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Piazza v. Little

March 17, 1998


Appeal by unnamed defendant, Automobile Insurance Company of Hartford, Connecticut, from order entered 31 March 1997 by Judge William C. Griffin, Jr., in Pitt County Superior Court. Heard in the Court of Appeals 16 February 1998.

The opinion of the court was delivered by: Horton, Judge.

John N. Piazza and his wife, Edith May Piazza, were involved in an automobile accident on 7 March 1995 in which Mrs. Piazza was killed and Mr. Piazza was injured. Mr. Piazza ("plaintiff") filed suit on 2 February 1996 in his individual capacity, and as executor of the estate of his deceased wife, against defendants Little and Perry. Little was the driver, and Perry the owner, of the other vehicle involved in the accident. Defendants had minimum liability coverage with Allstate Insurance Company, which tendered the full amount of its policy limits to plaintiff.

On the date in question, plaintiff also had two personal automobile liability insurance policies with the Automobile Insurance Company of Hartford, Connecticut ("Hartford"). Plaintiff elected $250,000 underinsured motorist coverage ("UIM") on the first policy ("underlying policy"), although he could have elected up to $1,000,000 in UIM coverage. After deducting the $25,000 paid by Allstate, Hartford paid $225,000 to plaintiff pursuant to the underlying policy.

Plaintiff also had an excess coverage policy with Hartford, which provided automobile bodily injury liability coverage up to $1,000,000 per occurrence ("umbrella policy"). The declarations page of the umbrella policy contained the following language: "Uninsured/Underinsured Motorists Limit of Liability: NOT APPLICABLE each occurrence." An Amendatory Endorsement to the umbrella policy provided in pertinent part that "he Uninsured or Underinsured Motorists provisions are hereby deleted from the policy." The Amendatory Endorsement excludes "any claim under uninsured or underinsured motorists coverage." Plaintiff did not sign a selection/rejection form waiving UIM coverage under the Hartford umbrella policy. The complaint included a declaratory judgment claim in which plaintiff asked that the Court declare the respective rights of the parties and determine that the umbrella policy issued by Hartford provided UIM coverage. Hartford denied that the umbrella policy provided UIM coverage, and both plaintiff and Hartford moved for summary judgment on that issue. The trial court granted plaintiff's motion for summary judgment, denied Hartford's motion, and Hartford appealed.

The issue presented by this appeal is whether an umbrella policy which provides automobile bodily injury liability coverage up to $1,000,000, but which by its terms excludes uninsured and underinsured motorist coverage, is subject to the provisions of N.C. Gen. Stat. § 20-279.21(b)(4) (1993 and Cum. Supp. 1997) and thus is required to offer UIM coverage.


At all times relevant to this case, N. C. Gen. Stat. § 20-279.21(b)(4) provided as follows:

(b) owner's policy of liability insurance:

(4) Shall . . . provide underinsured motorist coverage, to be used only with a policy that is written at limits that exceed those prescribed by subdivision (2) of this section [that is, minimum statutory limits of $25,000/$50,000] and that afford uninsured motorist coverage as provided by subdivision (3) of this subsection, in an amount not to be less than the financial responsibility amounts for bodily injury liability as set forth in G.S. 20-279.5 nor greater than one million dollars ($1,000,000) as selected by the policy owner. . . .

The coverage required under this subdivision shall not be applicable where any insured named in the policy rejects the coverage. An insured named in the policy may select different coverage limits as provided in this subdivision. If the named insured does not reject underinsured motorist coverage and does not select different coverage limits, the amount of underinsured motorist coverage shall be equal to the highest limit of bodily injury liability coverage for any one vehicle in the policy. . . .

Rejection of or selection of different coverage limits for underinsured motorist coverage for policies under the jurisdiction of the North Carolina Rate Bureau shall be made in writing by the named insured on a form promulgated by the Bureau and approved by the Commissioner of Insurance.

N.C. Gen. Stat. § 20-279.21(b)(4) is a part of the North Carolina Financial Responsibility Act ("the Act"), a remedial statute designed to protect "innocent victims who may be injured by financially irresponsible motorists." Proctor v. N.C. Farm Bureau Mutual Ins. Co., 324 N.C. 221, 224, 376 S.E.2d 761, 763 (1989). The purpose of the Act is "best served when the statute is interpreted to provide the innocent victim with the fullest possible protection." Id. The provisions of the Act are deemed to be written into every automobile liability policy "as a matter of law, and, when the terms of policy conflict with the statute, the provisions of the statute will prevail." Nationwide Mut. Ins. Co. v. Chantos, 293 N.C. 431, 441, 238 S.E.2d 597, 604 (1977).

As interpreted by our appellate decisions, the Act provides a three-part test to determine whether UIM must be provided in an automobile bodily injury liability policy, including:

(1) policy limits must exceed the statutory minimum limits set out in N.C. Gen. Stat. § 20-279.21(b)(2); Hollar v. Hawkins, 119 N.C. App. ...

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