Wade Clark Mulcahy LLP

In Motil v. Wausau Underwriters Insurance Company, the Appellate Division recently shed some light on the novel issue of whether an individual is entitled to UIM coverage as a “covered driver” injured in a car accident while driving a “covered vehicle” with an identified alternate garaging address under the parents’ auto policy.

The parties then cross-moved for summary judgment, and the judge subsequently granted the Plaintiff’s motion, ordering the defendant to provide $100,000.00 in UIM coverage and denied the defendant’s motion. The defendant appealed and the Appellate Court affirmed the trial court’s decision on April 5, 2024.

The plaintiff sustained serious bodily injuries in an automobile accident while driving a 2014 Jeep Cherokee owned by her father, Charles Motil. Plaintiff settled with the tortfeasor for the policy limit of $15,000.00. The plaintiff requested UIM coverage from the defendant, but coverage was denied on the grounds that plaintiff was a non-resident family member, and therefore was subject to the limit of liability step-down provision in the UM coverage endorsement of her parent’s policy, which was $15/$30k, making the limits equal to the tortfeasor limits. Wausau further claimed that plaintiff was neither a named insured nor a family member within the meaning of her parent’s policy and therefore not entitled to UIM benefits. The parent’s mailing address was in Bridgeton, and the plaintiff was named in the declaration as a covered driver under “driver information” and memorialized that the Jeep had an alternate garaging address in Blackwood.

Plaintiff then filed a declaratory judgment action seeking $100,000.00 in UIM coverage from the defendant, Wausau Underwriters Insurance Company. The parties ultimately cross-moved for summary judgment, and the judge subsequently granted the Plaintiff’s motion, ordering the defendant to provide $100,000.00 in UIM coverage and denied the defendant’s motion. The defendant appealed and the Appellate Court affirmed the trial court’s decision on April 5, 2024.

The Appellate Court affirmed and stated that neither the declaration nor the policy provided a distinction of UIM coverage for a “covered auto” with an identified alternate garaging address. Additionally, the declaration did not alert the plaintiff that as a covered driver operating a vehicle garaged at a separately identified alternate address, she did not qualify as a “family member” who was a “resident” of her parent’s household. The court reasoned that the drafters could have unambiguously included the language in either the declaration or the policy alerting that a covered driver with an identified garaging address was subject to the step-down in coverage. The Court stated that the lack of clarity and distinction in the declaration and policy created ambiguity and fairly leads to the presumption that a covered driver is entitled to UIM coverage, regardless of the UIM step-down provision.

Therefore, pursuant to the language of the declaration, the policyholder has a reasonable expectation that the plaintiff, as a covered driver, was entitled to the same UIM policy coverage. The Court ruled that due to the ambiguity and contradiction between the declaration and the policy obfuscates the application of the step-down, the “reasonable expectations doctrine” controls in this case. Under this doctrine, the interpretation of insurance contracts must accord with the reasonable expectations of the insured.