Present: All the Justices
SUPERIOR INSURANCE COMPANY
OPINION BY
v. Record No. 982671 JUSTICE LAWRENCE L. KOONTZ, JR.
September 17, 1999
PERCELL HUNTER AND LEKEDRA HUNTER
FROM THE CIRCUIT COURT OF THE CITY OF HAMPTON
Wilford Taylor, Jr., Judge
In this appeal, we consider whether the underinsured
motorist provision of a tortfeasor’s automobile liability
insurance policy is available to satisfy claims of passengers in
the tortfeasor’s vehicle who are insured under the same policy
and whose claims for damages exceed the limits of the policy’s
liability coverage.
The pertinent facts were stipulated. On January 10, 1997,
appellees Percell Hunter and his daughter Lekedra D. Hunter,
plaintiff’s below, were passengers in a vehicle owned by Percell
Hunter and driven by his wife, Eva L. Hunter. The vehicle
collided with a vehicle driven by Ikesha M. Dye. The accident
caused injuries to Dye and a passenger in her vehicle, as well
as to plaintiffs.
At the time of the accident, Percell Hunter was the named
insured under an automobile insurance policy issued by
appellant, Superior Insurance Company (Superior). Eva Hunter
and Lekedra Hunter were also named insureds under the terms of
the policy as persons who were residents of Percell Hunter’s
household. The policy provided liability coverage of $25,000
for each person injured, limited to $50,000 per accident. The
policy also provided uninsured/underinsured motorist coverage
with the same limits.
Dye and her passenger filed claims for their damages with
Superior alleging negligence on the part of Eva Hunter.
Superior paid these claims, which totaled $38,500.
Plaintiffs subsequently filed claims with Superior for
damages resulting from their personal injuries and filed suit
against Eva Hunter, alleging that her negligence caused their
injuries. 1 At that time, because of the prior payments to Dye
and her passenger, only $11,500 of the $50,000 in total
liability coverage for the accident remained available to
satisfy plaintiffs’ claims. Since their claims exceeded this
amount, plaintiffs, in separate actions argued together at
trial, sought declaratory judgments that they were entitled to
access the policy’s underinsured motorist coverage to satisfy
their claims.
At trial, plaintiffs argued that Percell Hunter’s vehicle
was underinsured because, under Code § 38.2-2206(B), “the total
amount of bodily injury and property damage coverage applicable
1
For purposes of this appeal, Eva Hunter is considered
solely responsible for plaintiffs’ injuries. Accordingly,
Superior’s policy is the sole applicable insurance policy for
plaintiffs’ claims.
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to the operation or use of the motor vehicle and available for
payment for such bodily injury or property damage . . . is less
than the total amount of uninsured motorist coverage afforded
[them].” They further maintained that Code § 38.2-2206(A)
obligates an insurance provider “to make payment for bodily
injury or property damage caused by the operation or use of an
underinsured motor vehicle to the extent the vehicle is
underinsured.” Thus, plaintiffs asserted that, because only
$11,500 in liability coverage was “available for payment” at the
time they made their claims, they should each be allowed to have
access to the underinsured motorist coverage provided by
Superior’s policy.
In a letter opinion, the trial court agreed with
plaintiffs’ assertions and found that Percell Hunter’s vehicle
was underinsured to the extent that the $11,500 remaining of the
liability coverage was less than $25,000, the total amount of
uninsured motorist coverage for each person injured in the
accident. 2 We awarded Superior this appeal and consolidated the
underlying cases.
2
The trial court held that “Superior’s policy definitions
for ‘available for payment’ and ‘underinsured motor vehicle’ are
similar to [those contained in Code § 38.2-2206].” For purposes
of our analysis, we agree that there is no material or
significant distinction between the policy terms and the
statute. Accordingly, we need construe only the provisions of
this statute to resolve the issue presented here.
3
On appeal, Superior contends that resolution of the issue
of underinsured motorist coverage in this case requires a two-
step analysis under the provisions of Code § 38.2-2206. Because
it is only obligated to make payments for bodily injury or
property damage caused by the operation of an underinsured motor
vehicle pursuant to the mandate of subsection (A), Superior
contends that the first step or “threshold question” is to
determine whether the vehicle in question is underinsured as
defined in subsection (B). Only when it is determined that the
vehicle is underinsured is the second step, viz., the extent to
which the vehicle is underinsured, reached. Superior contends
that the trial court erred in the present case because it failed
to make the proper initial determination that Percell Hunter’s
vehicle was not underinsured as to the claims of Percell and
Lekedra Hunter.
