to that insured as a named insured.
NJM denied coverage as the result of a step-down provision in the UM/UIM part of its policy, which stated:
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 coverage to that insured as a named insured.
Because the operation of the step-down provision reduced plaintiff's UIM coverage under NJM's policy to $15,000 (the amount of plaintiff's UIM coverage under his motorcycle policy), and that amount was less than the tortfeasor's liability coverage of $25,000, the tortfeasor's vehicle was not underinsured for purposes of this accident.
Following the denial of UIM coverage by NJM, plaintiff filed a declaratory judgment action against it and Government Employees Insurance Company (GEICO), the insurer of plaintiff's sister, with whom plaintiff also lived.*fn1 At the conclusion of the discovery period, NJM moved for summary judgment. Plaintiff opposed the motion and cross-moved for summary judgment in his favor. Following oral argument, the motion judge granted summary judgment to NJM, finding as a matter of law that NJM's step-down provision was applicable to both uninsured motorist (UM) and UIM coverage and that the Rider motorcycle policy ...