The Changing Landscape of Uninsured/underinsured Mortorist Insurance Law in Connecticut
| Publication year | 2021 |
| Pages | 129 |
68 CBJ 129. The Changing Landscape of Uninsured/Underinsured Mortorist Insurance Law in Connecticut
Nearly a decade ago, this journal published an exposition of uninsured ("UM") and underinsured ("UIM") motorist law in Connecticut. (fn1) While in the ensuing years there have been many changes in this area of the law by virtue of 1) the development of case law which has been ad hoc at best, and 2) the recent enactment of major legislation known as the Automobile Insurance Reform Act of 1993 ("AIRACT"), (fn2) there remains one constant and that is the widespread exposure of Connecticut's citizenry to uninsured and underinsured motorists. This danger has largely been fomented by an historical neglect of enforcement of the state's compulsory automobile insurance laws and the inadequacy, by today's standards, of the minimum mandated bodily injury coverage of $20,000 per person/$40,000 per accident. (fn3) People are placed at tremendous risk of sustaining bodily injury from the conduct of others and UM coverage is perhaps the most important form of protection which can be obtained as part of the automobile insurance package. Uninsured motorist coverage is first-party insurance protecting the unwitting consumer from the risks of the unknown. The purpose of this article is to highlight some of the major principles which have evolved over the last ten years which will survive in the AIRACT era; to outline the new legislation and its mechanics; and to discuss viable options for advancing consumer remedies for victims who are inadequately protected with uninsured/ underinsured motorist insurance.
Uninsured motorist insurance became compulsory in Connecticut in 1967. (fn4) For nearly twenty years dispute resolution for UM and UIM claims was achieved primarily through arbitration. In the late 1980s, this began to change as many
insurers deleted the arbitration clause from their polices. Most matters submitted to arbitration were resolved on the basis of an unrestricted submission of all issues including coverage and damages. Accordingly there was essentially no judicial review, (fn5) and the case law in this area was correspondingly scant. This however began to change in the wake of Oliva v. Aetna Casualty & Surety Co., (fn6) where the Supreme Court addressed the statutory mandate for arbitration, concluding that all coverage issues must first be, determined by arbitration if the insurance policy contained a provision requiring arbitration. Thereafter, in Wilson v. Security Insurance Group, (fn7) the Supreme Court distinguished between voluntary arbitration and compulsory arbitration and in dicta suggested that where there is compulsory arbitration of issues such as coverage, judicial review of such issues was warranted. Finally, in American Universal Insurance Co. v. DelGreco (fn8) the Supreme Court resolved the issue and held that any party to an arbitration proceeding which includes compulsory arbitration of coverage pursuant to C.G.S. § 38a336(c) is entitled to "de novo review of the interpretation and application of the law by the arbitrators. (fn9)
The scope of judicial review required on an issue subject to compulsory arbitration was delineated in Chmielewski v. Aetna Casualty & Surety Co., (fn10) where the Court was forced to review "factual findings of arbitrators" which related to the determination of coverage. The Court held that a party is not constitutionally entitled to introduce evidence upon review except in special circumstances" but rather that the reviewing Court should apply "the 'substantial evidence' test that prevails in review of factual determinations by administrative agencies." (fn11) Finally, to preserve entitlement to judicial review under this standard, the Court held that it was necessary that a record of the proceeding be made and preserved. (fn12)
No issue in the area of uninsured motorist insurance has engendered more controversy than stacking.
Stacking refers to the ability of the uninsured, when covered by more than one insurance policy, to obtain benefits from a secured policy on the same claim when recovery from the first policy above would be inadequate. (fn13)
Fundamentally, stacking was never anything more than a means to provide victims with adequate compensation for their injuries.
Stacking on an inter-policy basis (i.e., separate insurance policies) was really first addressed by the Supreme Court in Pecker v. Aetna Casualty & Surety Co. (fn14) In Pecker, the Supreme Court was called upon to consider the validity of an "other insurance clause" in connection with the claims of an injured victim who sought to recover UM benefits from a second insurer after having already settled with the primary UM insurer for $18,000.00 out of $20,000.00 in available coverage. (fn15) In concluding that "other insurance" clauses which purport to limit UM coverage are invalid, the Court recognized that the victim could aggregate the UM coverage in the two policies, crediting the secondary insurer with the full amount of coverage afforded by the primary insurer.
