8 A.3d 1177
Del.2010Background
- Castillo, Delaware resident, sued Clearwater Insurance for underinsured motorist (UIM) benefits.
- Castillo purchased Clearwater policy as required for non-trucking use; policy included UIM endorsements.
- Castillo was injured in a 2005 accident while performing IMF truck duties under a lease; IMF did not own the vehicle.
- IMF’s insurer denied applicability; underlying tortfeasor tendered policy limits and no other insurance was found.
- Superior Court held the Clearwater policy invalidly excluded UIM coverage but could not resolve all issues; entered final Stipulated Order favoring Clearwater, later reversed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UIM coverage is mandatory under 18 Del. C. § 3902 for all insureds. | Castillo argues UM/UIM is mandatory unless rejected in writing. | Clearwater argues exclusions can limit UM/UIM when authorized. | UM/UIM is mandatory unless written rejection; exclusion invalid. |
| Whether Endorsement Four excluding business property transport is a valid exclusion. | Exclusion not authorized by statute and undermines personal nature of UIM. | Exclusion should limit coverage for commercial use. | Exclusion invalid; UM/UIM coverage cannot be restricted by that provision. |
Key Cases Cited
- State Farm Mut. Auto. Ins. Co. v. Abramowicz, 386 A.2d 670 (Del. 1978) (UM restrictions void; statute governs coverage)
- Frank v. Horizon Assurance Co., 553 A.2d 1199 (Del. 1989) (UM restrictions must be authorized by statute; coverage personal to insured)
- State Farm Mut. Auto. Ins. Co. v. Washington, 641 A.2d 449 (Del. 1994) (reaffirmed that UM/UIM protections apply broadly under §3902)
- Hurst v. Nationwide Mut. Ins. Co., 652 A.2d 10 (Del. 1995) (UM coverage cannot be diminished absent statute; personal to insured)
- Jeanes v. Nationwide Ins. Co., 532 A.2d 595 (Del.Ch. 1987) (policy exclusions on UM coverage invalid if not statutorily authorized)