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Gonzales v. Dai-Tokyo Royal State Insurance Co.3/7/2005
FOR PUBLICATION
Plaintiff-appellant Bernardo Gonzales appeals from the February 14, 2003 judgment of the first circuit court, the Honorable Richard Pollack presiding, in favor of defendant-appellee Dai-Tokyo Royal State Insurance Company (DTRIC). Gonzales presents two principal arguments: first, he argues that the "covered loss deductible" (CLD) provision of Hawaii Revised Statutes (HRS) § 431:10C-301.5 (Supp. 2000) does not apply to the recovery of damages for bodily injury under the Underinsured Motorist (UIM) coverage provision of Gonzales's motor vehicle insurance policy contract with DTRIC; second, he argues that HRS § 431:10C-301.5 is unconstitutional. We disagree with Gonzales and hold that HRS § 431:10C-301.5 is constitutional and applies to UIM coverage.
I. The CLD Applies To UIM Coverage
In State Farm Mut. Auto. Ins. Co. v. Gepaya, 103 Hawaii 142, 80 P.3d 321 (2003), this court held that the CLD applies to the recovery of Uninsured Motorist (UM) benefits:
Based upon the nature and purpose of UM coverage, as well as the language and legislative history of HRS § 431:10C-301.5 and its 1998 amendment, we hold that HRS § 431:10C-301.5, both as originally enacted and as amended in 1998, is applicable to the recovery of damages for bodily injury under UM coverage.
Id. at 151, 80 P.3d at 330. For purposes of the applicability of the CLD statute, there is no distinction between UM benefits and UIM benefits; on the contrary, there are three reasons justifying the extension of Gepaya to UIM cases. First, HRS § 431:10C-301 (1993 & Supp. 2000), entitled "Required motor vehicle policy coverage," requires an insurer to offer both UM and UIM coverage under virtually identical terms:
(b) A motor vehicle insurance policy shall include:
(3) With respect to any motor vehicle registered or principally garaged in this State, liability coverage provided therein or supplemental thereto, in limits for bodily injury or death set forth in paragraph (1), under provisions filed with and approved by the commissioner, for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness, or disease, including death, resulting therefrom; provided that the coverage required under this paragraph shall not be applicable where any named insured in the policy shall reject the coverage in writing; and
(4) Coverage for loss resulting from bodily injury or death suffered by any person legally entitled to recover damages from owners or operators of underinsured motor vehicles. An insurer may offer the underinsured motorist coverage required by this paragraph in the same manner as uninsured motorist coverage; provided that the offer of both shall [be conspicuously displayed, identify the premiums, and provide for written rejection of the coverage].
(Emphases added.) This statute demonstrates that the legislature thought of UM and UIM coverages as counterparts, having similar purposes and deserving similar treatment.
Second, our statutory analysis in Gepaya applies equally to UM coverage and UIM coverage. HRS § 431:10C-301.5 provides that " he covered loss deductible shall not include benefits paid or incurred under any optional additional coverage." In Gepaya, we held that "optional additional coverage" did not refer to UM benefits; we based this holding on the fact that HRS § 431:10C-302 (1993 & Supp. 2000) (entitled "Required optional additional insurance"), the statutory section immediately following HRS § 431:10C-301.5, did not mention UM coverage in setting forth the various types of "opti
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