The opinion of the court was delivered by: Eagles, Chief Judge.
Appeal by defendant Aetna Casualty and Surety Company and cross appeal by defendants Tyvolia Faison, Virginia Lassiter, Norman Johnson, Jr., and William T. Parker from order entered 3 April 1997 by Judge Donald W. Stephens in Wake County Superior Court. Heard in the Court of Appeals 31 March 1998.
This declaratory judgment action arises out of a truck collision that occurred on 8 July 1994. In the 8 July 1994 accident, a flatbed truck owned by Francisco Vasquez and driven by Javier Flores Luna collided with a pickup truck owned by T. A. Loving, Inc. and driven by Loving's employee, Daryell Glenn Carlisle. Amos H. Bryant, Norman Johnson, Jr., and William T. Parker were passengers in the pickup truck and were also employed by Loving. Carlisle and Bryant were killed and Johnson and Parker suffered personal injuries. Carlisle, Bryant, Johnson and Parker were employed by T. A. Loving, Inc., the owner of the pickup truck. The estates and individuals have received workers' compensation benefits under a workers' compensation policy issued to T. A. Loving, Inc. by defendant Aetna Casualty and Surety Company ("Aetna"). The estates and individuals ("the claimants") have also received $250,000 under primary liability coverage from plaintiff Progressive American Insurance Company ("Progressive American"). The employees and their estates now seek underinsured motorist coverage ("UIM") under a business auto policy ("BAP") and an excess policy issued to T. A. Loving, Inc. by Aetna.
Progressive American filed this declaratory judgment action on 1 June 1995. Aetna filed an answer and cross-claim for declaratory judgment against defendants Tyvolia Faison, Administrator of the Estate of Daryell Glen Carlisle, Flora Maye Bryant, Administrator of the Estate of Amos H. Bryant, Johnson and Parker, on 19 March 1996. Aetna moved for summary judgment on 23 August 1996.
Following a hearing on 21 February 1997, the trial court entered summary judgment on 3 April 1997. In its order, the trial court determined that Aetna's business auto policy provides $1,000,000.00 in underinsured motorist coverage "for the aggregate of all claims and all claimants" arising out of the accident. The trial court also held that this obligation is reduced by the amount of primary carrier liability coverage paid by Progressive American and by "the aggregate amounts paid or payable under any workers' compensation policy to all claimants." The trial court further held that Aetna's excess liability policy provides additional underinsured motorist coverage in the amount of $1,000,000.00 for all claims. The trial court also determined that the $1,000,000.00 from the Aetna excess liability policy is not reduced by any workers' compensation payments made to the claimants. Both Aetna and the claimants appeal.
We first consider whether the trial court erred in holding that the excess umbrella policy provides underinsured motorist coverage in addition to the underinsured motorist coverage already provided by the underlying business auto policy. Aetna argues that the umbrella policy does not expressly provide for UIM coverage and that UIM coverage, therefore, can only exist in the umbrella policy if it is read into the policy through G.S. 20-279.21, the Financial Responsibility Act ("the FRA"). Aetna contends that the FRA allows a maximum of $1,000,000.00 in UIM coverage with any one insurer, and that the maximum amount was provided in the underlying policy. Aetna urges that Isenhour v. Universal Underwriters Ins. Co., 341 N.C. 597, 461 S.E.2d 317, reh'g denied, 342 N.C. 197, 463 S.E.2d 237 (1995), appeal after remand, 345 N.C. 151, 478 S.E.2d 197 (1996), does not require additional UIM coverage under an excess policy. Aetna further argues that the excess coverage is voluntary and not subject to the FRA. Finally, Aetna argues that because the umbrella coverage addresses a risk different from the risk addressed by primary motor vehicle coverage, the FRA should not apply. Accordingly, Aetna argues that the trial court should be reversed.
The claimants argue that pursuant to the Supreme Court's decision in Isenhour, the umbrella policy is subject to the FRA and must be applied separately from the underlying policy to determine the existence and amount of UIM coverage.
This Court recently determined that an umbrella policy which provided "bodily injury liability insurance" must also provide UIM coverage pursuant to the mandate of the FRA. Piazza v. Little, ___ N.C. App. ___, ___, 497 S.E.2d 429, 431 (1998). Since UIM coverage was not specifically rejected by the insured, and the policy provides coverage for "bodily injury," we hold that the umbrella policy provides UIM coverage and that the UIM coverage provided by the umbrella policy is in addition to the coverage provided by the underlying BAP. Accordingly, the trial court's order concluding that the umbrella policy provides UIM coverage is affirmed.
We next consider whether the trial court erred in holding that the umbrella policy provides underinsured motorist coverage in an amount that is not reduced by amounts paid or payable to the claimants under workers' compensation. Aetna argues that G.S. 20-279.21(e) mandates a reduction of coverage to the extent Aetna has paid benefits under its workers' compensation policy. See Brantley v. Starling, 336 N.C. 567, 572, 444 S.E.2d 170, 172 (1994). The claimants argue that the statute does not mandate a reduction but merely permits a reduction. Claimants distinguish Brantley by arguing that the insurance policies in Brantley included policy provisions specifically limiting liability, as permitted by G.S. 20-279.21(e). Accordingly, claimants argue that the assignment of error should be overruled.
With regard to reduction of UIM coverage, G.S. 20-279.21(e) states that "[s]uch motor vehicle liability policy need not insure against loss from any liability for which benefits are in whole or in part either payable or required to be provided under any workers' compensation law . . . ." (Emphasis added). This statute does not mandate that UIM coverage be reduced by the amount of workers' compensation benefits, but instead allows for the insurer to limit liability by appropriate language in the contract of insurance. See Brantley, 336 N.C. App. at 567, 444 S.E.2d at 170 and Manning v. Fletcher, 324 N.C. 513, 379 S.E.2d 854, reh'g denied, 325 N.C. 277, 384 S.E.2d 517 (1989), appeal after remand, 102 N.C. App. 392, 402 S.E.2d 648, review allowed, 329 N.C. 497, 407 S.E.2d 857 (1991), aff'd, 331 N.C. 114, 413 S.E.2d 798 (1992). Here, there was no explicit limitation of liability in the umbrella policy providing for the reduction of UIM coverage by amounts paid by a workers' compensation carrier. Accordingly, we hold that the amount of UIM coverage here is not reduced by the amount paid or payable under the workers' compensation policy. The assignment of error is overruled.