Sentry Insurance Company v. Amsel, 36 N.Y.2d 291 (1975)
New York Insurance Law § 167(2-a) only mandates uninsured motorist coverage for accidents occurring within New York State; insurers are not required to provide such coverage for accidents occurring outside the state.
Summary
Sentry Insurance sought to stay arbitration demanded by its insureds, the Amsels, who were injured in New Jersey by an uninsured driver. The Amsels’ policy contained a New York Automobile Accident Indemnification Endorsement that applied only to accidents in New York. The Amsels argued that this limitation conflicted with New York Insurance Law § 167(2-a), which they claimed required uninsured motorist protection for accidents anywhere. The lower courts, relying on a prior case, denied Sentry’s motion. The New York Court of Appeals reversed, holding that the statute only mandates coverage for accidents within New York, and the policy’s limitation was therefore valid. The court clarified that prior case law was misinterpreted and that the legislative intent of § 167(2-a) was to provide coverage only for in-state accidents.
Facts
The respondents, the Amsels, were insured by an automobile policy issued by Sentry Insurance Company in New York.
In June 1972, the Amsels were injured in an automobile accident in Rahway, New Jersey.
The driver of the other vehicle was allegedly uninsured.
The Sentry insurance policy contained a “New York Automobile Accident Indemnification Endorsement” (uninsured motorist clause) that applied only to accidents within New York State.
In January 1973, the Amsels demanded arbitration with Sentry under the uninsured motorist endorsement.
Procedural History
Sentry moved to stay arbitration, arguing that the policy did not cover accidents occurring outside New York.
Special Term denied Sentry’s motion to stay arbitration.
The Appellate Division affirmed the Special Term’s decision, relying on Matter of Askey [General Acc. Fire & Life Assur. Corp.], 30 AD2d 632, affd 24 NY2d 937.
The New York Court of Appeals granted leave to appeal.
Issue(s)
Whether New York Insurance Law § 167(2-a) obligates an insurer to provide uninsured motorist coverage for accidents occurring outside of New York State, when the insurance policy explicitly limits such coverage to accidents within the state.
Holding
No, because New York Insurance Law § 167(2-a) only mandates uninsured motorist coverage for accidents occurring within New York State. The statute’s language and legislative history do not suggest an intent to extend coverage extraterritorially.
Court’s Reasoning
The court emphasized the explicit language of Insurance Law § 167(2-a), which states that it applies to injuries “caused by accident occurring in this state.”
The court distinguished its prior decision in Farber v. Smolack, 20 N.Y.2d 198, which interpreted a different statute (Vehicle and Traffic Law § 388) and found a legislative intent to enlarge liability beyond the statute’s literal wording. The court explained, “As the quotation from the Farber case reveals, we were there concerned with interpreting section 388 of the Vehicle and Traffic Law, not subdivision 2-a of section 167, or any other portion, of the Insurance Law.”
The court found no similar indication of legislative intent to extend the reach of Insurance Law § 167(2-a) beyond New York’s borders. The court observed that, “But we have never detected anything in the history of subdivision 2-a of section 167 of the Insurance Law suggesting that here the Legislature intended the words ‘in this state’ to mean more than they obviously imply.”
The court addressed the lower courts’ reliance on Matter of Askey [General Acc. Fire & Life Assur. Corp.], 30 AD2d 632, affd 24 NY2d 937, clarifying that the Appellate Division’s statement in Askey that extraterritorial coverage was mandated by statute was not necessary to the holding in that case and should not be considered binding precedent. The court stated, “The dictum of the Appellate Division in the Askey case was not necessary to sustain the holding and our affirmance without opinion should not be considered an implied approval of that view.”
The court reaffirmed its earlier holding in Matter of Vanguard Ins. Co., 18 NY2d 376, where it had observed that Insurance Law § 167(2-a) provides “liability for injuries inflicted by an uninsured automobile in accidents occurring within the State.”
Because the Sentry insurance policy expressly limited uninsured motorist coverage to accidents within New York State, and because the statute required no more, the court held that Sentry was entitled to a stay of arbitration.