OPINION OF THE COURT
At issue in both of these appeals is whether supplementary uninsured/underinsured motorists (SUM) coverage was triggered. In both appeals, we conclude that it was not.
In the first appeal, Allstate Insurance Company issued an automobile insurance policy to Petra Mercado that provided bodily injury liability and SUM coverage of $25,000 per person/ $50,000 per accident. In July 2005, while the policy was in effect, Mercado and five passengers in her car were injured when they were struck by a vehicle driven by Nilza Rodriguez and insured by GMAC Insurance Company, which provided the same bodily injury liability coverage as the Allstate policy. GMAC tendered its coverage limit of $50,000, paying $25,000 to Mercado and $5,000 to each of her five passengers. Subsequently, the five passengers sought SUM benefits under the Allstate policy. By letter dated February 20, 2007, Allstate denied SUM coverage, stating that “[sjince the $50,000 liability policy of Nilza Rodriguez is an offset to our Uninsured Motorist coverage, we will not be able to honor any claims for Uninsured Motorist Coverage under [the Allstate] policy.”
In the second appeal, Clarendon National Insurance Company issued an automobile policy to Francisco Nunez with bodily injury liability and SUM coverage of $25,000 per person/$50,000 per accident. In June 2001, while the policy was in effect, Nunez, his wife, and their two children were injured when they were struck by a vehicle insured by Progressive Northwestern
The SUM claimants under the Allstate and Clarendon policies demanded arbitration. Allstate and Clarendon (petitioner insurers) each commenced a CPLR article 75 proceeding for a permanent stay of arbitration. In both cases, the SUM claimants (respondents) argued that SUM coverage was triggered under Insurance Department Regulations (11 NYCRR) § 60-2.3 (f).
The Appellate Division ruled for petitioner insurers and permanently stayed arbitration in both cases (
Insurance Law § 3420 provides, in pertinent part:
“Any [automobile insurance] policy shall, at the option of the insured, also provide supplementary uninsured/underinsured motorists [SUM] insurance for bodily injury, in an amount up to the bodily injury liability insurance limits of coverage provided under such policy . . . [SUM] insurance shall provide coverage ... if the limits of liability under all . . . 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. . . . As a condition precedent to the obligation of the insurer to pay under the [SUM] insurance coverage, 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] [A] [emphasis added]).
The plain language of Insurance Law § 3420, therefore, provides that SUM coverage is only triggered where the bodily injury liability insurance limits of the policy covering the tortfeasor’s
This statute “calls for a facial comparison of the policy limits without reduction from the judgment of other claims arising from the accident” (Matter of Prudential Prop. & Cas. Co. v Szeli,
The Legislature may authorize an administrative agency “to fill in the interstices in the legislative product by prescribing rules and regulations consistent with the enabling legislation” (Matter of Medical Socy. of State of N.Y. v Serio,
In 1992, the Superintendent of Insurance promulgated Insurance Department Regulation 35-D, codified at 11 NYCRR subpart 60-2, which requires that “[e]very SUM endorsement issued shall be the [SUM] Endorsement prescribed by
“(1) you, as the named insured and, while residents of the same household, your spouse and the relatives of either you or your spouse;
“(2) any other person while occupying:
“(i) a motor vehicle insured for SUM under this policy; or
“(ii) any other motor vehicle while being operated by you or your spouse; and
“(3) any person, with respect to damages such person is entitled to recover, because of bodily injury to which this coverage applies sustained by an insured under paragraph (1) or (2) above” (11 NYCRR 60-2.3 [f] [INSURING AGREEMENTS] [I] [a]).
Further, Regulation 35-D defines an “uninsured motor vehicle” as
“a motor vehicle that, through its ownership, maintenance or use, results in bodily injury to an insured, and for which . . .
“(3) there is a bodily injury liability insurance coverage or bond applicable to such motor vehicle at the time of the accident, but; . . .
“(ii) the amount of such insurance coverage or bond has been reduced, by payments to other persons injured in the accident, to an amount less than the third-party bodily injury liability limit of this policy” (11 NYCRR 60-2.3 [f] [INSURING AGREEMENTS] [I] [c] [3] [ii]).
Each co-occupant in the covered vehicles contends that he or she should be allowed to deduct the payments made to other co-occupants, thereby reducing the tortfeasor’s bodily injury liability coverage to an amount less than the coverage limits on their vehicle, triggering SUM coverage. The SUM claimants therefore argue that co-occupants constitute “other persons” under the endorsement, even though co-occupants are insureds under the policy. We are unpersuaded.
The position of the SUM claimants and the dissent notwithstanding, this is the only construction that is consistent with the plain language of Insurance Law § 3420, the enabling legislation that Regulation 35-D must conform to, and the core principle underlying SUM coverage—that insureds can never use a SUM endorsement to obtain a greater recovery for themselves than is provided under the policy to third parties injured by the insureds (see Raffellini,
Accordingly, the orders of the Appellate Division should be affirmed, with costs.
Ciparick, J. (dissenting). Because the majority improperly forecloses the availability of supplementary uninsured/ underinsured motorists (SUM) benefits to claimants, passengers injured in a car accident, by defining them as outside the purview of Insurance Department Regulation 35-D (see 11 NYCRR 60-2.3 [f] [INSURING AGREEMENTS] [I] [c] [3] [ii]) and labeling them as something other than “other persons injured in the accident,” I respectfully dissent and would hold that Regulation 35-D’s plain language, history and the basic purpose of the SUM coverage provision triggers benefits for claimants.
