Nationwide Mutual Insurance v. Stokes
Court: Appellate Division of the Supreme Court of the State of New York; May 1, 1995; New York; State Appellate Court
Mary Stokes appeals a Supreme Court order that limited her recovery for underinsured motorist benefits to $37,900 in an arbitration stay proceeding. The court modified the order by removing the $10,000 offset from a settlement with the tortfeasor’s insurer, Aetna, affirming the remaining aspects of the decision with costs awarded to Stokes. Stokes was injured in a February 14, 1992, automobile accident involving a vehicle owned by Russell Caldwell and operated by Steven Schwartz. She settled her claim against Caldwell for the full $10,000 policy limit. Stokes then sought arbitration for underinsured motorist benefits from her insurer, Nationwide Mutual Insurance Company, which provided coverage of $50,000 per person and $100,000 per accident. Nationwide sought to stay arbitration, claiming it could offset the $10,000 from Aetna and $2,100 from Workers’ Compensation benefits against her underinsurance coverage. The Supreme Court denied Nationwide’s request to stay arbitration but upheld the validity of the offset, reducing Stokes’ coverage to $37,900. However, case law indicates that insurers cannot offset third-party recoveries against the full underinsurance limits. Consequently, the court erred in reducing her coverage based on the Aetna settlement but correctly allowed an offset for Workers’ Compensation benefits, as there is no statutory prohibition against such offsets in underinsured motorist coverage agreements. The ruling was modified accordingly, with the majority concurring.