Gentile, Andrea

English

University of Baltimore School of Law

University of Baltimore Law ForumVolume 8Number 2 February, 1978 Article 132-1978Recent Decisions - State and Federal: Coverage ofUninsured Motorist EndorsementAndrea GentileFollow this and additional works at: http://scholarworks.law.ubalt.edu/lfPart of the Law CommonsThis Article is brought to you for free and open access by ScholarWorks@University of Baltimore School of Law. It has been accepted for inclusion inUniversity of Baltimore Law Forum by an authorized administrator of ScholarWorks@University of Baltimore School of Law. For more information,please contact snolan@ubalt.edu.Recommended CitationGentile, Andrea (1978) "Recent Decisions - State and Federal: Coverage of Uninsured Motorist Endorsement," University of BaltimoreLaw Forum: Vol. 8: No. 2, Article 13.Available at: http://scholarworks.law.ubalt.edu/lf/vol8/iss2/13Coverage Of Uninsured Motorist Endorsement by Andrea Gentile The Court of Appeals recently con-sidered the scope of an insurance com-pany's liability under its own uninsured motorist's endorsement. By resolving an ambiguous insurance contract in favor of the insured, the court extended coverage beyond the probable intent of the insurer McKoy v. Aetna Cas. and Sur. Co., Inc., 281 Md. 26,374 A.2d 1170 (1977). Mrs. McKoy, a Maryland resident in-sured by the defendant company, was driving in the District of Columbia when she was struck by a negligent D.C. motorist. Thereafter, McKoy began her at-tempts to recoup damages for personal bodily injuries which she alleged to be $29,000. The problems confronted in this case resulted from the fact that financial responsibility laws regarding auto in-surance vary from state to state. The minimum requirement for coverage in the District of Columbia for bodily injury liability insurance is $10,000 per person with an aggregate of $20,000 for all per-sons injured as a result of the same occur-rence. On the other hand, Maryland de-mands a minimum of $20,000 coverage per person and an aggregate of $40,000 to insure the injuries of all of the persons involved. Further, Maryland requires Uninsured Motorist Protection Coverage with the same $20,000/$40,000 limits. Maryland views any motorist, such as the Washington driver in this case, as unin-sured if he has coverage of less than the required Maryland limits of $20,000/$40,000, even though the Dis-trict's limits are satisfied. Thus, Mrs. McKoy was entitled to collect under the Uninsured Motorist provisions of her policy for an amount in excess of the tortfeasor's $10,000 coverage. The GEICO Insurance Company paid the $10,000 for which it had assumed liability as the insurer. Since her injuries exceeded this amount, Mrs. McKoy then submitted a claim to Aetna to recover the remainder of the damages under her Unin-sured Motorist (UlM) coverage. At this point a difference of opinion arose as to the amount of Aetna's liability. Aetna contended that it was obliged to pay McKoy no more than $10,000; that under the terms stated in the Aetna U/M en-dorsement, the company was allowed to "set-off" the $10,000, already paid to Mrs. McKoy by GEICO, against the $20,000 face amount of the endorsement. Aetna based its contention on the language contained in Part III of its UlM endorsement which reads as follows: III LIMITS OF LIABILITY (d) Any amount payable to an insured under the terms of this insurance shall be reduced by (1) all sums paid to such in-sured for bodily injury or property damage by or on behalf of the person or organization legally liable therefore. Mrs. McKoy found this objectionable and brought an action in the Prince Georges County Circuit Court for a declaratory judgment to determine the amount of the Uninsured Motorist coverage provided by her Aetna policy. Plaintiff McKoy argued that the sole purpose of the "set-off" clause was to pre-vent a double recovery of damages; that the amounts recoverable from other sources were to be subtracted from the total damages incurred but that they were not to affect the face amount of the policy. Simply stated, she felt that where she sustained damages for bodily injury amounting to $29,000, of which $10,000 was paid by the "responsible person or organization," and she carried a $20,000 limit on her own policy, she should be en-titled to recover the remaining $19,000 worth of damages from her insurer. The Circuit Court rejected Mrs. McKoy's argument and in agreeing with AETNA, stated that McKoy could claim only $10,000 from the insurer because despite total tiamages of $29,000 the total amount of Aetna liability ($20,000) was to be reduced, under the set-off clause of the Uninsured Motorist provi-sion, by the $10,000 collected from the wrongdoer's insurer. McKoy then carried the dispute to the Court of Appeals, which reversed. In determining the extent of Aetna's liability under their own contract, the Court looked to the language set forth in the U/M endorsement attached to the plaintiff's policy. Pertinent to the disposition of the case are three parts. First, Part I outlines the primary liability of Aetna to Mrs. McKoy. The relevant language reads: "The Company will pay all sums which the insured or [his] legal representative shall be legally entitled to recover. ." (emphasis ad-ded). Second, Part I1I(a) sets forth the dollar limit of Aetna's liability for inj uries (to anyone person covered by the policy) suffered in an accident "arising out of the FEBRUARY, 1978 ~ ownership, maintenance or use of an unin-sured auto." Under this provision of McKoy's policy, Aetna limits its dollar liability to a single injured person (McKoy) at $20,000. Third, Part lII(d) , the set-off clause upon which Aetna relied, also modifies the primary liability of Part I by indicating that "any amount payable to the insured under the terms of [the policy] shall be reduced" by the amount of sums paid to the insured "on behalf of the tortfeasor." See