In Matter of Allstate, six claimants were occupants of a vehicle injured in a car accident. The driver of the nonoffending vehicle had an insurance policy issued by Allstate. The offending vehicle was insured by nonparty GMAC Insurance. The GMAC policy provided a coverage amount of $50,000 per accident and $25,000 per person. GMAC paid $25,000 to the driver of the struck vehicle and $5,000 to each of the five other claimants, thereby totaling the $50,000 maximum coverage amount per accident.
Similarly, in Matter of Clarendon, four claimants were riding in a vehicle struck by an offending vehicle insured by nonparty Progressive Northwestern Insurance Company. After accepting liability for the accident, Progressive paid out of its $50,000 per accident coverage $15,000 each to three of the claimants and
Today, in denying claimants SUM benefits, the majority reads Regulation 35-D as not having contemplated SUM benefits for claimants, even though they were “other persons injured in the accident.” In interpreting the meaning of a regulation, courts must defer to the Superintendent of Insurance’s interpretation of his statutorily-vested authority and to his special expertise, unless such interpretation of the statute or regulation is wholly irrational or contrary to its clear meaning (see Matter of Medical Malpractice Ins. Assn. v Superintendent of Ins. of State of N.Y.,
Regulation 35-D states that a vehicle is underinsured for purposes of triggering SUM coverage where
“a motor vehicle . . . results in bodily injury to an insured, and for which . . . there is bodily injury liability insurance coverage . . . applicable to such motor vehicle at the time of the accident, but . . . the amount of such insurance coverage . . . has been reduced, by payments to other persons injured in the accident, to an amount less than the third-party bodily injury liability limit of this policy” (see 11 NYCRR 60-2.3 [f] [INSURING AGREEMENTS] [I] [c] [3] [ii]).
The majority concludes that vehicle co-occupants are not “other persons injured in the accident” by reading into the regulation a meaning excluding co-claimants as “other persons” and classifying them as “insureds.” Co-claimants, however, meet all of the criteria required by the plain language of the regulation to trigger SUM coverage: they are indeed injured parties in a car accident; the drivers/owners of the vehicles had bodily injury liability coverage; and claimants’ coverage was reduced by payments made to co-claimants—“other persons.” Put simply, when a tortfeasor’s coverage is reduced by payments to others—either co-claimants or strangers—less
Significantly, Regulation 35-D is silent as to any exception, limitation or other qualification to the phrase “other persons.” Nowhere does the regulation exclude as “other persons” a co-passenger or family relative of an insured. If the regulation was meant to exclude a co-passenger, it would have been a simple matter for the drafters to so state, and the regulation’s lack of any such exception is powerful evidence that no such limiting gloss was meant to be read into it (see McKinney’s Cons Laws of NY, Book 1, Statutes § 74). Rather, the regulation’s words were intended to mean what they say in ordinary and everyday terms. The majority’s rendering of an artificial and strained distinction between vehicle co-occupants and strangers to the insured vehicle in the definition of “other persons injured in the accident” is unwarranted and inconsistent with the plain language of the regulation as incorporated into these insurance policies.
In my view, the language of the SUM provisions is clearly, straightforwardly and unambiguously in favor of triggering SUM coverage for claimants, but to the extent that it can be read as having any ambiguity, the legal consequences of any such lack of clarity in the substance of these insurance contracts should not militate against claimants (see e.g. Matter of Mostow v State Farm Ins. Cos.,
Words of an insurance policy, furthermore, must be viewed from the position of an average person applying common speech (see Buckner v Motor Veh. Acc. Indem. Corp.,
The majority, citing Insurance Law § 3420 (f) (2) (A), argues that SUM coverage is available only where the policy limits of a tortfeasor’s vehicle are less than the third-party limits of the policy providing for SUM benefits (see majority op at 607-608), but the Superintendent of Insurance has been vested with the authority to promulgate rules and regulations that may expand upon such definitions (see Matter of Medical Socy. of State of N.Y. v Serio,
In addition, the majority looks for support in the notice and proof of claim provision (see 11 NYCRR 60-2.3 [f] [CONDITIONS] [2]), where there is a distinction between “the insured or other person making claim,” and injects that distinction into the plain language of the regulation at issue (see majority op at 610). There is no evidence, however, that the language found in the notice and proof of claim provision can be interpreted to rule out the possibility that claimants in the SUM coverage provision, who the majority claims fall within the endorsement’s definition of an “insured,” cannot be deemed “other persons.” On the contrary, the fact that when the drafters intended to make such a distinction between the insured and other persons they did so in clear and unambiguous language is telling that no such distinction here was intended.
Moreover, providing SUM coverage to claimants is not, as the majority states, contrary to the purpose and history of SUM coverage. New York’s uninsured and underinsured motorist protection statutes were enacted to protect innocent victims of motor vehicle accidents caused by motorists who, for whatever reason, could not be counted on to make their victims whole (see Matter of Vanguard Ins. Co. [Polchlopek],
In conclusion, I believe that the majority has read into Regulation 35-D an unwarranted and unreasonable limitation to exclude claimants from SUM coverage. Clearly, claimants meet the expressly written criteria for SUM coverage. Most notably, they are “other persons injured in the accident,” and thus should receive SUM benefits. Accordingly, I respectfully dissent and would reverse the orders of the Appellate Division.
Judges Graffeo, Read, Smith and Pigott concur with Judge Jones; Judge Ciparick dissents and votes to reverse in a separate opinion in which Chief Judge Lippman concurs.
In each case: Order affirmed, with costs.
Notes
As Insurance Law § 3420 (f) (2) and Regulation 35-D are in derogation of the common law, they must be narrowly construed.