Court: Supreme Court of Connecticut; March 30, 1999; Connecticut; State Supreme Court
The key issue in this appeal is whether the insurance contracts exempt the defendant, Hanover Insurance Company, from providing underinsured motorist benefits to the plaintiff, Ethel Orkney. The court concluded that the contracts did relieve the insurer of this obligation, affirming the trial court's judgment.
The facts reveal that on August 19, 1994, Orkney was injured as a passenger in a vehicle owned by Norman Nicholson, which was involved in an accident with a rental car driven by Sachito Sekiguchi. Orkney alleged negligence on Sekiguchi's part, leading to her injuries. The rental agreement between Alamo Rent-A-Car, which owned the vehicle operated by Sekiguchi, stated that if the renter lacked sufficient insurance, Alamo would provide minimum liability coverage, which was $20,000 per person under Connecticut law. Sekiguchi had no other insurance.
Alamo had obtained self-insurer status from the Connecticut Department of Insurance prior to the accident, which meant it was responsible for liability coverage up to the state-required minimum. Orkney settled her claims against Sekiguchi and Alamo for the maximum amount of $20,000.
Orkney then pursued underinsured motorist benefits from Hanover Insurance, claiming coverage under both Nicholson's and her own policies. Hanover moved for summary judgment, arguing that the plaintiff had not exhausted Alamo's liability coverage and that its policies excluded vehicles owned by self-insurers. Consequently, the court upheld Hanover's motion, confirming that the self-insured status of Alamo barred the underinsured motorist claims against Hanover.
The trial court granted the defendant's motion for summary judgment, determining that the plaintiff had not exhausted Alamo’s liability coverage. The plaintiff appealed, and the defendant filed a preliminary statement of issues to affirm the trial court's judgment on alternative grounds. The appeal was transferred to a higher court. The defendant argues that the plaintiff is not entitled to underinsured motorist benefits because the Hanover policies exclude vehicles owned by self-insurers, which Alamo was under Connecticut law. The plaintiff conceded this exclusion but contended that state regulations do not permit excluding self-insured vehicles from underinsured motorist coverage and, if they do, such regulations are invalid. The court found the plaintiff's arguments unconvincing. It reiterated that summary judgment is appropriate when there are no genuine issues of material fact and that insurers must provide uninsured and underinsured motorist coverage according to statutory requirements. The enforceability of the exclusion in the Hanover policies hinges on proper authorization by state regulations.
Section 38a-334-6 (c) states that an insurer's obligation to pay may not apply if the uninsured vehicle is owned by either the named insured or a self-insurer. The plaintiff argues that the absence of a reference to underinsured motor vehicles in this regulation implies it does not apply to them. However, established case law indicates that statutes and regulations for uninsured motorist coverage also extend to underinsured motorist coverage. Consequently, the exclusion in 38a-334-6 (c)(2)(A) for vehicles owned by named insureds applies to underinsured motorist coverage as well. It follows that 38a-334-6 (c)(2)(B) permits the exclusion of vehicles owned by self-insurers from underinsured motorist coverage. The plaintiff contends that this exclusion undermines the purpose of the underinsured motorist statute, but the burden lies with the plaintiff to prove that the regulation exceeds the insurance commissioner’s authority. The commissioner is empowered to create regulations regarding exclusions in uninsured motorist coverage, and such regulations are presumed valid and carry statutory weight. The claimant challenging a regulation must demonstrate it conflicts with legislative intent. The insurance commissioner has a broad regulatory authority in this area, and their regulations receive substantial deference.
The commissioner is mandated to establish regulations concerning the minimum provisions required in insurance policies under General Statutes 38a-334, reflecting legislative intent. Case law supports the presumption that these regulations accurately represent legislative goals. If a regulation has been in effect for a long time without legislative override, it serves as persuasive evidence of its validity; for example, regulation 38a-334-6 (c)(2)(B) has been in place since January 1, 1968. Since the mandate for underinsured motorist coverage in 1979, the legislature has amended 38a-336 nine times but has not prohibited insurers from excluding self-insured vehicles from this coverage, reinforcing the regulation’s validity. Although the underinsured motorist statute aims to ensure that insured individuals can recover damages they would have obtained had the other driver maintained adequate insurance, it does not guarantee underinsured motorist coverage if other protections are available, nor does it establish the coverage as a separate recovery source or prevent limit reductions under certain conditions. The statute requires a minimum level of protection, while the commissioner determines the specific terms and conditions necessary to fulfill this requirement.
The statutory framework for self-insurance mandates that the commissioner of insurance assess whether applicants have sufficient resources to forgo minimum insurance coverage. According to General Statutes 14-129, individuals with more than twenty-five registered motor vehicles can qualify as self-insurers by obtaining a certificate from the commissioner, who must be convinced of the applicant's ongoing ability to satisfy potential judgments. Additionally, General Statutes 38a-371 requires owners of private passenger vehicles to maintain continuous security throughout the registration period, which can be fulfilled either via an insurance policy or through self-insurance, contingent on the submission of specific documentation to the commissioner. This documentation must include a commitment to meet obligations, evidence of efficient claims administration, and proof of reliable financial arrangements for obligation payment. Individuals who fulfill these criteria are classified as self-insurers.
The court found no conflict between the public policy supporting underinsured motorist coverage and regulations allowing exclusions based on the ability to pay judgments. A person injured by a self-insured rental vehicle can seek compensation from the vehicle's owner. The plaintiff's decision to settle claims against the driver and the self-insured owner for less than the claimed damages does not establish grounds for claiming underinsured motorist benefits from the defendant. The judgment was upheld, with the concurrence of other justices. Relevant statutes and regulations regarding uninsured and underinsured motorist coverage were also referenced.
Alamo's automobile liability insurance coverage includes multiple policies from various insurers: Continental Insurance Company provides $4 million in coverage excess of $1 million, Royal Indemnity Company offers $5 million excess of primary, Reliance Insurance Company provides $5 million excess of $10 million, Transamerica Insurance Company covers $25 million excess of $15 million, and Aetna Casualty and Surety Company offers $10 million excess of $40 million. Under General Statutes 14-154a, a rental vehicle owner is liable for damages caused by the vehicle to the same extent as the operator. The plaintiff did not pursue a separate claim against Alamo as the vehicle owner and released Alamo from future claims in the settlement agreement. According to General Statutes 38a-336(d), when a person is insured for uninsured and underinsured motorist coverage, the coverage of a non-owned vehicle is primary, while the individual’s own insurance is secondary. Thus, Nicholson's liability coverage was primary, with the plaintiff's insurance as secondary. The appeal focuses on the claim that Hanover policies exclude vehicles owned by self-insurers from the definition of underinsured vehicles, which is decisive to the case. Relevant regulations state that insurers must cover damages from uninsured motor vehicles but can exclude claims settled without their consent or those involving vehicles owned by self-insurers or certain government entities. The conclusion that self-insured vehicles may be excluded from both uninsured and underinsured coverage is central to the appeal. Additionally, General Statutes 38a-334 mandates that the Insurance Commissioner adopt regulations regarding minimum provisions in automobile liability policies, including exclusions related to bodily injury liability and uninsured motorist coverage.
