Raffellini v. State Farm Mut. Auto. Ins. Co., 9 N.Y.3d 196 (2007)
A “serious injury” exclusion in a supplementary uninsured/underinsured motorist (SUM) endorsement to an automobile liability policy is enforceable, aligning with the intent of SUM coverage to provide the same protection the insured would provide others.
Summary
Raffellini was injured in a car accident and received the policy limit from the other driver’s insurance. He then sought additional damages under his SUM endorsement with State Farm. State Farm denied the claim, asserting Raffellini did not sustain a “serious injury” as defined by New York Insurance Law. The New York Court of Appeals held that the serious injury exclusion in the SUM endorsement is enforceable. This decision aligns with the regulatory framework and the underlying purpose of SUM coverage, ensuring insureds receive the same level of protection they would provide to others under their policy.
Facts
Nicholas Raffellini sustained back injuries in a car accident caused by another driver who ran a red light. Raffellini’s medical expenses were covered by no-fault insurance. He settled with the other driver’s insurance company for the policy limit of $25,000. Raffellini then sought $75,000 in additional damages from his own insurer, State Farm, under a SUM endorsement providing up to $100,000 coverage. State Farm denied the claim, arguing that Raffellini had not sustained a “serious injury.”
Procedural History
Raffellini sued State Farm for breach of contract. The Supreme Court granted Raffellini’s motion to strike State Farm’s “serious injury” defense. The Appellate Division affirmed. State Farm appealed to the New York Court of Appeals, which reversed the Appellate Division’s order, reinstating State Farm’s “serious injury” defense.
Issue(s)
Whether a “serious injury” exclusion in a supplementary uninsured/underinsured motorist endorsement to an automobile liability policy is enforceable.
Holding
Yes, because the regulation requiring the exclusion is consistent with the purpose of SUM coverage, which is to provide insureds with the same level of protection they would provide to others were they the tortfeasors.
Court’s Reasoning
The court reasoned that Insurance Law § 3420(f)(2), which addresses SUM benefits, is silent on whether a “serious injury” is required for recovery. However, Regulation 35-D (11 NYCRR 60-2.3[f][EXCLUSIONS][3]) mandates that SUM endorsements exclude coverage for non-economic loss unless the insured sustained a “serious injury.” The court emphasized that the Superintendent of Insurance has broad authority to interpret and implement legislative policy through regulations, provided they are consistent with the statute. The court reasoned that the legislative history indicates that SUM coverage was intended as an extension of mandatory uninsured motorist coverage. The court noted, “The purpose of supplementary benefits was ‘to provide the insured with the same level of protection he or she would provide to others were the insured a tortfeasor in a bodily injury accident’ (Matter of Prudential Prop. & Cas. Co. v Szeli, 83 NY2d 681, 687 [1994]).” Since a third party injured by the insured would have to demonstrate serious injury to recover non-economic loss under the insured’s policy, the insured must also meet the serious injury requirement to recover under the SUM endorsement. The Court stated, “Since the purpose of supplementary coverage is to extend to the insured the same level of coverage provided to an injured third party under the policy, the insured must also meet the serious injury requirement before entitlement to supplementary benefits.”