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1
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OPINION
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EXTRACTED KEY WORDS
LIABILITY INSURANCE LIMITS BODILY INJURY VEHICLE POLICY PAYMENT APPELLANT INSURANCE POLICIES TORTFEASOR EXHAUSTION PLAINTIFF REGULATION MEMORANDUM INSURANCE LAW COVERAGE JUDGE RESPONDENT APPELLATE DIVISION COSTS SUPREME COURT INJURY LIABILITY BONDS MOTOR VEHICLE AMOUNT CONDITION PRECEDENT ACCIDENT JUDGMENTS SETTLEMENTS DEFENDANT |
CARLA C. S'DAO, APPELLANT, v. NATIONAL GRANGE MUTUAL INSURANCE COMPANY,
RESPONDENT.
87 N.Y.2d 853, 661 N.E.2d 1378, 638 N.Y.S.2d 597
December 5, 1995
4 No. 256 (1995 NY Int. 275)
Decided December 5, 1995
_________________________________________________________________
This memorandum is uncorrected and subject to revision before
publication in the New York Reports.
Damon A. DeCastro, for Appellant.
Richard J. Lutzel, for Respondent.
MEMORANDUM:
The order of the Appellate Division should be reversed, with costs,
and the order of Supreme Court reinstated.
Insurance Law § 3420(f)(2) provides that supplemental uninsured
motorist insurance -- known colloquially as underinsurance -- is
available "if the limits of liability under all bodily injury
liability bonds and insurance policies of another motor vehicle liable
for damages are in a lesser amount than the bodily injury liability
insurance limits of coverage provided by such policy" (emphasis
added). Under this definition, a tortfeasor is "underinsured" if the
limits of his or her liability for bodily injury are less than the
amount of corresponding insurance purchased by the injured insured
(Prudential Prop. and Cas. Co. v Szeli, 83 NY2d 681, 684).
As a condition precedent to payment of underinsurance, "the limits of
liability of all bodily injury liability bonds or insurance policies
applicable at the time of the accident shall be exhausted by payment
of judgments or settlements" (Insurance Law § 3420(f)(2)). Where
plaintiff was a passenger injured in a two-vehicle accident, the
question arises whether exhaustion of the limits of liability of all
policies held by both tortfeasors is required before the
underinsurance coverage in plaintiff's policy is available.
We conclude that the exhaustion requirement of section 3420(f)(2)
relates back to the statute's reference to "another motor vehicle" and
indicates that the proper focus is on the underinsured status of each
individual tortfeasor.(n 1) Nothing in the statutory language or
the policy providing underinsurance at issue here notifies the insured
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