In essence, Superior’s position is that the mathematical
calculations involved in determining whether a vehicle is
underinsured are to be made as of the time of the particular
accident. The crux of the plaintiffs’ position is that those
calculations are to be computed as of the time their claims are
made. As we will demonstrate, in the present case the
distinction in these positions dictates entirely different
results. It is in this context that the focus of our analysis
is directed to Code § 38.2-2206(B).
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Code § 38.2-2206(B), in pertinent part, provides that:
A motor vehicle is “underinsured” when, and
to the extent that, the total amount of
bodily injury and property damage coverage
applicable to the operation or use of the
motor vehicle and available for payment for
such bodily injury or property damage, . . .
is less than the total amount of uninsured
motorist coverage afforded any person
injured as a result of the operation or use
of the vehicle.
“Available for payment” means the amount of
liability insurance coverage applicable to
the claim of the injured person for bodily
injury or property damage reduced by the
payment of any other claims arising out of
the same occurrence.
(Emphasis added.)
As we have noted above, Superior’s policy contained
liability and uninsured motorist coverage with identical limits
of $25,000 per person or $50,000 per accident. Thus, applying
the above statutory provisions at the time of the accident,
Superior contends that the vehicle in question was not
underinsured with respect to the plaintiffs’ subsequent claims.
Superior contends that this is so because, at the time of the
accident, the liability coverage was not less than the uninsured
motorist coverage afforded to the plaintiffs. Rather, the total
liability coverage was “available for payment” because that
coverage had not been “reduced by the payment of any other
claims [those of Dye and her passenger] arising out of the same
occurrence.” Applying the same statutory provisions at the time
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their claims were made, plaintiffs contend that the total
liability coverage under Superior’s policy was no longer
“available for payment” because it had been reduced by the
payment to the other parties injured in the same occurrence. In
this context, plaintiffs contend that as to their claims the
vehicle was underinsured because the liability coverage was less
than the uninsured coverage “afforded” to them. Thus, the
distinction between the parties’ conflicting interpretations of
Code § 38.2-2206(B) is the point in time when the mathematical
calculations of liability and uninsured/underinsured coverage
are computed.
In support of its contentions, Superior relies primarily on
our holding in Trisvan v. Agway Insurance Co., 254 Va. 416, 492
S.E.2d 628 (1997). In that case, the claimant was a passenger
in a car driven by the tortfeasor and was injured when the
vehicle overturned in a single-car accident. At that time, the
car was insured by a policy issued by the Integon Indemnity
Corporation with liability coverage of $25,000 per person for
bodily injury and the identical amount of uninsured/underinsured
motorist coverage. The claimant was insured under a separate
policy issued by the Agway Insurance Company with a limit of
$100,000 for uninsured/underinsured motorist coverage. The
accident resulted in damages for injuries to the claimant
exceeding $125,000. Integon paid the claimant $25,000 under its
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liability policy and Agway paid the claimant $75,000 under
underinsured motorist coverage provided by its policy.
We affirmed the trial court’s judgment that, under Code
§ 38.2-2206, the $75,000 payment by Agway was the extent to
which the vehicle was underinsured. We rejected the claimant’s
assertion that in calculating the amount by which a motor
vehicle is underinsured pursuant to subsection (B) the
uninsured/underinsured motorist coverage of the tortfeasor’s
vehicle even in a single car accident must be “stacked” or added
onto other available coverage. In Trisvan, because Code § 38.2-
2206(A) provides that the amount of uninsured/underinsured
motorist coverage can either be equal to or less than the
liability coverage, but not more than the level of liability
coverage, we concluded that “when comparing the amounts of
liability and [underinsured] motorist coverage in the
tortfeasor’s policy applicable to his motor vehicle, that
vehicle cannot be . . . underinsured” as contemplated by
subsection (B) of Code § 38.2-2206. 254 Va. at 420, 492 S.E.2d
at 629. In that case, we were not required to address the
construction of the “available for payment” term under
subsection (B) because there the total amount of the
tortfeasor’s liability coverage was available for payment to the
claimant and, indeed, was paid to him.
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In the present case, for the reasons that follow, we
conclude that the trial court erred in finding that the vehicle
was underinsured. The total amount of liability coverage for
the tortfeasor, Eva Hunter, has been reduced in the amount of
$38,500 by Superior’s payment to Dye and her passenger. Only
$11,500 remains available for payment from the liability
coverage of Superior’s policy, as compared with $25,000 per
injured person under the policy’s uninsured/underinsured
motorist coverage. Hence, the language of subsection (B)
standing alone might suggest that Percell Hunter’s car was
“underinsured,” therefore, producing a different result here
than in Trisvan, where the amount of liability coverage
available for payment had not been reduced by other claims.
