An interesting New York court decision came down the other day on Supplementary Uninsured/Underinsured Motorists Coverage. A drunk driver killed a married couple (and himself) in an auto accident. His auto liability policy carried bodily injury limits of $50,000 per person, $100,000 per accident. The couple had an auto policy with SUM limits of $250,000 per person, $500,000 per accident. The couple's estate collected the $100,000 from the drunk driver's insurance and another $255,000 from the insurance covering a bar and a diner that served drinks to the driver.
The trouble started when the estate made a SUM claim. The insurance carrier subtracted the $355,000 that the estate had recovered from all sources from the $500,000 SUM coverage available and offered the estate $145,000. The estate sought $400,000, in the belief that the only amount that the carrier should have subtracted from the SUM limits was the $100,000 from the driver's auto policy. The carrier refused, the estate sued, and a trial court sided with the estate.
However, the appellate court ruled on Wednesday in favor of the insurance carrier. The court relied on a condition in the SUM endorsement that states, "This SUM coverage shall not duplicate any of the following: ... Any amounts recovered as bodily injury damages from sources other than motor vehicle bodily injury liability insurance policies or bonds."
This appears to be an entirely correct decision to me, and it's heartening to see the appellate court uphold the clear provisions of the auto insurance policy. Anyone have a different view?