Superior Insurance v. Hunter

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.

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 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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