Nonetheless, in construing Code § 38.2-2206 as a whole, we
conclude, even under the facts of this case when only one
insurance policy is involved, that the General Assembly did not
intend that a vehicle could be “underinsured” with respect to
itself. In light of the provisions of subsection (A), it is
clear that subsection (B) contemplates a situation in which
there are at least two applicable insurance policies at
issue⎯the liability coverage provided by a tortfeasor’s
insurance policy, and the uninsured/underinsured motorist
coverage provided by an injured party’s insurance policy.
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Subsection (A) provides that the limits of the uninsured/
underinsured coverage of any policy issued in Virginia “shall
equal but not exceed the limits of the liability insurance
provided.” It does not permit the amount of liability coverage
provided by a policy to be less than uninsured/underinsured
motorist coverage provided by that policy. The total amounts of
this coverage necessarily is to be determined at the time the
policy is issued by the insurance company.
The definition of “underinsured” in subsection (B),
however, contemplates just such a scenario, that is, where the
amount of the liability coverage is less than the amount of the
uninsured/underinsured motorist coverage. The two subsections
can be reconciled only if it is assumed, as we do here, that
subsection (B) contemplates a situation in which there are two
insurance policies at issue. Moreover, subsection (A) states
that the underinsured motorist coverage must “obligate the
insurer to make payment for bodily injury or property damage
caused by the operation or use of an underinsured motor
vehicle.” The reference to “an underinsured motor vehicle”
contemplates the existence of a second insurance policy.
Read together, subsection (A) and subsection (B) do not
contemplate that, under the circumstances of this case, a
claimant would be permitted to recover under both the liability
and uninsured/underinsured motorist coverages of a single
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policy. In the present case, the uninsured/ underinsured
motorist coverage provided by Superior’s policy would not be
“afforded to” plaintiffs. Thus, there are no underinsured
motorist coverages afforded to plaintiffs to compare with the
amount of liability coverage “available for payment.”
Plaintiffs urge that this case should be distinguished from
Trisvan because here the passengers are insureds under the same
policy as the tortfeasor/driver. Before the underinsured
motorist provision was added to Code § 38.2-2206, a person
injured by an uninsured motorist could receive greater recovery
than if injured in the same accident by an insured motorist
where that person had uninsured motorist coverage in an amount
greater than the liability limits of the insured tortfeasor.
See Nationwide Mutual Insurance v. Scott, 234 Va. 573, 363
S.E.2d 703 (1988). One obvious purpose of the underinsured
motorist provision was to allow insureds to receive the same
level of protection whether an insured or uninsured driver
injures them. Id. at 575-76, 363 S.E.2d at 704. The provision
was intended to protect injured parties in situations where the
amount of coverage available to them was beyond their control,
“not to . . . expand protection to injured parties generally.”
Trisvan, 254 Va. at 419, 492 S.E.2d at 629.
The construction of Code § 38.2-2206 urged by plaintiffs,
however, would allow plaintiffs to augment the insurance
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protection afforded by their liability policy. As we explained
in Trisvan, this would constitute an “arbitrary expansion of
[their] recovery options.” Id. Had plaintiffs contracted for
more liability coverage they would have been able to employ it
to cover their claims from this accident. They cannot now
augment their liability coverage by accessing the underinsured
motorist coverage of their own policy.
Subsection (G) provides further evidence that Code § 38.2-
2206 does not contemplate injured passengers recovering under
both the liability and underinsurance provisions of a single
automobile policy. That subsection gives insurers a right of
subrogation allowing them to recover any payments made under the
uninsured/underinsured motorist provision of their policies from
the tortfeasor. In this case, were appellees allowed to recover
under the underinsured motorist provision of the policy,
Superior could subrogate against its insured, Eva Hunter. We
remain convinced that the General Assembly did not intend such a
result when it decided to allow insureds to utilize their
uninsured motorist coverage when injured by an underinsured
motorist. See Trisvan at 420, 492 S.E.2d at 629.
For these reasons, we hold that the underinsured motorist
provision of a tortfeasor’s automobile liability insurance
policy is not available to satisfy claims of passengers who are
insureds under the same policy and whose claims exceed the
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limits of the policy’s liability coverage. Accordingly, we will
reverse the judgment of the trial court and enter final judgment
for Superior.
Reversed and final judgment.
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