The Court in Pecker analyzed the Connecticut statute and the regulations adopted by the Insurance Commissioner to implement the stacking provisions and concluded there was nothing in the regulatory scheme which authorized reducing total coverage by way of an "other insurance" clause and that there was no maximum limitation on the amount to UM coverage that could be obtained. (fn16)
Intra-policy stacking involves the aggregation of UM coverage afforded on more than one vehicle insured under the same policy. This principle was first endorsed by the Connecticut Supreme Court in Safeco Ins. Co. v. Vetre. (fn17) In Vetre, the Court adopted the reasoning that it would be
inequitable to permit inter-policy stacking but deny intra-policy stacking as obviously the multiple vehicles insured under one policy could have just as easily been insured under multiple policies. "This [contention] is particularly true where each of the insured vehicles is separately described, the coverage granted under the policy is separately listed for each vehicle, and a separate premium is charged for the coverage afforded to each of the described vehicles." (fn18) The endorsement of intra-policy stacking was reinforced by the Supreme Court in Nationwide Insurance Co. v. Gode, (fn19) where the Court held that for purposes of determining whether or not a victim could pursue an underinsured motorist claim, it was appropriate to stack the UM coverage on more than one vehicle insured under the same policy to determine if the aggregate amount exceeded "the sum of the limits of liability under all bodily injury liability bonds and insurance polices applicable at the time of the accident . . . ." "Where two premiums are paid for two vehicles, whether in one policy or two, total coverage for the named insured is doubled since a person can reasonably expect double coverage when he pays double premiums." (fn20)
Stacking achieved its high watermark in Allstate Insurance Co. v. Ferrante, (fn21) where the Court sanctioned intra-policy stacking by a passenger under the terms of the policy insuring the occupied vehicle. In Ferrante, the Court noted that the policy made no attempt to differentiate between classes of insureds and therefore the permissive occupant was treated as though she were a named insured.
Retrenchment from the expansive view of stacking really began when it was invalidated for fleet coverage, (fn22) commercial coverage, (fn23) and excess or umbrella coverage. (fn24)
Additional limitations were placed on underinsured motorist claims when the Supreme Court held that in a multiple-victim accident, an insured must compare the aggregate applicable liability coverage (not the amount of money actually received in settlement) to the available UM/UIM coverage against which the claim is to be made and if the former is greater than the latter, there cannot be an underinsured motorist claim. (fn25) Additionally, to pursue an underinsured motorist claim the amount of UIM coverage under each policy against which the claim is to be made, must exceed the tortfeasor's liability coverage. (fn26)
In 1993, the Supreme Court did its best to put an end to stacking. First, in Middlesex Insurance Co. v. Quinn, (fn27) the Court sanctioned the use of the definition of an "insured" to exclude from coverage the son of the named insured who coincidentally owned his own automobile at the time of the subject accident. As a consequence, the son was denied the ability to stack coverage under the family coverage provision of his father's policy.
Finally in Kent v. Middlesex Mutual Assurance Co. (fn28) the Supreme Court put its imprimatur on the abolition of intra-policy stacking by holding that by charging a single premium for UM/ UIM coverage regardless of the number of vehicles insured under a policy, an insurer could avoid the aggregation of UM/ UIM coverage on the multiple vehicles insured and separately described in the policy.
As will be described below, stacking has been abolished under AIRACT and replaced in part with optional enhanced coverage which can be elected by a consumer.
In the context of an underinsured motorist claim, the obligation for an insurance company to make payment is triggered only after the exhaustion of "the limits of liability under all bodily injury liability bonds or insurance policies applicable at the time of the accident..." (fn29) if there are multiple tortfeasors involved in an accident, the obligation to exhaust the underlying bodily injury coverage...
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