Szeli v. Prudential Property and Casualty Ins. Co., 81 N.Y.2d 492 (1993)
When comparing insurance policies to determine underinsured status under New York Insurance Law § 3420(f)(2) in a multiple-victim accident, the insured’s ‘per accident’ bodily injury limit should be compared to the tortfeasor’s policy limit, considering any required allocation for property damage within the tortfeasor’s ‘single limit’ policy.
Summary
In a case involving multiple injuries from a single accident, the New York Court of Appeals addressed how to determine if a tortfeasor is underinsured when their insurance policy has a ‘single limit’ covering both bodily injury and property damage. Brian Szeli was injured in an accident caused by a tortfeasor with a $300,000 single-limit policy. Szeli sought underinsured motorist (SUM) coverage under his father’s Prudential policy, which had a $100,000 per person/$300,000 per accident split limit for bodily injury. The Court held that when comparing the policies, the insured’s per-accident limit should be considered, and the tortfeasor’s single limit must be construed to include the minimum required property damage coverage, thus potentially reducing the amount available for bodily injury. This makes the tortfeasor underinsured, entitling Szeli to arbitration.
Facts
Brian Szeli and two other teenagers were hit by a car, causing serious injuries. The tortfeasor’s insurance policy had a single limit of $300,000 per accident for both bodily injury and property damage. The tortfeasor’s insurer paid the full $300,000 policy limit, allocating $95,000 to Szeli and $205,000 to the other two injured individuals. Szeli sought supplementary underinsured motorist (SUM) coverage under his father’s insurance policy with Prudential, arguing his damages exceeded the settlement amount.
Procedural History
Prudential denied Szeli’s claim for SUM coverage, leading Szeli to seek arbitration. Prudential then filed a petition in Supreme Court to stay the arbitration. The Supreme Court denied Prudential’s petition and ordered arbitration. The Appellate Division reversed, finding that the tortfeasor’s policy was equal to or greater than Szeli’s policy. The New York Court of Appeals granted leave to appeal.
Issue(s)
1. Whether, in a multiple-victim accident with a single SUM claimant, the insured’s bodily injury limit for comparison purposes should be the per person or per accident amount.
2. Whether, for comparison purposes, the tortfeasor’s entire single limit should be considered their bodily injury limit, even when it also covers property damage.
Holding
1. No, because in a multiple-victim accident, the ‘per accident’ limit of the insured’s policy should be used for comparison.
2. No, because the tortfeasor’s single limit must be construed to include the minimum legally required amount of property damage coverage, effectively reducing the amount available for bodily injury claims.
Court’s Reasoning
The Court reasoned that Insurance Law § 3420(f)(2) aims to provide insureds with the same level of protection they would provide others if they were the tortfeasor. The Court framed the inquiry as whether the insured (Szeli’s father) would have greater bodily injury coverage than the tortfeasor, considering the circumstances of a multiple-victim accident. The Court emphasized a “facial comparison of the policy limits without reduction from the judgment of other claims arising from the accident.”
The Court rejected Prudential’s argument that the $100,000 per person limit should be used because only one person was claiming under the Prudential policy. The court stated that the determination of whether SUM coverage is available requires a comparison of each policy’s bodily injury liability coverage as it operates under the policy terms. This determination is made “without reference to the terms of the SUM endorsement.”
The court noted that Vehicle and Traffic Law § 311 requires New York motorists to have at least $5,000 in property damage liability coverage. Therefore, the tortfeasor’s $300,000 single limit policy necessarily includes this minimum property damage coverage, meaning less than $300,000 is actually available for bodily injury. The court reasoned that “a policy facially offering $300,000 exclusively for bodily injury liability insurance provides greater bodily injury coverage than one facially offering $300,000 divided between bodily injury and property damage.”
Referencing other jurisdictions, the court cited Heirs of Leetz v Arnica Mut. Ins. Co., 839 P2d 511, 513 (Colo App) and Staub v Hanover Ins. Co., 251 NJ Super 66, 68, 596 A2d 1096, 1097, and concluded that the “per accident limit ($300,000) should be employed in the underinsurance comparison when there is a multiple-victim accident but only one underinsurance claimant.”