Proctor v. North Carolina Farm Bureau Mutual InsuranceProctor v. North Carolina Farm Bureau Mutual Insurance
Lead Opinion
The sole question presented by this appeal is what amount of underinsured motorist coverage is required by law when an insurer has not complied with
The facts controlling this case were stipulated by the parties in the trial court. The plaintiff’s decedent, Joyce Batts Proctor, was killed in a traffic accident on 27 September 1984 while driving a van owned by Country Manor Antiques, a partnership in which she was a partner. The wrongful death of the plaintiff’s decedent was caused by the negligence of William Gray Edwards, Jr., who was driving another vehicle involved in the accident. Edwards was covered by a liability insuranсe policy with maximum coverage limits of $25,000 per person and $50,000 per accident. The plaintiff’s decedent was covered by a policy issued to Country Manor Antiques by the defendant, North Carolina Farm Bureau Mutual Insurance Co., with maximum liability coverage limits for wrongful death of $100,000 per person and $300,000 per accident, as well as uninsured motorist coverage.
Neither Country Manor Antiques nor the plaintiffs decedent had ever rejected underinsured motorist coverage in the policy issued by the defendant, as requirеd by
The plaintiff, Geоrge L. Proctor, administrator of Joyce Proctor’s estate, sued the defendant insurance company for proceeds from the underinsured motorist coverage provided in its policy by operation of the statute. The trial court granted summary judgment for the plaintiff in the amount of $75,000. The plaintiffs wrongful death damages had been found to be in excess of $100,000. After determining that the $100,000 per person maximum liability coverage of the policy issued by the defendant was the amount of underinsured motorist coverage required by the statute, the trial court deducted from that amount Edwards’ maximum liability coverage of $25,000 to arrive at the $75,000 that the defendant owed the plaintiff, such deduction also being provided for by the statute as it was then written.
The defendant contends that the statute as written at the time of the accident was not intended to provide the maximum amount of underinsured motorist coverage in cases such as this where the insurer failed to comply with the statute and the existence and amount of such coverage were not stated in the policy. The defendant contends that when underinsured motorist coverage was provided solely by operation of the former version of the statute, it was only provided at the minimum level of underinsured motorist coverage offered by the insurer at the time, which in this case would have been $50,000. That is particularly appropriate in this case, the defendant contends, because the insured
The language of the statute was not explicit as to the amount of underinsured motorist coverage required at the time of this accident. Absent the insured’s rejection of such coverage, the statute as written at that time required underinsured motorist coverage in all insurance policies that provided more than the statutory minimum liability coverage and which included uninsured motorist coverage. The statute prоvided that the underinsured motorist coverage was “not to exceed” the policy limits for automobile bodily injury liability as specified in the owner’s policy. The statute’s only other reference to the amount of such coverage was in its formula for the limit оf the insurer’s payment under such coverage, the limit then being “only the difference between the limits of the liability insurance [of the underinsured motorist] that is applicable and the limits of the underinsured motorist coverage as specified in the owner’s policy.”
In order to determine what level of coverage the statute as formerly written was intended to mandate under the circumstances of this case, we must look to the purpose of the statute and the needs it was intended to address. The purpose of this Stаte’s compulsory motor vehicle insurance laws, of which the underinsured motorist provisions are a part, was and is the protection of innocent victims who may be injured by financially irresponsible motorists. See Nationwide Mutual Insurance Co. v. Chantos,
The innocent plaintiffs damages in this case werе in excess of $100,000, of which only $25,000 was recoverable (the plaintiff actually recovered less) from the liability coverage of the underinsured motorist who caused the accident. The defendant insurance company, which created the ambiguity cоnfronting us in this case by its failure to comply with the statute, asks this Court to resolve the ambiguity in its favor. That would provide the plaintiff with an additional $25,000 —$50,000 underinsured motorist coverage, less the $25,000 liability limit of the underinsured motorist’s policy — leaving in excess of $50,000 in damages uncompensated by operation of the statute.
Under the plaintiff’s interpretation of the statute’s requirements at the time of the accident, adopted by the trial court and the Court of Appeals, the statute would provide $100,000 of underinsured motorist coveragе —an amount equal to the liability coverage in the defendant’s policy — for the death of this innocent victim of a tortfeasor who was financially unable to make full compensation. Thus, the general purpose of the statute would be served better and more fully by the plaintiff’s interpretation. Furthermore, such an interpretation is consistent with the principle that the remedial compulsory motor vehicle insurance statutes should be liberally construed to accomplish the beneficial purpоse intended by the legislature. See Moore v. Hartford Fire Insurance Co.,
As pointed out by the Court of Appeals, the legislature made the level of underinsured motorist coverage a function of liability coverage, not a function of uninsured coverage as urged by the defendant.
Unless they expressly say so, amendments to statutes are not necessarily clarifications of legislative intent. Nevertheless, the fact that the legislature has amended
The defendant in this case must be held responsible for issuing a policy that purported to include requirements that violated the provisions of
For the foregoing reasons, we conclude that under the circumstances of this case, the statute as written at the time of the accident required that the victim of an underinsured tortfeasor havе underinsured motorist coverage equal to the liability limits of the policy covering the victim, unless the victim had rejected such coverage.
Affirmed.
Notes
. At the time of this accident, the statute provided in pertinent part:
[Motor vehicle liability insurance policies] shall . . . provide underinsured motorist coverage, to be used only with policies that are written at limits that exceed those рrescribed by subdivision (2) of this section and that afford uninsured motorist coverage as provided by subdivision (3) of this subsection, but not to exceed the policy limits for automobile bodily injury liability as specified in the owner’s policy.
. The statute’s ambiguity as to the amount of underinsured motorist coverage to be mandated under all circumstances, including when the policy does nоt comply with the statute as in this case, has now been clarified by the legislature. Subsection (b)(4) was amended effective 1 October 1985 to require in all cases that underinsured motorist coverage be “in an amount equal to the policy limits for automobile bodily injury liability as specified in the owner’s policy.”
Dissenting Opinion
dissenting.
Underinsured motorist coverage is not required by law, since the insured may reject it. The repealed statute that governs this case, as well as the current statute, requires that the carrier offer underinsured coverage only to the holders of liability policies which exceed the minimum compulsory amounts of liability insurance. Even the currently effective statute, which provides that underinsured coverage must be offered in the amount of the upper limits of the owner’s liability policy, does not require the motorist to carry such insurance since he may reject the same simply by electing not to purchase the coverage.
I agree with the majority that, because of the erroneous language in its policy, Farm Bureau should be held tо have provided underinsured motorist coverage in this case. I differ from the majority as to the amount of coverage applicable. In my opinion, Farm Bureau should be held to have provided $50,000 in underinsured coverage for the death of the plаintiffs decedent, which, after the $25,000 credit for sums recovered from the tort-feasor, would leave a net liability of $25,000.
Recovery in this additional amount of $25,000 does equity in this case. It cannot be said that Mrs. Proctor had an expectation of receiving the higher coverage. The statute in effect at the time the policy was purchased certainly did not explicitly so provide. Nor can any such expectation have arisen from the words of the policy. Though the policy provisions relating to underinsured coverage were totally erroneous, they served specifically to notify the insured that the policy did not provide any underinsured coverage at all. Nor can any such expectation be said to have arisen
While the statute has now been amended to specifically tie the amount of underinsured coverage to the amount of the liability coverage purchased by the insured and while there are probably only a few cases yet to be decided under the old statute, it is important to decide this case correctly. I vote to reverse the decision of the Court of Appeals.