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American Family Insurance Co. v. Barnett5/23/1991
The majority opinion strongly suggests that the amount deducted from the insured's policy for Social Security payments operates solely to prevent a double recovery by the injured parties. This clause, however, does not only prevent a double recovery. Rather, it permits a deduction by the insurer from the total UM/UIM coverage for each dollar received from disability payments. Since the payments of Social Security benefits provides less than full compensation to an injured party, the reduction from the total UIM coverage for each dollar paid in disability restricts or prohibits an injured party from receiving the entire range of compensation that is supposed to be available to him under his UM/UIM coverage. See Newton v. Mutual Insurance, supra.
There is a substantial difference between an insurance policy which prohibits double recovery for benefits received but does not reduce the total coverage available versus the policy here which does reduce the total coverage available. See Booth v. Seaboard Fire & Marine Insurance Co., supra.
In my view, the method of deducting from the total UIM insurance available the Social Security disability payments prohibits injured parties from receiving full benefits under these policies. Therefore, it undermines the legislatively stated purposes of providing full coverage to persons injured by the negligent conduct of others. Hence, I would hold this policy provision to be contrary to public policy because it permits diminution of the statutorily directed $100,000/$300,000 coverage.
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