Id., at 30, 374 A.2d at 1172. There was no dispute that Part III (d) meant that the $10,000 from the D.C. driver's insurance already paid to Mrs. McKoy should act as a set-off. The issue became one of determining the proper referent of the phrase "any amount paya-ble." If this meant the total amount corre-sponding to the total damages, $29,000, suffered by Mrs. McKoy, then the $10,000 set-off would leave Aetna with a $19,000 obligation. On the other hand, if those words in III (d) referred to the amount payable from Aetna to McKoy, $20,000, then the application of the set-off would leave Aetna with a mere $10,000 obligation. In holding for Mrs. McKoy, the court stated that both lII(a) and III (d) were inde-pendent modifiers of the total amounts payable clause in Part I. Thus, the set-off did not reduce the Aetna limit of liabilit~, but the total sums to which that liability was to be applied, i.e., the outstanding amount payable to plaintiff McKoy after the application of the $10,000 paid on behalf of the tortfeasor. In order to remove any doubt about the correctness of the result, the court stated: Even assuming that the interpretation of the policy urged upon us by Aetna is an equally reasonable one, this would, at best, create an ambiguity. In such Situations, ambiguities are resolved against the author of the instru-ment. Penn., Etc., Ins. Co. v. Shirer, 224 Md. 530, 537, 168 A.2d 525,528 (1961). 281 Md. at 31,374 A.2d at 1173. The decision of the court rested en-tirely upon the construction of the Unin-sured Motorists Endorsement issued by Aetna. To avoid this result in future cases involving the Uninsured Motorists ~ THE FORUM coverage, Aetna could restructure the language of its endorsement specifically to limit the coverage. While it is evident that the court intended that an insured benefit from as much of her insurance as possible, it could have reached a more en-during result based upon substantive law rather than contract construction had it dealt with the alternative argument that the set-off clause was void under MD. ANN. CODE art. 48A §541. This section requires that insurers issuing policies for Maryland drivers provide a minimum of $20,000 U!M coverage for each policy, and a court could construe the Code to require ap-plication of the $20,000 obligation to the balance of "any amount payable" to an insured after application of a set-off. The court chose not to reach this question, and thus left this case vulnerable to isola-tion on its facts. See id., at 28 n.l, 374 A.2d 1171 n.l. McKoy articulates well the problem of uninsured motorists insurance protec-tion--a problem acute in Maryland, which entertains more than its share of foreign drivers who are without sufficient coverage of their own. It also appears that the result in this case works a two-edged economic sword, with one blade cutting costs to an insurance consumer like McKoy by holding an insurance company to its full obligation in the manner pro-vided by this court. The other edge, however, narrows company profit margin resulting in higher insurance rates. Terry Examined by James F. Kuhn The Court of Special Appeals has ren-dered invalid an investigatory stop based solely on information received in a police radio broadcast absent other indications of present danger and criminal activity. Price v. State, 37 Md. App., 248, 376 A.2d 1158 (1977). On April 5, 1975, a Prince George's County police officer on routine patrol received a radio broadcast that an armed robbery suspect, James Price, was believed to be driving a silver 1966 Cadillac and that he was in possession of a shotgun, stolen goods, and narcotics. The officer, having sighted an automobile matching the description given in the broadcast down to the tag number, ap-proached the driver when he stepped from the car in a gas station and conducted a patdown of the driver who at that time identified himself as James Price. This limited search, conducted on the basis of the radio alert alone, produced a knife from the person of the appellant. He was arrested on a weapons charge and subse-quently convicted on separate charges, relating to a robbery which had occured three weeks earlier on the basis of evi-dence seized by a second officer while searching the car in the gas station. Price's contention on appeal was that the state had failed to establish the necessary "reasonable suspicion" to justify his being stopped and frisked for weapons, thus vio-lating rights guaranteed by the Fourth Amendment. Nine years ago, the Supreme Court made clear in Terry v. Ohio, 392 U.S. 1, (1968), that police officers may "in ap-propriate circumstances and in an ap-propriate manner approach a person for purposes of investigating possibly crimi-nal behaviour even though there is no probable cause for making an arrest" and that where the officer "observes unusual conduct which leads him reasonably to conclude in light of his experience that criminal activity may be afoot and that the persons with whom he is dealing may be armed and presently dangerous" he may conduct a limited frisk for weapons by patting down the outer clothing of the suspect. 392 U.S. at 22. Terry requires only that the officer be able to point to specific and articulable facts that would justify a reasonable suspicion that the in-dividual is armed and presents a threat to the officer or bystanders. In Price, the state argued that the pat-down was justified under the Terry doctrine in that a police broadcast that a suspect is armed and dangerous in and of itself justifies a patdown for weapons even if it does not constitute probable cause for arrest. The danger of too broad a reading 

Recent Decisions - State and Federal: Coverage of Uninsured Motorist Endorsement

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Recent Decisions - State and Federal: Coverage of Uninsured Motorist Endorsement

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