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Landi v. Gray11/28/1988
[228 NJSuper Page 620] Plaintiff was a passenger in an automobile when a friend accidentally drove it off the road into a tree, causing her serious injuries. Plaintiff had borrowed the automobile from her brother Donald, its owner, and then permitted her friend to drive it. The friend did not own an automobile and was not covered for automobile liability except for the $15,000/$30,000
coverage afforded under Donald's policy, which his carrier paid plaintiff.
Plaintiff, Donald and their parents were members of the same household. Defendant had issued a $100,000/$300,000 automobile liability insurance policy to plaintiff's mother insuring an automobile that she owned. The policy required defendant to pay plaintiff up to $100,000 under its omnibus clause for unrecovered damages she would be entitled to recover from the operator of an underinsured motor vehicle. Plaintiff brought this action for a judgment compelling defendant to honor this underinsured motorist coverage.
Defendant answered that an exclusion in its policy removed the coverage in this case. The exclusion reads in pertinent part:
Neither "uninsured motor vehicle" nor "underinsured motor vehicle" includes any vehicle . . . wned by or furnished or available for the regular use of you or any family member.
Defendant argued that the exclusion removes coverage here because the underinsured motor vehicle was owned by Donald, a family member. Judge Turnbach ruled, on cross-motions for summary judgment, that the exclusion was repugnant to N.J.S.A. 17:28-1.1 (the statute) and therefore of no effect. He declared that defendant must pay plaintiff up to $85,000, its $100,000 underinsured motorist coverage less $15,000 that plaintiff recovered in settlement from Donald's liability carrier.
The statute deals differently with uninsured and underinsured motorist coverage. With respect to underinsured motorist coverage, N.J.S.A. 17:28-1.1b provides in part that
underinsured motorist coverage shall be provided as an option by an insurer to the named insured up to at least the following limits: $250,000.00 each person and $500,000.00 each accident for bodily injury; $100,000.00 each accident for property damage or $500,000.00 single limit, subject to an exclusion of the first $250.00, of such damage to property for each accident, except that the limits for . . . underinsured motorist coverage shall not exceed the insured's motor vehicle liability policy limits for bodily injury and property damage, respectively.
N.J.S.A. 17:28-1.1e provides in part that
"underinsured motorist coverage" means insurance for damages because of bodily injury and property damage resulting from an accident arising out of the
ownership, maintenance or use of an underinsured motor vehicle. Underinsured motorist coverage shall not apply to an uninsured motor vehicle. A motor vehicle is underinsured when the sum of the limits of liability under all bodily injury and property damage liability bonds and insurance policies available to a person against whom recovery is sought for bodily injury or property damage is, at the time of the accident, less than the applicable limits for underinsured motorist coverage afforded under the motor vehicle insurance policy held by the person seeking that recovery. A motor vehicle shall not be considered an underinsured motor vehicle under this section unless the limits of all bodily injury liability insurance or bonds applicable at the time of the accident have been exhausted by payment of settlements or judg
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