New York Vehicle with $25K/$50K Limits Deemed Uninsured in Comparison to North Carolina Mandatory Minimum Limits of $30K/$60K

UM/SUM – AUTO – NORTH CAROLINA POLICY
Matter of State Farm Mut. Auto. Ins. Co. v. Gray
(2nd Dept., decided 12/15/2009)

State Farm insured the respondent's vehicle under a North Carolina personal auto policy with $100,000 per person/$300,000 per accident bodily injury liability limits.  The respondent was injured in an auto accident that occurred in New York; AIG National Insurance Company insured the tortfeasor's vehicle under a New York personal auto policy with $25,000/$50,000 BI liability coverage limits.

With State Farm's consent, the respondent settled her personal injury claim against the tortfeasor for the per person BI coverage limit of $25,000.  State Farm subsequently advised its insured that since her policy contained only uninsured but not underinsured motorist coverage, it was closing its file because there was no further claim to adjust. Thereafter, Gray made a demand to arbitrate her claim for uninsured/underinsured motorist benefits under her North Carolina policy, and State Farm commenced this special proceeding to permanently stay the arbitration. Supreme Nassau granted the petition and permanently stayed the arbitration.

In REVERSING the order, denying State Farm's petition and dismissing the proceeding, the Appellate Division, Second Department, held:

• the uninsured motorist provision of State Farm's policy defined an uninsured motor vehicle as one to which a "policy applies at the time of the accident; provided its limit for liability is less than the minimum limit specified by the financial responsibility law of North Carolina"; the minimum limits in North Carolina are $30,000 per person/$60,000 per occurrence;  in this case, since the tortfeasor's policy limit of $25,000 per person/$50,000 per accident "is less than the minimum limit specified by the financial responsibility law of North Carolina [emphasis added]," the tortfeasor's vehicle was deemed to be uninsured under the language of the uninsured motorist provision of State Farm's policy issued to the respondent's husband;  and

• because State Farm's documents submitted in support of its petition failed to failed to demonstrate that the named insured had been offered but rejected underinsured motorists coverage in writing on a prescribed form as required by North Carolina law, the Grays' policy was deemed to include underinsured motorist coverage.